GfK FMR Conference 2010

How does crisis affect the global and especially the Serbian consumer? With lower financial powers, what kind of financial services do Serbian consumers need and what services could they actually use? What exactly are their demands and what do they expect from financial services and institutions? To what extent are banks and insurance companies prepared to adjust their business with such needs? And finally, how should these institutions behave to survive and become more successful?

Through an analysis of the financial market and its changes, at this conference GfK Belgrade will address similar questions and point out new trends which can be seen in financial business – the situation as it is today and is supposed to be tomorrow.

Global retail banking in 2010

After greeting the presentation of GfK Belgrade’s Managing Director Marijana Agić-Molnar, Alexander Zeh of GfK Austria, team leader for financial research at CEE, gave us an insight into trends in global banking in terms of attitudes and behaviour of people.

Global consumer confidence reached its lowest level in the last ten years. Consumers’ biggest concern is a possible recession and unemployment growth. Then comes the fear of inflation. Consumers save their money in all possible ways - they buy more carefully, they wait, use coupons and look for discounts.

The last two years have had a dramatic impact on financial industry. Global consumers think that banks (73%) and other financial institutions (72%) are to blame for the world crisis. The percentages are significantly lower when it comes to insurance companies (37%) and corporations (35%). As a result – banks, as well as insurance companies have lost most of the consumers’ confidence, so it is necessary to find new ways to regain it. Consumers state they want the "basic relationship with clients” to be reestablished in financial institutions. Also, taking responsibility is needed if these financial institutions want to regain trust of their clients.

Environment and financial market in Serbia – yesterday and today

Goran Tintor, GfK Belgrade Custom Research Director and Predrag Ćirović, GfK Belgrade Junior Research Consultant talked about these themes.

The world crisis has definitely had impact upon Serbia, but that impact is stronger than could be conceived.  According to Purchasing Power Index (which is calculated for 41 countries), a decrease was recorded in consumers’ purchasing power.  In 2009, purchasing power fell to EUR 2.993, 5% down compared to 2008 and 9% compared to 2007!

More and more money is spent on food, so there is less money for everything else. Because of this, consumers are forced to run up debt in all possible ways. From Dec. 31, 2009 to March 31, 2010 only, the number of current accounts in default  increased by 8.5%, while the number of cards in default also increased by 4%. When we add the number of closed current accounts in the same period of time (80,000), big problems for consumers can easily be anticipated.

After the first crisis wave, the perception of consumers’ financial situation is quite better, but there is still a strong base of citizens (48%) who state that the situation is worse than the year before, which means that the crisis’ effects are still very noticeable. The biggest fear our citizens still have is that of price increase and further standard decline.

As the main reason for the worsening of their financial situation, the consumers mention their decreased incomes (18% of them).  Every tenth respondent (10%) mentions that his/her income has become less regular, which means that the liquidity crises could be observed in terms of people’s standard of living. 9% of the citizens have lost their job or some other source of income.

Only a small number of Serbian households have the privilege of being able to put some money aside, i.e., to save. Children and saving for rainy days are the main reasons for saving among the people who are in a situation to save. Also, holidays and travelling are important motives for saving in Serbia.

On the other hand, real estates are a good option for investing, when it comes to it.

There is one thing which can still be seen as positive and that is trust. Trust in domestic banks is higher than in other financial institutions and companies. 48% of Serbian citizens trust domestic banks, whereas 35% of them trust the National Bank and only 26% trust the Government and ministries of Serbia. In terms of trust, banks have a strong potential which could be used for defending their interests, as well as their clients’ interest.

Consumers testify: experience of users of different services  - selection process and satisfaction

In the situation when the incomes are in decline, when there are fewer part time jobs, there is not enough money in household budget to cover all costs. The lower purchasing power causes less spending, but more saving among the people. Citizens are ready for bigger investments only when necessary: when the car is really old and when there is an unsolved housing situation, if there are good loan terms available. Banking product users want stronger flexibility in terms of repayment, as well as lower interest rates and provisions. When it comes to relationship between the clients and their bank, a more personalized communication becomes increasingly important, because the bank is expected to show that it respects personal needs and abilities of its clients.

Although the cheques are perceived as souvenirs of the ’90s, this bank product has made a big comeback in the financial market and has become very popular, especially among those who do not use credit cards. Overdraft is perceived as positive because money is available instantly, but the interest rate is perceived as too high and therefore less acceptable than other products’ interest rates. Snežana Delić, Custom Qualitative Research Manager, GfK Belgrade, talked about the issues.

Leading managers in the financial market told us...

Marijana Agić-Molnar analyzed the opinions of the leading managers in the financial market about trends caused by crisis, events in 2009 and projections for 2010 and 2011. Due to the measures of the National Bank of Serbia, the financial sector in Serbia was protected to a great extent against the crisis influence. A new kind of caution surfaced in 2009 – the clients became more careful (decrease in long term debt, lower usage of credit cards, rare usage of overdraft), as well as  the banks (in new client selection). Interestingly, all the banks recorded a significantly higher interest in saving (this trend applies to short term savings only).

2009 was the year of stagnation, while growth is expected in 2010 and 2011, but that growth will be more modest than in the past. Bank clients confidence will be gained by adjusting the supply to consumers’ needs (one way would be a market segmentation), by understanding and making partnerships, by simplifying the offered products and making them more transparent as demanded by the new business ethics as well.

Market research – themes for surviving in times of revival

New times, as well as crisis times, need new approach to market research. In addition to appropriate methodologies, the agency should show proactivity, make selection of market information according to clients’ needs, promote building of partnerships, offer clear recommendations.

The key demand is to provide an insight, and not only the simple facts and commercial data analyses. The sources of the insight are not only the primary researches, but also the internal company facts, trend researches and other secondary market facts as well as client/user/customer feedback information. In times of crisis, commercial thinking is necessary as well, because the marketing budget is lower, and every investment is triply checked. Marijana Kristić, Consumer Market Developer, GfK Belgrade, talked about this interesting and challenging theme.

The GfK Group

The GfK Group offers the fundamental knowledge that industry, retailers, services companies and the media need to make market decisions. It delivers a comprehensive range of information and consultancy services in the three business sectors Custom Research, Retail and Technology and Media. The no. 4 market research organization worldwide operates in more than 100 countries and employs over 10,000 staff. In 2009, the GfK Group’s sales amounted to EUR 1.16 billion.

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