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Consumers and Retail Banking - UK - September 2015

“Mobile and online are the most frequently used banking services, but far from gathering dust, branches are supporting a resurgence in trust for banks as time distances them from the financial crisis. The decision on whether to innovate or integrate with existing technologies can mean the difference between grief and glory for the main banks. The sale of TSB marks the beginning of a shift in the landscape, with the dominant banking groups finding a growing number of determined challengers waiting in the wings.”
– Patrick Ross, Financial Services Analyst

This report looks at the following areas:

  • Making the best return on tech strategies will make all the difference
  • Cost sensitivity is one of few factors that can drive customers away
  • Loyalty has few rewards, encouraging customers to look for better deals

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • Consumer credit is once again a key focus for banks
              • Figure 1: Growth rates for personal deposits, mortgage lending and consumer credit among the main high street banks*, 2009-15
            • Companies and brands
              • High concentration continues to define UK retail banking
                • Figure 2: Main banking groups, by aggregated share of main current account market, May 2015
              • Banks split on branch and tech strategies
                • Banks make the most of TV advertising to get their message across
                  • Figure 3: Recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2013-15
                • The consumer
                  • The majority have just one current account
                    • Figure 4: Number of current accounts owned, May 2015
                  • 71% of current account holders use four or more banking services
                    • Figure 5: Number of different types of banking services used, May 2015
                  • Banks must keep a close eye on cost sensitivity
                    • Figure 6: Attitudes towards switching and value, May 2015
                  • Convenience reigns when it comes to banking preferences
                    • Figure 7: Attitudes towards banking channels, May 2015
                  • Excessive charges and data breaches get under customers’ skin
                    • Figure 8: Consumer concerns over various issues in the financial services industry, May 2015
                  • Trust is on the up, with branches acting as a driving force
                    • Figure 9: Proportion of people with any trust in different elements of the banking industry, June 2014 and May 2015
                  • Customers are not convinced banks have their best interests at heart
                    • Figure 10: Agreement with statements concerning different concepts of trust in retail banking, May 2015
                  • What we think
                  • Issues and Insights

                    • Making the best return on tech strategies will make all the difference
                      • The facts
                        • The implications
                          • Cost sensitivity is one of few factors that can drive customers away
                            • The facts
                              • The implications
                                • Loyalty has few rewards, encouraging customers to look for better deals
                                  • The facts
                                    • The implications
                                    • The Market – What You Need to Know

                                      • Consumer credit gets competitive
                                        • Banks are growing overdrafts and loans at the same rate as credit cards
                                        • Market Overview

                                          • Growth in consumer credit borrowing overtakes personal deposits
                                            • Figure 11: Growth rates for personal deposits, mortgage lending and consumer credit among the main high street banks*, 2009-15
                                          • Banks clash with specialist lenders over booming credit market
                                            • MMR slows growth in mortgage lending
                                              • Growth in overdrafts and loans is back in line with credit cards
                                                • Figure 12: Growth rates for credit card lending and personal loans & overdrafts among the main high street banks*, 2009-15
                                            • Companies and Brands – What You Need to Know

                                              • High concentration continues to define the market
                                                • The relative importance of technology and branch networks divides opinion
                                                  • Year-on-year adspend is on the up, and heavyweights use TV to get their message across
                                                  • Retail Banking Providers: Market Share

                                                    • High concentration prevails despite spin-off activity
                                                      • Figure 13: Current account providers, by share of main and other current account market, May 2015
                                                    • Challenger brands fight for a small share
                                                      • Switching service is benefiting established providers more than new entrants
                                                        • Lloyds Banking Group stays dominant despite loss of TSB
                                                          • Figure 14: Main banking groups, by aggregated share of main current account market, May 2015
                                                      • Company Strategies

                                                        • Branching out or going without?
                                                          • Barclays
                                                            • HSBC
                                                              • Metro Bank
                                                                • TSB
                                                                  • Atom Bank
                                                                    • Innovate or integrate?
                                                                      • Apple
                                                                        • Barclays
                                                                          • Banks get personal to win wary customers
                                                                            • Yorkshire Bank and Clydesdale Bank
                                                                              • Tesco Bank
                                                                                • TSB
                                                                                • Brand Communication and Promotion

                                                                                  • Barclays cranks up the pressure with growing adspend…
                                                                                    • Figure 15: Top 15 highest spenders for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, 2013-15
                                                                                  • …and TV takes the starring role
                                                                                    • Figure 16: Recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2013-15
                                                                                  • Banks use digital media to support personal focus
                                                                                    • Search is crucial in gaining share of voice
                                                                                      • Note on NMR Data
                                                                                      • The Consumer – What You Need to Know

