Branch design

The female touch

July 2007

The figures speak for themselves. Women account for 52 per cent of the UK population and 55 per cent of the country's university undergraduates, as well as owning 48 per cent of the nation's personal wealth - a share expected to rise to 60 per cent by 2025. One third of women are now financially independent, up from less than a quarter in 1985, and there are now more female millionaires aged 18-44 than male. In both economic and social terms, the female marketplace is where the action is.

These statistics alone demonstrate that women represent a major opportunity for financial service providers. And a recent Accenture research study into banking services for women has shown that both this opportunity and the price for missing it are much bigger than previously thought.

In terms of the opportunity, our research found that banks and building societies are amongst women's most trusted brands, and that women are now the best route for selling higher-value products such as mortgages and pensions to couples, in addition to family-related products such as child trust funds. However, when it comes to turning this potential into real profit, our study showed most banks are signally failing to target women with female-orientated products and services. Unless the banking industry takes steps to address this failure, it faces losing out in this under-served but vastly valuable market to new entrants, IFAs and other challengers.

Into the driving seat

Our wider background research highlighted the extent to which women have moved from the back seat to the driving seat as financial decision-makers. Far fewer women are married today than thirty years ago, and women in general are having children later, becoming more successful as entrepreneurs, and gaining greater financial independence both inside and outside marriage. Around 25 per cent are now earning more or the same as their partner, up from 7 per cent in 1985. And the fact that women continue to outlive their spouses by five years - their current life expectancy is 81, against 76 for men - means many double-inherit from parents and husband, driving the female share of overall national wealth relentlessly upwards.

The social and economic changes seen over recent decades have not only given women greater financial independence, but have made their lives more complex - in turn requiring new approaches to financial management. To bring this change to life, we developed two fictionalised scenarios of a typical female consumer in 1977 and 2007. In many ways, banks today still act as if they are still dealing with the first of these women rather than the second.

Triggers for buying

So, what did our interview-led research tell us about the modern woman whom banks need to address? Our top-line finding was significant pent-up demand for banking products, services and advice geared to the female population with most respondents saying they would switch to another bank if it proposed products tailored to the needs of women.

This is not an idle threat. We found that women are more diverse than men in their choice of banks, establishing banking relationships with a wider range of providers. Fifty-five per cent of our respondents say their primary bank - the one that receives their salary - is one of the big four banks, a lower proportion than in the population as a whole. We also found that 55 per cent of women have accounts with two or more banks, indicating that they are not loyal to one provider. And a fifth of women have opened an account with a completely new bank during the last 12 months, demonstrating a fluid marketplace for switching.

However, the sharpest differentiating factor of the female marketplace is around buying triggers. In comparison to men, women's critical life-stages are more clearly-defined and have a greater impact on their financial needs. So banks could pick up much more custom from women by targeting them at point, such as buying a home, getting married, having children, getting divorced, becoming widowed, or inheriting money. Asked whether they would switch to a bank if it offered products tailored to these life-stage events, 52 per cent of our respondents said yes

Holding the purse-strings

Our research also blows away some traditional preconceptions about women's role in managing household finances. Among the life-stage triggers for women to buy banking products and services, marriage/cohabitation is one of the most powerful. And we found that women are no longer willing to play second fiddle to their partner, with 65 per cent of women with a partner regarding it as 'important' to ensure their financial independence. Almost a third of women (32 per cent) actually become more interested in personal finances once married or cohabiting, as a result of the additional responsibilities and debt (mortgages, pension, children) that couples face.

This heightened interest leads to buying of products. Fifty per cent of married/cohabiting women own financial products personally because they enjoy managing their own finances, and 47 per cent do so to maintain their financial independence. The majority (65 per cent) that own financial products have retained at least some of them from before marriage/cohabitation, while a resounding 79 per cent have bought products since then, underlining the fact that finding a partner is a trigger for buying.

Our research also shows that women take a lead role in decision-making over day-to-day financial transactions, and that investments and borrowings are usually decided jointly. This makes women with partners both an important market in their own right, and the ideal route for selling higher-value products such as mortgages and pensions to couples.

Other life stages also trigger demand. Motherhood may lead to career breaks, creating a need for financial advice and clear follow-on opportunities around accounts, investments and child trust funds. Divorce also requires financial advice; despite the handful of headline-grabbling settlements, it often puts women in a poorer financial position, with lower household income plus the pressures of becoming a single parent. And bereavement/inheritance means many women become wealthy relatively late in life.

Trust in banks, but little delivery

All these findings underline the scale of the opportunity in the female marketplace. And banks - of all the potential sources of financial advice and products - are especially well-placed to capitalise on it. Our survey participants' primary banking provider comes out ahead of their husband/partner as first choice for financial advice when it is required, and second only to all family and friends combined. So in terms of professional financial advice, banks have a clear lead.

However, while women are looking for tailored female-focused advice from their bank, they are usually disappointed. Most of the women we interviewed do not even know what key life events their bank could help with, and mortgage lending is the only area where more than a fifth of respondents are aware of suitable products. This leaves a huge gap for banks to fill in both their offerings and their communication.

In terms of what women are looking for from their banking providers, a key characteristic that emerges from our research is that women tend to be relatively risk-averse, and take a balanced and considered approach to investment as a result. Another is that, when it comes to savings/investment products, they want substance over style, meaning they are looking for price and performance rather than marketing spiel. More than a third will accept lower performance in return for low risk - a factor banks should bear in mind when designing products for the female market.

Customer information

The key conclusion that emerges from this study is that women want tailored advice and products, but that they are not being targeted effectively or catered for imaginatively by banks. Our parallel research into banks' approaches to the female marketplace across the world shows that the UK and Europe are lagging behind the US and Japan in this regard. We believe it is vital that UK banks move to close the gap.

The way they do this needs to be much more sophisticated than simply slapping some pink branding onto existing products. What is required is an ability to deliver carefully crafted, female-orientated products supported by targeted, clear and timely advice, using a combination of well-informed advisers and the internet. To do this successfully, banks will need to know enough about their female customers to track their critical life events and be able to respond with the right offers at the right time.

So the key is information. To address the needs of the female marketplace, banks need to be able to store, process and apply customer data more intelligently and responsively. Only then will they be in a position to target women effectively. And as women garner an ever greater share of national wealth, those banks that fail to get to know and understand their female customers face losing out in the marketplace as a whole. In our view, targeting women is not a choice for the UK's banks, but a prerequisite for staying in the game.

Natasha Miller is a senior executive at Accenture's Financial Services Industry Practice