Financial Strategy Segments (FSS)
Find out more about Experian's consumer financial behaviour and financial market analysis services.
FSS Interactive Guide
View our Financial Strategy Segments Interactive Guide to see some examples of pen profiles.
Unveiled: The changing financial face of Britain
London, 9th June 2011 — a three year study by Experian published today, reveals a seismic shift in financial attitudes and behaviour across the UK, following the longest recession in modern history. The first comprehensive analysis of its kind undertaken in the UK since the beginning of the credit crunch provides a detailed insight into how the recent economic downturn has had major consequences on the way consumers approach personal finance. Experian’s analysis shows that post-recession British consumers are hardened, more resilient and more financially savvy than ever before. On average, UK consumers are now better able to manage their money, are increasingly credit smart and have cut down on impulsive spending, with the analysis revealing:
- An increase in the number of consumers making their money last between paydays from 75% in 2008 to 81% today;
- An increase in responsible borrowers with 88% of UK consumers considering their ability to pay back credit before they make impulsive purchases compared to 83% in 2008;
- A fall in the number of people who are finding it a financial burden to keep up with bills and credit commitments from 16% pre recession to 12% post recession.
However, there are indications of cash flow struggles amongst certain social groups, with increasing numbers of consumers revealing that they are more than £1000 overdrawn (16% in 2011 vs 14% in 2008).
Covering every household in the UK, the research is based on Experian’s latest version of its financial classification tool, Financial Strategy Segments 2011 (FSS) with additional insight from YouGov financial surveys undertaken between 2008 and 2011. FSS is a unique people classification system which draws on over 300 data sources to divide the UK population into 14 main groups and 50 sub-types based on their attitudes to finance.
The young: increasingly credit smart
Whilst Experian’s analysis reveals that younger groups (aged between 18 and 30) have a requirement for short term credit and continue to use it in their daily lives:
- Young people are showing signs of becoming more efficient money managers with the percentage of individuals in this age group making their salaries last between paydays increasing from 63% pre recession to 77% in 2011.
- Credit awareness has increased, with the number of people considering taking credit without thinking about their ability to pay it back falling from 23% in 2008 to 15% today. This is most significant amongst the FSS 2011 classification of Young Essentials (young singles in their 20s on low incomes in rented accommodation making up 3.8% of the UK population), 18% of whom are now considering taking credit without thinking about the consequences compared to a substantial one in three (33%) in August 2008.
- Bright Futures (FSS group of young professionals in their 20s and early 30s building their careers and accounting for 5.4% of households in the UK) have remained fairly consistent in their attitudes towards financial planning pre and post recession with 18% revealing they would buy on credit without thinking about their ability to pay it back in 2008 falling to 16% thinking the same today.
Families: taking control of their finances
Families have been taking steps to manage their finances better and be more credit smart with only 14% buying things on credit without thinking about it, compared to 18% before the recession,
- However the amount of families that rely on credit for everyday living has increased slightly to 14% from 12% in August 2008.
- Consumers in the Balancing Budgets classification (middle years with average incomes and expenses) have been making the largest strides in managing their everyday finances with now only 10% struggling to last out until pay day (compared to 12% before the recession).
- Individuals in the Growing Rewards category (high income families in their 30s and 40s with growing children accounting for nearly 6% of all UK households) are some of the few to have increased their reliance on overdrafts of over £1000 (33%) compared to just 15% in August 2008. However there is a high level of optimism in this group with nearly two thirds (61%) believing their financial situation will become better in the next 12 months.
Average annual household incomes for this group range from £16,000 to £46,000 and financial provisions at this stage of life vary greatly with clear divisions between the wealthy retired and those that have less money:
- In general, the last few years have seen retirees maintaining a stable financial situation and they are far more able than younger generations to keep up with all of their outgoings - less than 2% say they fall behind with bills and credit commitments. They are also least likely to rely on an overdraft facility (76% do not have an overdraft facility compared to a national average of 56%).
- People in this age bracket are also more able to make their income stretch from month to month – and this has further improved since the beginning of the economic crisis (an increase from 84% in 2008 to 87% now). This may in part due to the fact that they have made a conscious effort to decrease reliance on credit (a fall from 8% to 5%) and have curbed their impulse shopping (a drop from 11% to 9%).
- Those in the Platinum Pensions social grouping (elderly people with good pensions accounting for 4.8% of UK households) have always been particularly good at limiting their impulse buying habits, but even this has now halved (2% vs 1%).
Nigel Wilson, Managing Director, Experian Marketing Information Services, UK and Ireland, comments:
“This study reflects the unprecedented changes that have happened to the UK economy over the past three years and our findings reveal that there is no one size fits all when it comes to the financial attitudes and behaviours of post recession UK consumers. Financial Strategy Segments paints a financial portrait of Britain today and, following the recession, the UK consumer has become more financially savvy and credit smart. Our analysis shows a greater emergence in the number of consumers ensuring that they make their money last until their next pay day and many more thinking twice before committing themselves to borrowing money that they might not be able to pay back.
“Our latest version of Financial Strategy Segmennts means that companies can have an even clearer view of consumers’ underlying financial attitudes, lifestyles and behaviours which is crucial to improve customer engagement and reach.”
Click here to view the 14 new groups and their key characteristics as identified by Experian