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Current Accounts - Ireland - August 2011

Since Mintel last examined the Irish current account market in 2009, the situation facing both consumers and financial services providers has changed considerably. Both have their respective problems to address.

Consumers' efforts to reduce expenditure and curtail outgoings are negatively impacting upon current account providers' cross-selling opportunities. Banks' efforts to repair their balance sheets mean higher charges, fees and overdraft rates on current accounts.

Although the Irish current account market is now well established and mature, it arguably lacks competitiveness. In contrast to the economic boom years when the arrival of overseas banks (including Halifax/Bank of Scotland and Postbank) brought intense competition to the RoI banking sector, this is no longer the case. Currently, only five financial institutions offer current account facilities to RoI consumers: Bank of Ireland, AIB, Ulster Bank, National Irish Bank and Permanent TSB. Although NI consumers have access to a far broader selection of current account providers, it remains the case that four banks – Northern Bank, Ulster Bank, First Trust Bank and Bank of Ireland – dominate NI's current account market.

Some questions answered in the report include:

  • Changing relationships – How has the relationship between Irish consumers and current account providers been affected by the events of the past couple of years?
  • Impact of the recession – In what way has the recession impacted upon demand for current accounts?
  • Evolving to meet consumer needs – How have the recession and financial crisis affected banks' current account product offerings, fees and service charges?
  • Preferred banking channels – What channels are consumers using to manage their current accounts? How has usage of online banking progressed?
  • What appeals to consumers – What features do consumers have on their current accounts? And what are they using current accounts for? What are the deciding factors when consumers are choosing a current account provider?

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Table of contents

  1. Issues in the Market

      • Key themes
        • Definitions
          • Data sources
            • Abbreviations
            • Insights and Opportunities

              • Premium accounts may yet find their niche among Irish consumers
                • Demographic changes to force a future shift in focus
                • Market in Brief

                  • Current account ownership approaches saturation
                    • Low level of trust among consumers in banks
                      • Banks 'spreading the net' wider in search of income
                        • Economic challenges to remain for foreseeable future
                          • Demographic changes pose challenges for providers
                            • Branches and online – preferred means of account management
                              • Interest on balance the most common feature
                                • Interest on credit balances the main deciding factor
                                  • High level of loyalty towards current account providers
                                    • Reluctance to accumulate debt or purchase with credit
                                    • Fast Forward Trends

                                        • Trend 1: Prepare for the Worst
                                          • What’s it about?
                                            • What we’ve seen
                                              • What next?
                                                • Trend 2: Decline of Deference
                                                  • What’s it about?
                                                    • What we’ve seen
                                                      • What next?
                                                      • Internal Market Environment

                                                        • Key points
                                                          • Banks losing the trust of Irish consumers
                                                            • Figure 1: Consumers agreeing with selected statements about trust, NI and RoI, 2011
                                                          • Middle-aged consumers have less trust
                                                            • Figure 2: Consumers who agree with the statement ‘I have trust in banks’, by age, NI and RoI, 2011
                                                            • Figure 3: Consumers who agree with the statement ‘I have trust in other financial institutions (eg Credit Unions, Post Office etc)’, by age, NI and RoI, 2011
                                                          • Consumers finding more cause for complaint
                                                            • Figure 4: Banking-related complaints lodged with Irish Financial Ombudsman, by type of complaint, RoI, 2010
                                                          • Preference for cash remains high
                                                            • Figure 5: Agreement with statement 'I like to pay cash for everything I buy', NI and RoI, 2006-10
                                                            • Figure 6: Percentage of all transactions that cash accounts for, UK, 1999, 2009 and 2018
                                                          • Are banks 'spreading the net' wider in search of income?
                                                            • The end of ‘free banking’ in RoI?
                                                              • Service charges can add up
                                                                • Figure 7: Overview of service charges and overdraft fees levied on current account holder, RoI, October 2011
                                                              • NI consumers face steeper service charges
                                                                • Figure 8: Overview of service charges and overdraft fees levied on current account holders, NI, October 2011
                                                              • High variation in interest charged on overdrafts
                                                                • Figure 9: Authorised overdraft interest rates, for selected banks, RoI, October 2011
                                                              • Higher variation in NI, despite lower rates
                                                                • Figure 10: Authorised overdraft interest rates, for selected banks, NI, October 2011
                                                              • NI banks presenting charges in clear English
                                                                • Interest on credit balances no longer common
                                                                • Broader Market Environment

