It showed volumes of direct mail from banks dropped by 40% between January and March this year. Volumes were at 91.8m items compared to 153m in the same period last year.

According to Vertis Leicester managing director Richard Husband, reasons for the decline include financial services companies exploring alternative channels and regulatory changes.

"Budgets are not increasing in this sector but being squeezed," he said. "We are seeing a reduction in financial services but there are other sectors where there
is growth."

The figures follow news that the some financial services firms were examining ways to combine campaigns with transactional mail. Bristol-based DSTi was speaking to its customers about reducing inserts and mail shots and saving DM spend by 30% (PrintWeek, 16 June).

Husband added that the direct mail industry was becoming increasingly segmented.

His views are supported by the DMIS survey, which found that elsewhere the picture was "largely encouraging". Government mailings increased by 36.2% to 24.7m with volume in the health sector up by 26.7% to 13m. Charities' use of direct mail was also on the up, increasing by 11.7% to 84.2m items.

"The full extent of the cutback by the banks, while going against the
first quarter trend in the financial sector, fits in with what the industry has been telling us," said DMIS managing director Jo Howard-Brown. "There is general retrenchment going on and no one is quite sure how temporary or otherwise it may be."

Story by Philip Chadwick