Austerity News: The Financial Crisis and the Digital Revolution

The financial crisis has transformed public interest in business and economic news. The severity of the crisis, and its direct effect on living standards, has led to people to search much more frequently for personal financial information. People are less certain where to turn to for reliable financial information. Trust in major financial institutions – and in the business press – has declined sharply.

One reaction to this development has been the increasing use of multiple online sources to seek out financial news. The internet is the most rapidly growing source of financial information. More people now look for financial information online than on television. The use of mobile internet devices to get instant business information is also growing fast, with half the population using smart phones in this way.

Changing nature of financial information seeking

There has been a dramatic shift in how often people search for financial information. In 2005, before the crash, most people were happy to keep up with financial matters on a monthly basis, and 40% never or rarely kept up at all; now, one-third are doing so on a daily basis, and more than three-quarters are doing so at least weekly.1

Looking for financial information: how often?

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Frequency 2005 2012 Difference
Weekly or more* 34 78 +44
At least monthly 24 11 -13
Less than monthly 19 N/a
Don’t keep up generally N/a 9
Never 23 2 -21
Q10b How often do you keep up with financial matters generally, such as the economy and the financial services sector?

Base % seeking financial information 2005 (n=5328) 2012 (n=2173)

*2012: Daily or more: 33%, Weekly or several times a week: 45%

As well as looking for financial information more frequently, people are also using many more sources to find it. Two new sources stand out. There has been a striking increase in the use of the internet; and there has also been a substantial increase in the number of people who are seeking financial information through face-to-face contact, such as with friends, colleagues, and advisers. The traditional offline media have seen far smaller increases – and while television has gained, printed newspapers do not seem to have benefited from the general trend.

Sources of information on financial matters

Q10c Which of the following sources of financial information do you use to get advice on personal financial matters?

2012 Base All (n=2173) 2005 (fieldwork June-Sept, n=5328); : Financial Services Authority, Levels of Financial Capability in the UK: Results of A Baseline Survey

The growing use of the internet for financial information is only one part of the trend to seek out multiple sources of information, but it is important. People who use the internet for news typically look at two or three different sources.

What is driving the search for more financial information?

The financial crisis has had a huge impact on public attitudes. The downturn in the UK has been deeper, and lasted longer, than the decline in economic output during the Great Depression of 1929–31. Household incomes have fallen for the first time in a generation, and are not expected to recover to their pre-crisis levels for a decade. Asset prices – housing and shares – have crashed, reducing wealth levels and further undermining confidence. There has been a sharp drop in consumer confidence and a high degree of pessimism about the future, with many households experiencing severe financial stress, with accompanying emotional and physical symptoms. Attitudes towards debt and borrowing have also undergone a sea-change.2 Those in financial stress are more likely to be following the news about the economy, and to want more information about how it will affect them personally. Public interest in the economy has not declined during the first five years of the crisis. According to research carried out by City University, levels of interest in the economic crisis are as high now as when it started in September 2008, when the collapse of the huge US investment bank Lehman Brothers triggered the global recession.3

People are not just interested in news about the economy generally. They are also interested in the fate of their own personal investments – something which becomes particularly urgent during a severe downturn. This type of information is more readily accessed on news websites than other types of financial news sources. For example, at the beginning of the financial crisis there was a big increase in viewers of the BBC News website, and a particularly sharp rise in the numbers who were looking at the live market data pages. In fact, during the three months from the collapse of Lehman, traffic to the market data pages made up 25% of all pages viewed.4

The severity of the crisis shattered trust in the high street banks. It led to greater uncertainty and fear in the public mood, as people are no longer clear where to turn to for financial advice. The decline in trust may help explain why more people turn both to personal contacts – friends and family – and to financial websites, where they can try to find more impartial advice.

Trust in financial institutions

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More Less Same Don’t know
Banks 3% 57% 36% 4%
Credit card 1% 49% 44% 6%
Pension 2% 44% 47% 7%
Insurance 2% 39% 54% 6%
IFAs 6% 33% 52% 9%
Building society 12% 31% 62% 5%
Price comparison websites 19% 14% 58% 8%
Q Thinking generally, in light of the recent economic crisis, when it comes to looking after your money do you trust the following types of company more, or less, or is there no difference?Fieldwork YouGov Omnibus online survey : February 2010, (n=2104)

It is not just the banks who are now trusted less, but the credibility gap has extended right across the financial sector, including pension funds, insurance companies, and credit card firms. The only sector that has not shown a decrease in trust is price comparison sites, which allow people to compare and choose financial products online.

