According to a June 2010 survey, people who use their mobile phone for web-based banking tend to be younger, male and more ethnically diverse than their online banking counterparts.

• 36 percent are between the ages of 25-34, while only 18 percent represent that same age group online
• Males represent 53 percent of this population versus 43 percent online
• 30 percent are Hispanic while this same user group represents only 11 percent of the online banking population

Those who use SMS texting for mobile banking – either from a smart phone or a standard feature phone – represent the largest group of mobile bankers. This is not surprising given the growing popularity of texting in general: As of July 2010, two out of three U.S. mobile subscribers used text messaging.

Mobile banking SMS users vary demographically from mobile web users. This group is slightly older than their mobile web banking counterparts, as 48 percent of these users are over the age of 35. With this simple easy-to-use feature, banks can provide customers the ability to track balances, set up alerts, and have much greater and immediate control of their finances.

According to David Gill, Senior Director of Mobile Marketing at The Nielsen Company, “People who are comfortable using their mobile phones for mobile banking tend to check their mobile bank site twice a week. These customers are already highly engaged and eager for real-time solutions based on their specific needs.”

Mobile banking offers something for every degree of technology adoption and comfort level, from sophisticated, mobile web-based banking services to the quick and simple, SMS texting based offerings that are driving mobile banking growth.

The mid-year edition of The Nielsen Company’s Personal Finance Monitor indicates that these financial service companies have a tremendous opportunity to gain new customers and launch new services, but will have to do some work to fully realize that potential. In a monthly survey of 600 people in the two main cities of Ho Chi Minh and Hanoi, Nielsen found that almost half of respondents maintained a bank account, with saving and transactional accounts the most common.

“Vietnam’s population is young and increasingly exposed to new products and services, and they are open to investigating how these can complement their lifestyles.  Combined with increased affluence and economic opportunities, the appetite for financial services is likely to grow.  However, many people lack an understanding about financial services products, and firms should not underestimate the importance of education as part of the process of building relationships with new consumers,” said Alan West, Associate Director, Financial Research at Nielsen Vietnam.

As only half of the potential market (4 million people) currently use banking, insurance and other financial services, there is significant latent demand that can be tapped.

Make it easier and raise awareness of financial services offerings
Key barriers to banking identified by survey respondents included lengthy application procedures and the amount of financial documentation required to establish accounts.  Although these issues were not barriers to the other half of the desired market, a large number of these consumers still used non-bank sources for savings, investing and other financial functions.  For example, just 10 percent saved their money in banks and only 2% of the target market had bank loans, while 6 percent sought funds from other sources, such as family and friends.   Investing in one’s business was the top place (61%) to put spare cash, followed by gold (35%) and real estate (23%).

Credit still a “taboo” for Vietnamese
While ATM/debit card ownership is growing (almost a quarter of respondents said they owned one), Vietnamese consumers shy away from credit:  just 7 percent of respondents said they intend on obtaining one in the future.  Primary reasons given included no demand, or a desire to use cash, followed by a lack of knowledge about the product.

Banking customers largely loyal
81 percent of survey respondents still only use a single bank for their financial services needs.   This is changing, and whilst “switching” is rare, the number of consumers taking on secondary banking accounts is on the rise.

Protection at the top of insurance customers’ minds
74 percent of respondents indicated “protection” is the reason they purchase an insurance product.  Interestingly, 68% perceive insurance as a form of savings.  Life insurance, education and accident insurance are currently the top products used by survey respondents.

Internet banking penetration still in early stages
Just 1 percent of current bank customers use such services offered by their banks, despite the fact that Vietnamese – especially those age 35 and younger – tend to use the Internet more than many of their Southeast Asian neighbors.  The key reasons given for not accessing this channel included awareness (they didn’t know about such services or how to use them) and safety.  Nevertheless, just as ATM use has increased since consumers have become more familiar with the machines, online banking will also likely take hold in the next few years.

Non-product features as important as product features
The importance of customer service, convenience and reputation cannot be overstated: the top reasons for selecting banks included competitive interest rates (60%), the bank was viewed as prestigious (56%), highly recommended by others (52%) and good customer service (50%).  Meanwhile a lack of ATMs or the lack of branches close to home and poor customer service were the main reasons for switching banks.

