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Consumers and Retail Banking - UK - September 2017

“People who are considering switching banks are the most likely to opt in to sharing their financial data with third parties. This suggests that upcoming Open Banking regulations may help to boost competition in the retail banking sector, as those in the market for a new provider could be won over by personalised deals and a streamlined application process.
However, the implementation of Open Banking is unlikely to suddenly lead to a flurry of switching activity, with only 6% of current account holders saying they are ‘very likely’ to move banks in the next year.”
– Paul Davies, Senior Financial Services Analyst

This report looks at the following areas:

  • Switching bank: more hassle than it’s worth?
  • It’s not all about the money
  • The changing role of the bank

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Table of contents

  1. Overview

    • What you need to know
      • Scope of this Report
      • Executive Summary

          • The market
            • Regulators aim to boost competition
              • Aggregation could reduce the big banks’ advantage
                • Companies and brands
                  • Big banks remain dominant
                    • Figure 1: Top six main current account providers, by banking groups, June 2017
                  • The consumer
                    • Only a quarter of savers hold an account with another provider
                      • Figure 2: Financial product ownership and cross-sales, June 2017
                    • Less than one in five people are likely to switch banks
                        • Figure 3: Current account holders’ switching intentions, June 2017
                      • Half of consumers have no major frustrations with their bank
                        • Figure 4: Consumers’ frustrations with their main current account provider, June 2017
                      • Fees/charges have biggest influence on choice of current account
                        • Figure 5: Important factors when choosing a new current account provider, June 2017
                      • Nearly three in four people have concerns about switching bank
                        • Figure 6: Barriers to switching main current account provider, June 2017
                      • Two thirds of current account holders could be encouraged to share data
                        • Figure 7: Open Banking incentives, June 2017
                      • What we think
                      • Issues and Insights

                        • Switching bank: more hassle than it’s worth?
                          • The facts
                            • The implications
                              • It’s not all about the money
                                • The facts
                                  • The implications
                                    • The changing role of the bank
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Regulators aim to boost competition
                                            • Aggregation could reduce the big banks’ advantage
                                              • Low interest rates polarise consumers
                                                • Concerns over increased borrowing
                                                • Economic and Regulatory Environment

                                                  • Regulators aim to boost competition
                                                    • Aggregation could reduce the big banks’ advantage…
                                                      • …but will consumers opt in?
                                                        • Making the most of a challenging economic environment
                                                          • Figure 8: Headline CPI inflation and average weekly earnings (12-month percentage change), May 2014-May 2017
                                                        • Open Banking to open up opportunities
                                                        • Market Overview

                                                          • CASS has completed over 3.7 million switches
                                                              • Figure 9: Number of switches per month since launch of CASS, September 2013-May 2017
                                                            • Low interest rates polarise consumers
                                                              • Figure 10: UK interest rates, January 2012-May 2017
                                                            • Low rates disincentivise saving activity…
                                                              • …and encourage people to look beyond traditional savings products
                                                                • Figure 11: Impact of low interest rate on motivation to save and product choices/considerations, April 2017
                                                              • There is still a stigma associated with borrowing…
                                                                • …although some forms of debt are seen as more acceptable
                                                                  • Figure 12: Annual gross and net credit card lending, not seasonally adjusted, 2010-16
                                                                  • Figure 13: Annual gross and net other consumer credit lending, not seasonally adjusted, 2010-16
                                                                • Surge in remortgaging as borrowers look to lock in low rates
                                                                  • Figure 14: Gross and net mortgage lending, not seasonally adjusted, 2012-16
                                                              • Companies and Brands – What You Need to Know

                                                                • Big banks remain dominant
                                                                  • Reacting to consumers’ changing channel preferences
                                                                    • Cost pressures force banks to water down ongoing rewards
                                                                      • Nationwide becomes the industry’s largest ATL spender
                                                                      • Market Share

                                                                        • Big banks remain dominant
                                                                          • Figure 15: Top six main current account providers (including netted banking groups), June 2017
                                                                        • Nearly one in six people say Barclays is their main bank
                                                                          • Figure 16: Consumers' main current account provider, June 2017
                                                                      • Competitive Strategies

                                                                        • Reacting to consumers’ changing channel preferences
                                                                          • Digitising the bank branch
                                                                            • Lloyds
                                                                              • Nationwide
                                                                                • Figure 17: Nationwide NOW branch service
                                                                              • Santander
                                                                                • Iam Bank
                                                                                  • Switching pays off…
                                                                                    • …but cost pressures force banks to water down ongoing rewards
                                                                                      • The customer is king
                                                                                        • Royal Bank of Scotland
                                                                                          • Barclays
                                                                                            • Lloyds Banking Group
                                                                                              • Santander
                                                                                                • Challengers prepare for Open Banking
                                                                                                  • Starling Bank
                                                                                                    • Figure 18: Starling Bank app UI shown on an iPhone
                                                                                                  • Atom Bank
                                                                                                    • Monzo
                                                                                                      • Figure 19: Monzo prepaid debit card and mobile transaction notification
                                                                                                    • Bud Financial
                                                                                                        • Figure 20: Bud Financial app UI
                                                                                                    • Advertising and Marketing Activity