                                                                  • Key points
                                                                    • Economic outlook remains uncertain
                                                                      • Figure 11: GDP growth, actual and forecast, UK, NI and RoI, 2009-12
                                                                    • NI
                                                                      • RoI
                                                                        • No easy solution to unemployment
                                                                          • NI
                                                                            • Figure 12: Employment and claimant count numbers, actual, estimated and forecast, NI, 2009-12
                                                                          • RoI
                                                                            • Figure 13: Employment, labour force and unemployment, RoI, actual, estimated and forecast, RoI, 2010-12
                                                                            • Figure 14: Unemployment rate, actual and forecast, RoI, 2009-12
                                                                          • Interest rates low and unappealing
                                                                            • Figure 15: Interest rates, actual and forecast, RoI and NI, 2011
                                                                          • Consumers' incomes under increasing pressure
                                                                            • Figure 16: Median gross weekly pay, NI, 2005-10
                                                                            • Figure 17: Median gross weekly earnings, RoI, 2006-11
                                                                          • Confidence at close to all-time lows
                                                                            • Figure 18: Expectations of how household financial position will fare in next 12 months, NI, June 2011
                                                                          • RoI confidence low, but better than in 2008
                                                                            • Figure 19: Consumer sentiment index, three-month moving average, RoI, 2002-11
                                                                          • Online access central to current account management
                                                                            • Figure 20: Consumers with broadband connection at home, RoI and NI, 2004-10
                                                                          • Demographic changes bring challenges
                                                                            • Figure 21: Population, by age, RoI, 2006-41
                                                                            • Figure 22: Population, by age, NI, 2008-58
                                                                          • Exodus of foreign nationals
                                                                            • Figure 23: Net migration, RoI and NI, 2000-10
                                                                          • Young fear having to leave Ireland
                                                                            • Figure 24: Consumers agreeing that ‘having to emigrate to find work/go to college’ most concerns them, by age, RoI and NI, 2011
                                                                        • Strengths and Weaknesses

                                                                          • Strengths
                                                                            • Weaknesses
                                                                            • Who’s Innovating?

                                                                              • Key points
                                                                                • Co-op Bank offers switchers £200
                                                                                  • Co-op Bank also appealing to football fans
                                                                                    • Santander offering rewards for loyal customers
                                                                                      • Northern Bank launches new smartphone app
                                                                                        • Evolving the mobile banking offering
                                                                                        • Market Size and Penetration

                                                                                          • Key points
                                                                                            • More than 6 million current accounts in Ireland
                                                                                              • Figure 25: Number of current accounts in issue, IoI, RoI and NI, 2005-15
                                                                                            • Current account ownership approaching saturation
                                                                                                • Figure 26: Current account ownership, NI and RoI, 2008 and 2010
                                                                                              • Ownership lowest among consumers aged 15-24
                                                                                                • Figure 27: Consumers with no current account, by age and socio-economic group, NI and RoI, 2010
                                                                                              • Lower ownership among the less affluent
                                                                                                • Ownership highest among married consumers
                                                                                                  • Figure 28: Current account ownership, by marital status, NI and RoI, 2010
                                                                                                • Little interest in premium and packaged accounts
                                                                                                  • Figure 29: Type of current account owned, NI and RoI, 2010
                                                                                              • Companies and Products

                                                                                                  • Figure 30: Profiled banks, 2011
                                                                                                • AIB
                                                                                                    • Figure 31: AIB current accounts, RoI, October 2011
                                                                                                    • Figure 32: AIB current account service charges, RoI, October 2011
                                                                                                  • Bank of Ireland
                                                                                                    • RoI
                                                                                                      • Figure 33: Bank of Ireland current account, RoI, October 2011
                                                                                                    • NI
                                                                                                      • Figure 34: Bank of Ireland current account portfolio, NI, October 2011
                                                                                                      • Figure 35: Bank of Ireland current account service charges, RoI, October 2011
                                                                                                      • Figure 36: Bank of Ireland service and overdraft charges, NI, October 2011
                                                                                                    • First Trust Bank
                                                                                                        • Figure 37: First Trust Bank current account portfolio, NI, October 2011
                                                                                                        • Figure 38: First Trust Bank current account service charges, NI, October 2011
                                                                                                      • HSBC
                                                                                                          • Figure 39: HSBC current account portfolio, UK (including NI), October 2011
                                                                                                        • National Irish Bank
                                                                                                            • Figure 40: National Irish Bank current accounts, RoI, October 2011
                                                                                                            • Figure 41: Northern Bank current account service charges, RoI, October 2011
                                                                                                          • Northern Bank
                                                                                                              • Figure 42: Northern Bank current accounts, NI, October 2011
                                                                                                              • Figure 43: Northern Bank current account service charges, NI, October 2011
                                                                                                            • Permanent TSB
                                                                                                                • Figure 44: PTSB current accounts, RoI, October 2011
                                                                                                                • Figure 45: PTSB current account service charges, RoI, October 2011
                                                                                                              • Santander
                                                                                                                  • Figure 46: Santander current account portfolio, UK (including NI), October 2011
                                                                                                                • Ulster Bank
                                                                                                                    • Figure 47: Ulster Bank current accounts, NI and RoI, October 2011
                                                                                                                    • Figure 48: Ulster Bank current account service charges, RoI, October 2011
                                                                                                                • The Consumer – How Accounts are Accessed