Business journalists have also suffered a loss of reputation. Polling commissioned by City University found that 40% believe that journalists are not independent enough of businesses they cover, and half thought that they were not doing a good job explaining the financial crisis – with many confused by economic jargon. The greater uncertainty in times of crisis has also reinforced the importance of seeking news from well- trusted brands, with the BBC one of the main beneficiaries.5

Beyond the crisis, there are also deeper trends at work. The idea of a job for life, with an occupational pension and owner-occupation providing security in retirement, is a fading dream for the next generation. The role of the state had also been trimmed back even before the financial crisis, with individuals being expected to pay more of the full cost of their education, housing, and social care. The desire for financial information that is useful in planning for the future is increasing. The attitude change which the crisis has brought about has reinforced this trend. Fewer people believe that it is acceptable to live for the moment and more say they would rather save than spend.

Future trends in business and financial news

Will the shifting landscape of financial news and information be maintained after the financial crisis is over? Even if – and this is a big if – economic conditions return to normal, there are reasons to suppose that the shift to multiple, digital sources of business news will continue. This will provide both opportunities and threats to news providers.

The austerity forced on governments by the crisis is reinforcing the trend towards greater personal responsibility in financial matters. The advantage of the internet is that it provides real-time, detailed, and on- the-go personal financial information. One likely trend – already underway – is the increased personalisation of financial news, particularly on mobiles.

Another trend to watch is the growing convergence between seeking financial information, looking for financial products, and making online transactions. It could become only a short step from finding about interest rates changes to purchasing a mortgage. Already an increasing number of people use the internet for financial transactions generally – and for checking on financial product information. At the height of the boom, one-third of older people were tracking the value of their stocks online and one-quarter were executing transactions. (These numbers have declined significantly since the crash.) Independent financial advice is also increasingly found online.6

Enhanced financial news consumption has not been driven by social media. This could change if transactions become more integrated with financial information-seeking. Relying more on social media – recommendations from reliable sources – might close the trust gap. It may be that some types of online financial recommendation sites based on user experience will become more important, or that general financial news sites will offer this service.

The greater willingness of people to pay for online financial information will also boost investment by news organisations, although brand will continue to be very important – especially for more affluent readers (whose top news brands are the Financial Times and The Economist, both of which have made significant investments in their online offerings).

There is a danger that the future flow of financial information may become even more unevenly distributed. There are already two audiences for business and financial news, as our survey has shown – the more intense, better-off users who are interested in investment decisions, and many general readers who want to know how economic events will affect them personally. The increased use of pay-per-view news websites could mean that one part of the audience will have less access to real-time information than before. The gap between the specialist business press and general business audience – already large – could widen further.

Interest in business and financial news is also very unevenly distributed between different age groups, and between men and women. Will this trend persist in the future? At the moment older people, especially men, are the digital pioneers in seeking financial information online. Already we are seeing a narrowing gap in the level of interest in financial matters between men and women as they get older. So there are some grounds for optimism that permanent changes are occurring in attitudes and behaviour among under-served groups. Further changes will be necessary if the level of financial capability in the population as a whole is to rise to meet the growing challenges of the post-austerity economic landscape.

  1. The Reuters Digital Survey repeated three questions first asked in the baseline survey of financial capability carried out by the Financial Services Authority in 2005, concerning how often people kept up with financial matters, and what sources they used. The two surveys cannot be directly compared because of the different methodology (face-to-face as opposed to online). In particular, the numbers saying they accessed the internet need to be adjusted for the fact that just less than 80% of the population is online. So we need to be cautious about making direct comparisons between these two sets of figures. Even making these adjustments, however, the striking differences between the two surveys – one before and one after the financial crisis – are unlikely to be due purely to methodological differences, and it is a reasonable hypothesis to suggest there has been a major shift in public attitudes and behaviour in relation to financial information – something confirmed by other survey evidence.
  2. Adele Gritten, ‘New Insights into Consumer Confidence in Financial Services’, International Journal of Bank Marketing, 29/2 (2011), 90–106.
  3. Steve Schifferes, ‘Public Attitudes towards the Media during the Financial Crisis’, paper presented at a British Academy Conference: Soothsayers of Doom: The Media and the Financial Crisis in Comparative and Historical Perspective, London City University, Dec. 2011.
  4. Steve Schifferes, ‘Downloading Disaster: BBC News Online and the Financial Crisis’, Journalism, Theory, Practice, Criticism (special issue on the financial crisis, 2012).
  5. Schifferes, Steve, ‘Trust-meltdown for business journalism,’ British Journalism Review, (June 2012).
  6. See William Dutton, Eileen Helsper, and Monica Gerber, The Internet in Britain 2009 (Oxford: Oxford Internet Institute, 2009) and William Dutton and Grant Blank, Next Generation Users: The Internet in Britain in 2011 (Oxford: Oxford Internet Institute, 2011).