Nielsen BuzzMetrics reviewed 8,000 discussion forums, 45,000 Usenet forums and more than 135 million blogs to gauge consumers’ thoughts on this law, with particular focus on the following issues:

• How are consumers reacting?
• How are card companies communicating changes?
• What actions do consumers plan to take?
• Who is to blame?
• Which companies are being implicated?

Online buzz spiked at the end of May 2009 as Congress passed the Credit CARD Act, and then tapered off until the end of February 2010, when the law went into effect.  Overall, however, this discussion about this issue paled in comparison to the rancorous health care reform debate, which took center stage for much of 2009.

Almost immediately upon the President’s signing the bill into law, online sentiment began to turn against it.  A USA Today post on the law received more than 600 comments – most of them quite negative.  Many people thought that the legislation did not go far enough in protecting consumers, while others felt the new law penalized those who were responsible credit users.  Meanwhile, there was widespread belief that card issuers would find loopholes for raising fees and interest rates prior to the law’s enactment.

Overall, consumers seem concerned about how the law changes the use and availability of credit.  They said that their credit issuers communicated with them primarily through statements or via a web site.  A fair number of people went online to search for information about the law and how it might affect them.  Financial and political web sites were the top destinations for online discussions, and searches on Google and other engines are being actively used by consumers to learn more about the law.  So what actions might consumers take in response to this law? Switching to cash or debit cards was the top action, followed by canceling credit cards.

“It was a little surprising to see the widespread negative or ambivalent consumer sentiment towards the credit card reform law.  What was initially hailed as an important step in protecting consumer rights quickly turned into an exercise of public mistrust of both financial service companies and the government.  As we have seen with the health care reform debate, many Americans think that companies will find ways around the law and find new sources of revenue,” said Ron Coyle, Lead Analyst at Nielsen BuzzMetrics.  “Now that the law is in effect, buzz about the topic will likely quiet down.  But it will be interesting to see how consumer sentiment about this law changes.”

But it is income rather than age or ethnicity that appears to be driving online banking usage: affluent households with incomes of $100,000 and up and with heads-of-households aged 35 or younger were just as likely to bank online whether they were Asian or not (84%).  As affluence levels decrease, more Asians tend to bank online compared to non-Asian households.

With competition for new customers increasingly fierce, financial institutions would be well-served in targeting Asian families.  The average Asian-American household has a mean income of $84,000 compared to $62,000 in non-Asian households.  In addition, they tend to hold very high deposit levels with much of their assets in savings, money market, CDs or mutual funds accounts.

Snapshot of Asian American Households’ Banking Practices Compared to Non-Asians

The Tax Services category spent $220 million in 2008 on ads, an increase of 11% from 2007. Over one-third of the 2008 total was spent on Cable TV ($76.9 million), followed by Spot TV ($40.5 million), and Network TV ($35.7 million).

Over half ($125.8 million) of the budget was spent in the first quarter – the three months leading up to the April deadline. That was followed by the fourth quarter ($36.9 million, 17%). The third quarter had the least amount of advertising – $25.6 million, or 12% of the year’s ad spending.

TOP TAX SERVICE ADVERTISERS IN 2008

Spending by the top five advertisers in the Tax Services category totaled $170.9 million for 2008, a 7% increase from 2007. H&R Block, the largest advertiser last year, essentially kept its budget flat from 2007.

As an indication of the economic struggles Americans have been facing, American Tax Relief, a company specializing in settling individual tax debts, showed the largest percent increase from 2007 to 2008 (+97%, +$14 million). American Tax Relief’s ad budget has grown more than twenty-fold since 2004, when its spending was just $1.3 million.

For more information on ad spend in the Tax and Financial Services industries, click here.

Mortgage and loan companies, including Web-based companies, combined to spend 62% — or $778 million — less on advertising during the first three quarters of 2008, compared with the same time period last year.

Overall, ad spending by financial services companies dropped from $5.9 billion in Q1-Q3 2007 to $5.3 billion through September of this year, according to Nielsen.  Nielsen’s data excludes outdoor and B2B magazine ad spending.

Despite the struggling economy, some financial services advertisers have boosted their ad budgets.

Spending by credit services companies and their Web-based services jumped by 22% from Q1 to Q3 2008, while investment services companies and their Web-based services — the industry’s biggest ad spenders so far this year — spent 6% more this year than in Q1-Q3 2007.

Credit card services companies, the second-biggest spenders among all financial services categories, saw their numbers remain relatively unchanged, dropping by less than one percent from Q1 to Q3 2008, compared with Q1-Q3 2007.

