Imagine you are the chief executive of a financial services institution, bank or insurance provider and consider the possibilities presented by the following consumer market.
Anything between three and six million individuals in the UK.
Eighty per cent from the desirable ABC1 economic group.
Estimated collective disposable income of £10bn a year.
Fifty-three per cent regularly accessing the internet, with around 33 per cent conducting their banking online.
Brand loyalty seen as the single most tangible distinction between this and other markets.
You may be surprised to know that financial institutions have historically chosen to discriminate against – rather than cultivate – this lucrative group of consumers. When I tell you that this market is the UK's lesbian and gay community – the so-called pink economy – you may not be so surprised.
Queercompany, a lesbian and gay consumer brand which looks set to become the homosexual equivalent of what Virgin is to heterosexual consumers, published research into services offered to gay consumers by financial institutions earlier this year. In a blaze of publicity, the research showed how, contrary to many reports, the industry simply has not woken up to the pink pound.
Queercompany managing director Wanda Goldwag is amazed at the casual way in which institutions dismiss this market based on incorrect actuarial assessment. She says they happily admit that they do not provide insurance to gay men or life cover for same-sex couples because of risk assessment difficulties.
Ignorance, rather than prejudice, has probably played a bigger role historically – although there has been a quite a lot of the latter as well. The problem is that research into the UK's gay market is sketchy and based largely on US findings. However, this information deficit is set to change very quickly because of three recent key developments.
First, a credit card for lesbian and gay consumers, the Queercard, was launched by Queercompany on October 15. For each card taken out, a donation is made to Stonewall, the biggest UK organisation campaigning for social justice and legal equality for lesbians, gay men and bisexuals.
The card has had 12,000 applications already and should provide an indication of the massive clout held by the gay community and generic details about its spending habits.
Second, Stonewall launched the Diversity Champions project at a reception at the CBI on October 18.
This is an initiative in partnership with leading FTSE 100 employers including HSBC, Barclays, Credit Suisse and JP Morgan to realise the potential of gay people as employers and consumers.
The scheme helps companies develop best practice in challenging sexual orientation discrimination at work. Member organisations gain advice on recruitment and retention, developing and implementing inclusive diversity policies and tapping into the benefits of the pink pound.
Speaking at the launch, Cabinet Office minister Baroness Morgan outlined how the scheme will help employers prepare for compliance with the EU equal treatment directive, which comes into force in 2003 and will outlaw sexual orientation discrimination.
CBI head of employee relations Dominic Johnson underlined how supporting diversity makes good business sense and helps employers win the war for talent.
And there's more. Data collected and prepared for Stonewall by ID shows that 80 per cent of lesbian and gay people are likely or more likely to buy from a company that is perceived as gay-friendly and that a similar number see sponsorship of gay events and festivals as important in deciding whether a company is gay-friendly.
This has not gone unnoticed by clever institutions which are promoting their gay-friendly credentials in terms of products and employment best practice through integrated public relations strategies, including direct marketing and advertising to the gay community as well as sponsorship of gay festivals and events.
Bristol & West Building Society is embarking on an advertising campaign targeted at gay people. In New York, Citibank sponsored this year's Gay Pride event and launched its new Rainbow credit card for lesbian and gay customers.
Stonewall's Debbie Gupta believes the financial services industry is beginning to appreciate that gay-friendly policies are not simply nice add-ons – the first thing to be dumped in a recession – or as the domain of their communications or corporate giving departments. She says equality and diversity is a business tool to gain commercial advantage over competitors for a share of a lucrative market.
She points out that members of Diversity Champions are looking to host a conference next year in association with the British Bankers Association to look at ways of attracting this untapped market.
Finally, in September and with wide media support, the Greater London Authority became the first public body to introduce a civil partnership register for same-sex and opposite-sex couples. Although such registrations will not have immediate legal effect, this is the first time in the UK that a public body has provided such registration for same-sex couples.
It is believed that the London model will become an example for other cities and will speed up an adoption of legislation providing civil partnerships for same-sex couples.
In the House of Commons on October 24, Labour MP Jane Griffiths introduced the Relationships (Civil Registration) Bill under the Ten Minute Rule procedure and, early next year, Lord Lester of Herne Hill will introduce a similar Civil Partnerships Bill in the House of Lords.
The Government does not oppose either of these bills and it could be that recognition of same-sex partners in terms of, for example, inheritance tax and pensions, will become law. These developments can only raise the profile and understanding of the nature and extent of the pink economy.
Already, a few are ahead of the game. In terms of products, CIS is still one of the few insurers that accepts joint applications for life insurance from same-sex couples so long as there is an insurable interest. CIS adopts a generic inclusive policy rather than targeting particular groups because of its socially-accountable approach. CIS says a consequence of this is that it will serve groups that other companies reject.
In the banking world, Barclays is now seen widely as a leader in employment best practice in this area. For example, employees in same-sex partnerships whose partners accompany them on overseas assignments are treated the same as married couples in allowance terms. It offers lesbian and gay awareness training, a support network for gay staff and a review of harassment and bullying procedures.
Barclays' commitment comes from the top. Barclaycard chief executive Gary Hoffman says he took on the role of sexual orientation champion because he felt that attitudes towards sexual orientation constitute one of society's biggest challenges in the area of equality and diversity. He believes that resolving the issues facing gays and lesbians will go a long way to solving many behavioural barriers faced by other groups.
The biggest and the best are now making massive headway to plug into this lucrative market. The message for financial institutions is simple – get savvy about the pink economy or be left behind.
Prejudice-free financial services are good for UK plc. I ask you to encourage those financial institutions with which you deal, whether as customer, employee or as an IFA, to sign up to Stonewall's Diversity Champions initiative. As someone who advises Stonewall as well as clients in the financial sector, I would be very interested to hear your views.
Richard Jarman is account director at Consolidated Communications