                                                                                                                  • Key points
                                                                                                                    • Branches retain role in current account management
                                                                                                                        • Figure 49: Financial transactions conducted through a branch, RoI, 2006 and 2010
                                                                                                                        • Figure 50: Financial transactions conducted through a branch, NI, 2006 and 2010
                                                                                                                      • Consumers particularly keen on branches when seeking advice
                                                                                                                          • Figure 51: Platform used to access financial advice, NI and RoI, 2006-10
                                                                                                                        • Telephone banking facilities losing relevance
                                                                                                                            • Figure 52: Financial transactions conducted via telephone, RoI, 2006 and 2010
                                                                                                                            • Figure 53: Financial transactions conducted via telephone, NI, 2006 and 2010
                                                                                                                          • Online emerging as preferred way to manage account
                                                                                                                              • Figure 54: Financial transactions conducted online, RoI, 2006 and 2010
                                                                                                                              • Figure 55: Financial transactions conducted online, NI, 2006 and 2010
                                                                                                                          • The Consumer – Features and Transactions

                                                                                                                            • Key points
                                                                                                                              • Interest on balance the most common feature
                                                                                                                                  • Figure 56: Features on main current account, NI and RoI, 2010
                                                                                                                                • Direct debit bill paying the most popular transaction
                                                                                                                                  • Figure 57: Transactions with main current account, NI and RoI, 2010
                                                                                                                                • ABC1s engage more with their current accounts
                                                                                                                                    • Figure 58: Consumers who have salary paid directly into main current account, by socio-economic background, NI and RoI, 2010
                                                                                                                                    • Figure 59: Consumers who conduct bill payments by direct debit through main current account, by socio-economic background, NI and RoI, 2010
                                                                                                                                • The Consumer – Factors When Choosing Current Account Provider

                                                                                                                                  • Key points
                                                                                                                                    • Interest rates most important factor when choosing bank
                                                                                                                                        • Figure 60: Most important factors when choosing a bank for a current account, RoI and NI, 2010
                                                                                                                                      • Locality a rising concern for Irish consumers
                                                                                                                                          • Figure 61: Consumers who mention 'Locality' as an important factor when choosing a bank for a current account provider, RoI and NI, 2002 and 2010
                                                                                                                                        • Growing concern about company reputation
                                                                                                                                            • Figure 62: Consumers who mention 'Locality' as an important factor when choosing a bank for a current account provider, RoI and NI, 2006 and 2010
                                                                                                                                          • Online facilities now central to consumers' selection
                                                                                                                                              • Figure 63: Consumers who mention 'Telephone/internet banking facilities' as an important factor when choosing a bank for a current account provider, RoI and NI, 2002-10
                                                                                                                                            • Personal recommendations becoming slightly more influential among RoI consumers
                                                                                                                                                • Figure 64: Consumers who mention 'Personal recommendation' as an important factor when choosing a bank for a current account provider, RoI and NI, 2008 and 2010
                                                                                                                                                • Figure 65: Consumers who mention 'Range of services' as an important factor when choosing a bank for a current account provider, RoI and NI, 2008 and 2010
                                                                                                                                              • Overdraft charges attracting more attention
                                                                                                                                                • Figure 66: Consumers who mention 'Overdraft charges' as an important factor when choosing a bank for a current account provider, RoI and NI, 2002-10
                                                                                                                                              • Most consumers choose own current account
                                                                                                                                                  • Figure 67: Who chose main current account, NI and RoI, 2010
                                                                                                                                              • The Consumer – Length of time Current Account Held