                                                                                        • Attractive credit card and mortgage deals hamper banks’ cross-selling
                                                                                          • 92% of banking customers say they use in-branch counter services
                                                                                            • Cost sensitivity is high when it comes to banking products
                                                                                              • Employed 16-34s are leading the charge for ultimate convenience
                                                                                                • Excessive charges and neglecting existing customers get the thumbs down
                                                                                                  • Trust in banks is rising and branches have a key role to play
                                                                                                    • Only half of customers feel banks have their best interests at heart
                                                                                                    • Product Ownership and Cross-sales

                                                                                                      • The majority have just one current account
                                                                                                        • Figure 17: Number of current accounts owned, May 2015
                                                                                                      • Savings accounts remain the most cross-sold product but rate rises could drive more switching
                                                                                                        • Mortgage and credit card deals have encouraged customers to look elsewhere
                                                                                                            • Figure 18: Financial services product ownership and cross-sales, May 2015
                                                                                                          • Credit card loyalty wanes as current account holders age
                                                                                                            • Figure 19: Credit card ownership among women, by provider and age group, May 2015
                                                                                                          • Banks have missed out on mortgages from 35-44-year-old customers
                                                                                                              • Figure 20: Mortgage ownership, by provider and age group, May 2015
                                                                                                          • Frequency of Banking Service Use

                                                                                                            • 92% of current account holders use in-branch counter services
                                                                                                              • Telephone services still have a role to play…
                                                                                                                • Figure 21: Banking services, by frequency of use, May 2015
                                                                                                              • …but online and mobile services are used more often
                                                                                                                • Figure 22: Proportion of current account holders that use each banking service provided by their main current account provider two or three times a month or more often, by age, May 2015
                                                                                                              • 71% of current account holders use four or more banking services
                                                                                                                • Figure 23: Number of different banking services used, May 2015
                                                                                                            • Attitudes towards Switching and Value

                                                                                                              • Current account holders reveal sensitivity over cost…
                                                                                                                  • Figure 24: Attitudes towards switching and value, May 2015
                                                                                                                • …and experience does little to break this down
                                                                                                                  • Figure 25: Agreement with the statements ‘I don’t believe banking is ever really free’ and ‘I’d switch accounts if my bank ever tried to charge me a monthly fee’, by age, May 2015
                                                                                                              • Attitudes towards Banking Channels

                                                                                                                • Convenience reigns when it comes to banking preferences
                                                                                                                  • Human interaction remains a key part of branch banking experience
                                                                                                                      • Figure 26: Attitudes towards banking channels, May 2015
                                                                                                                    • 16-34s will demand a more flexible branch service
                                                                                                                      • Figure 27: Agreement with the statement ‘I would make use of bank services offered in different locations (ie supermarket, from a vehicle)’, by age, May 2015
                                                                                                                  • Level of Concern over the Industry’s Failings

                                                                                                                    • Charges and data breaches are key customer concerns…
                                                                                                                      • …while mis-selling continues to cloud perceptions of the industry
                                                                                                                        • Figure 28: Consumer concerns over various issues in the financial services industry, May 2015
                                                                                                                      • Rewarding only new customers is starting to get old
                                                                                                                        • Figure 29: Credit card ownership, by proportion concerned by better deals offered to new customers only, May 2015
                                                                                                                    • Trust in Different Elements of the Banking Industry

                                                                                                                      • Local branches play a key role in maintaining customer relationships…
                                                                                                                        • …but call centre staff find it harder to build trust
                                                                                                                          • Scepticism increases at corporate and industry level
                                                                                                                            • Figure 30: Trust in different elements of the banking industry, May 2015
                                                                                                                          • Overall trust levels are improving year on year in all areas
                                                                                                                            • Figure 31: Proportion of people with any trust in different elements of the banking industry, June 2014 and May 2015
                                                                                                                        • Different Concepts of Trust in Retail Banking

                                                                                                                            • Customers are confident their banks are here for good…
                                                                                                                              • …but the majority are not convinced banks have their best interests at heart
                                                                                                                                  • Figure 32: Different concepts of trust in retail banking, May 2015

                                                                                                                              Companies Covered

                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                              Consumers and Retail Banking - UK - September 2015

                                                                                                                              £2,195.00 (Excl.Tax)