HML urges banks to develop low-risk products
Financial outsourcer HML has called on banks to capitalise on consumer appetite for low-risk savings products by launching attractive and simple deals.
Andrew Jones, chief executive HML, said organisations should launch more products that people like, such as instant access savings accounts, to help cross-subsidise other business areas such as mortgage lending.
With the size of the UK savings market set to rise to £1.3 trillion by 2015, Mr Jones said consumers are increasingly turning their backs on risky investments and those with spare cash are more likely to favour safer savings accounts over complicated investment products.
He said: “There is undoubtedly an opportunity for lenders to get the funds they need from the savings market. Consumers’ aversion to risk is a direct result of the credit crunch, and while the economy remains flat, fast access to savings will be a priority for many. Well-marketed products at the right rate will get the attention of consumers.”
According to figures from HML, nearly half of consumers favour financial products with low financial returns and high capital protection, compared with just 15 per cent who favour high financial returns with low capital protection.
Among internet users, 65 per cent own an instant access savings account, while a further 64 per cent do not own an investment product and 43 per cent would not invest in a product carrying risk.
Tim Purdon, managing director of Ayrshire-based Paladin Financial Services, said: “Many people are better off saving through bank accounts than getting involved in investments they do not understand.
“Banks could also offer better rates. In the old days commercial banks did not speculate on the markets and we need to return to that.”