Read coverage of Nielsen’s findings in The Hollywood Reporter, Adweek, and the St. Louis Business Journal.

Strong advertising growth in the Asia-Pacific region (+7.6% over Q2 2007) drove the increase, according to data released in Nielsen’s latest Global AdView Pulse report.

Ad spending trends worldwide showed significant variations — with overall advertising declines recorded in North America (-1%) and Europe (-3%).

In North America, U.S. ad spending was down by approximately 6%, compared with the same period last year, while ad spending in Canada grew slightly (+1.7%).

In Europe, the drop in ad spending affected all industry sectors and all media — except radio, which rose by almost 1% during the second quarter of this year.

In Asia Pacific, all four major media types (TV, magazines, newspapers, and radio) grew over Q2 2007, despite the detrimental effects of the May 2008 earthquake in China’s Sichuan Province, the Japanese recession, and general softening of the economy.  Of the twelve Asia-Pacific countries Nielsen tracks, only Japan, South Korea, and Taiwan showed declines in second quarter ad spending.

Globally, most industry sectors showed increased ad spending in Q2 2008, as compared with Q2 2007 spending.  The Automotive, Telecommunications, Financial, and Durables categories, which recorded decreased advertising investment in the second quarter of this year, were the only exceptions to that trend.

Among the mediums tracked by Nielsen – television, print, radio, outdoor, cinema, and Internet (where available) — TV showed growth (+3.8%), while all other media recorded ad spending declines.

Nielsen’s report is based on advertising data from 28 markets in Africa, Asia Pacific, Europe, and North America.

View the full press release.

Among credit card services companies, TV ad units for Sept. 1 – 21, 2008 were down by almost 24% versus the same time period last year.

Most of the top advertisers in the Credit Card Services category — including Capital One, Discover, Synovus, Washington Mutual, and Visa — reduced their TV television advertising activity in September.

Earlier in 2008, advertising by credit card services companies had shown increases.  In July and August, ad spending for the category was up by almost 27% over the same period a year ago.

Ad spending by other sectors of the financial services industry has declined steadily so far this year. 

In July and August, ad spending by mortgage service companies was down by almost 54%, compared to the same period in 2007.  Ad spending by loan companies also dropped by almost 37% between July-August 2007 and July-August 2008.

Read coverage of Nielsen’s findings by the Associated Press and in Ad Age, the Los Angeles Times, The Globe and Mail, Broadcasting & Cable, and Adweek.

Despite a continued softening of the economy, several media showed healthy growth in advertising for the first half.  Advertising on Cable TV (+8.1%), Syndication TV (+7.2%), and National Sunday Supplements (+7.2%) saw the largest growth, according to Nielsen.  Spot Radio fared worst among the 19 media categories analyzed by Nielsen (-10.1%). 

Although overall Internet ad spending, when including paid search and online video advertising, was up by 11% during the first half of this year, image-based Internet advertising declined by 6% during the first half of 2008, compared to the same period in 2007.

Among specific product categories, Credit Card Services (+18.95%) and Direct Response Products (+20.48%) showed the strongest ad spending gains, while the Automotive (-.01%), Pharmaceutical (-4.76%), and Motion Picture (-4.64%) categories recorded the largest advertising declines.

The decrease in image-based Internet advertising was driven by a 27% drop in online ad spending by financial services companies, which decreased their spending from $1.5 billion in the first half of 2007 to $1.1 billion during the first two quarters of this year. 

Other industries — entertainment (+47%), automotive (+45%), and consumer goods (+32%) — showed strong increases in image-based online advertising during the first half of 2008.

View the full press release.

View Nielsen Online’s report on first half 2008 online ad spending.

Read coverage of Nielsen’s findings in Wired, Investment News, the Financial Times, Crain’s New York Business, TV Week, Broadcasting & Cable, MediaPost, The Hollywood Reporter, Adweek, and Mediaweek.

Known as the “New Mass Affluent,” members of this group have amassed assets of more than $100,000 each, though most of these baby boomers were born into middle class households.  By 2007, the group represented 19% of all households in the U.S.  By 2012, the New Mass Affluent is expected to grow to account for at least 20% of all American households.

Often underserved by financial services companies, the group represents a significant opportunity for that industry, Nielsen’s white paper argues — especially now, as its members approach retirement and prepare to roll over 401(k) funds into retirement accounts.

Access the whitepaper.