                                                                                                                                                • Key points
                                                                                                                                                  • Half of RoI consumers bank for more than a decade
                                                                                                                                                    • Figure 68: How long main current has been held, NI and RoI, 2010
                                                                                                                                                  • Age of account tends to correlate with age of consumer
                                                                                                                                                    • Evidence of higher loyalty among ABC1 consumers
                                                                                                                                                      • Figure 69: Consumers who have held their main current account for more than ten years, by socio-economic background, NI and RoI, 2010
                                                                                                                                                    • Even additional accounts tend to be 'long held'
                                                                                                                                                        • Figure 70: How long other (not main) current account held, NI and RoI, 2010
                                                                                                                                                    • The Consumer – Attitudes Towards Finance

                                                                                                                                                      • Key points
                                                                                                                                                        • Consumers reluctant to be in debt
                                                                                                                                                          • Figure 71: Agreement with selected statements relating to personal finance, RoI and NI, 2010
                                                                                                                                                        • Growing aversion to debt
                                                                                                                                                          • Figure 72: Agreement with the statement 'I don't like the idea of being in debt', NI and RoI, 2007-10
                                                                                                                                                        • Aversion to debt increases with age
                                                                                                                                                            • Figure 73: Agreement with statement 'I don't like the idea of being in debt', by age, NI and RoI, 2010
                                                                                                                                                          • High level of reluctance to shop on credit
                                                                                                                                                              • Figure 74: Agreement with statement 'If there's something I want, I save up for it', by gender, NI and RoI, 2010
                                                                                                                                                            • Growing awareness of personal finance among consumers
                                                                                                                                                                • Figure 75: Agreement with statement 'I am more aware of personal finance than I used to be', by age and socio-economic background, NI and RoI, 2010
                                                                                                                                                            • Consumer Target Groups

                                                                                                                                                              • Key points
                                                                                                                                                                • NI target groups
                                                                                                                                                                  • Figure 76: NI consumer typologies, 2010
                                                                                                                                                                • Financial Controllers
                                                                                                                                                                  • Disengaged
                                                                                                                                                                    • Traditionalists
                                                                                                                                                                      • Moderates
                                                                                                                                                                        • RoI target groups
                                                                                                                                                                          • Figure 77: RoI consumer typologies, 2010
                                                                                                                                                                        • Informed and Involved
                                                                                                                                                                          • Disinterested
                                                                                                                                                                            • Interested Observers
                                                                                                                                                                              • Relationship Seekers
                                                                                                                                                                              • Appendix

                                                                                                                                                                                • NI TGI
                                                                                                                                                                                  • Figure 78: Number of current or savings accounts held, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 79: Number of current accounts held, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 80: Own/joint account, by ownership, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 81: Type of current account owned (main account), by demographics, NI, 2010
                                                                                                                                                                                  • Figure 82: Type of current account owned (other accounts), by demographics, NI, 2010
                                                                                                                                                                                  • Figure 83: Features of main current account, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 84: Features of other current account, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 85: Transactions with main current accounts, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 86: Transactions with other current accounts, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 87: How long main current account has been held, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 88: How long other current account has been held, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 89: Who choose main current account, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 90: Who choose other current account, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 91: Consumers who have opened new current accounts, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 92: Most important factors when choosing a bank for a current account, by demographics, NI, 2010
                                                                                                                                                                                  • Figure 93: Most important factors when choosing a bank for a current account (continued), by demographics, NI, 2010
                                                                                                                                                                                • RoI TGI
                                                                                                                                                                                  • Figure 94: Number of current or savings accounts held, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 95: Number of current accounts held, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 96: Own/joint account, by ownership, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 97: Type of current account owned (main account), by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 98: Type of current account owned (other accounts), by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 99: Features of main current account, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 100: Features of other current account, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 101: Transactions with main current accounts, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 102: Transactions with other current accounts, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 103: How long main current account has been held, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 104: How long other current account has been held, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 105: Who choose main current account, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 106: Who choose other current account, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 107: Consumers who have opened new current accounts, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 108: Most important factors when choosing a bank for a current account, by demographics, RoI, 2010
                                                                                                                                                                                  • Figure 109: Most important factors when choosing a bank for a current account (continued), by demographics, RoI, 2010

                                                                                                                                                                              Companies Covered

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                                                                                                                                                                              Current Accounts - Ireland - August 2011

                                                                                                                                                                              £1,095.00 (Excl.Tax)