                                                                                                      • Nationwide becomes the industry’s largest ATL spender
                                                                                                        • Figure 21: Top 10 highest-spending retail banks/building societies for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, 2015-17*
                                                                                                      • Providers’ ATL campaigns focus on brand building
                                                                                                          • Figure 22: Top 10 highest-spending retail banks/building societies for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by product category, 2015-17*
                                                                                                        • TV accounts for nearly half of ATL expenditure
                                                                                                          • Figure 23: Top 10 highest-spending retail banks/building societies for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, May 2016-June 2017
                                                                                                        • Nielsen Ad Intel coverage
                                                                                                        • The Consumer – What You Need to Know

                                                                                                          • Open Banking could create a more open marketplace
                                                                                                            • Less than one in five people are likely to switch banks
                                                                                                              • Potential switchers may be put off
                                                                                                                • Half of consumers have no major frustrations with their bank
                                                                                                                  • A poor online service can be the catalyst for churn
                                                                                                                    • Fees/charges have biggest influence on choice of current account
                                                                                                                      • Two thirds of current account holders could be encouraged to share data
                                                                                                                      • Product Ownership and Cross-sales

                                                                                                                        • Current account ownership is near universal
                                                                                                                          • Figure 24: Current account ownership, June 2017
                                                                                                                        • Only a quarter of savers hold an account with another provider
                                                                                                                            • Figure 25: Financial product ownership and cross-sales, June 2017
                                                                                                                          • Open Banking could create a more open marketplace
                                                                                                                              • Figure 26: Repertoire of financial products owned, June 2017
                                                                                                                            • Nationwide and Halifax among the leaders at cross-selling
                                                                                                                                • Figure 27: Repertoire of financial products owned with main provider, by selected providers, June 2017
                                                                                                                            • Switching Intentions

                                                                                                                              • Less than one in five people are likely to switch banks…
                                                                                                                                • …but prompts could encourage more to review their accounts
                                                                                                                                  • Figure 28: Current account holders’ switching intentions, June 2017
                                                                                                                                • A third of Millennials are weighing up a move
                                                                                                                                    • Figure 29: Current account holders’ switching intentions, by generation, June 2017
                                                                                                                                  • HSBC customers frustrated by branch closures
                                                                                                                                      • Figure 30: Current account holders’ switching intentions, by main provider, June 2017
                                                                                                                                    • Potential switchers may be put off
                                                                                                                                      • Figure 31: Barriers to switching current account, by current account holders’ switching intentions, June 2017
                                                                                                                                  • Consumer Pain Points

                                                                                                                                    • Half of consumers have no major frustrations with their bank
                                                                                                                                        • Figure 32: Consumers’ frustrations with their main current account provider, June 2017
                                                                                                                                      • Millennials most likely to have frustrations with their bank
                                                                                                                                          • Figure 33: Proportion of consumers who have frustrations with their main current account provider, by generation, June 2017
                                                                                                                                        • A poor online service can be the catalyst for churn
                                                                                                                                        • Important Factors when Choosing Provider

                                                                                                                                          • Fees/charges have biggest influence on choice of current account
                                                                                                                                            • Figure 34: Important factors when choosing a new current account provider, June 2017
                                                                                                                                          • Interest rates are low on young consumers’ priority list
                                                                                                                                            • Figure 35: Important factors when choosing a new current account provider, by age, June 2017
                                                                                                                                          • Opening offers most likely to influence potential switchers
                                                                                                                                              • Figure 36: Important factors when choosing a new current account provider, by consumers who are ‘very likely’ to switch current account provider in the next 12 months, June 2017
                                                                                                                                          • Barriers to Switching

                                                                                                                                            • Nearly three in four people have concerns about switching bank
                                                                                                                                              • Consumers are still sceptical
                                                                                                                                                  • Figure 37: Barriers to switching main current account provider, June 2017
                                                                                                                                                • Time is of the essence for Millennials
                                                                                                                                                  • Figure 38: Barriers to switching main current account provider, by generation, June 2017
                                                                                                                                              • Open Banking Incentives

                                                                                                                                                • Two thirds of current account holders could be encouraged to share data
                                                                                                                                                  • Getting a good value exchange
                                                                                                                                                    • Figure 39: Open Banking incentives, June 2017
                                                                                                                                                  • Financial support
                                                                                                                                                    • Personalised offers
                                                                                                                                                      • Figure 40: Tail screenshot and example of a notification when paying via Starling Bank
                                                                                                                                                    • Fast approval
                                                                                                                                                      • Potential switchers are the most engaged in Open Banking
                                                                                                                                                        • Figure 41: Proportion of consumers who could be encouraged to share data in exchange for any of the surveyed incentives, by likeliness of switching current account provider, June 2017
                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                        • Abbreviations
                                                                                                                                                          • Consumer research methodology

                                                                                                                                                          Companies Covered

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

                                                                                                                                                          Consumers and Retail Banking - UK - September 2017

                                                                                                                                                          US $2,914.30 (Excl.Tax)