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Deposit and Savings Accounts - UK - April 2012

“Our research suggests that many people are baffled by the number of different savings accounts and rates on offer. Any attempts by providers to simplify their product ranges or to introduce applications that help people quickly and easily navigate the maze of choices would be welcomed by customers. At the same time, maintaining a competitive rate and good customer communications will also help retention levels.”

– Sarah Hitchcock, Senior Analyst – Financial Services

Some questions answered in this report include:

  • How large is the retail savings market and how has it performed recently?
  • How competitive is the retail savings landscape?
  • Which sectors of the market are seeing the greatest inflows of money?
  • How is the rival equity asset class faring?

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Table of contents

  1. Introduction

      • Report scope and product definitions
        • Key data sources and BBA product categories
          • Abbreviations
          • Executive Summary

              • The market
                • Retail savings balances grew by 3% in 2011
                  • Figure 1: Forecast of retail savings balances, at current prices – fan chart, 2006-16
                • Sub-sector performance
                  • Size of the ‘saver’ population
                    • Figure 2: Estimated number of retail savers in the UK, by type of account held, February 2012
                  • Market factors
                    • Macroeconomic conditions are not currently conducive to saving
                      • Pricing and average returns
                        • Competition from other asset classes
                          • Companies, brands and innovation
                            • Largest providers of savings accounts
                              • Figure 3: Top six providers of savings accounts, by estimated share of ‘main account’ customers, February 2012
                            • Product innovation
                              • Distribution mix favours online
                                • Figure 4: Channel most used to access savings account, by type of account, February 2012
                              • Industry adspend totalled £83 million in 2011
                                • The consumer
                                  • An easy-access account is the most widely held savings product
                                    • Figure 5: Ownership of cash savings products, February 2012
                                  • More than a quarter of adults have investible assets worth over £10,000
                                    • Figure 6: Total value of savings and investments, February 2012
                                  • Most people have a clear reason for saving – even if it’s just for their peace of mind
                                    • Figure 7: Main reasons for saving, February 2012
                                  • Many savers are unimpressed by the savings rates currently on offer
                                    • Figure 8: Agreement with statements about savings behaviour and attitudes, February 2012
                                  • What we think
                                  • Issues in the Market

                                      • How large is the retail savings market and how has it performed recently?
                                        • How competitive is the retail savings landscape?
                                          • Which sectors of the market are seeing the greatest inflows of money?
                                            • How is the rival equity asset class faring?
                                            • Future Opportunities

                                                • Develop apps that help people quickly and easily identify the best product for them
                                                  • Grabbing the attention of the under-35s with the right savings message
                                                  • Internal Market Environment

                                                    • Key points
                                                      • Low base rate is not conducive to saving
                                                        • Figure 9: Average annual changes in the Bank of England base rate, CPI and RPI – UK, 2003-12
                                                      • March 2012 budget offered no change to the ISA rules
                                                        • Regular savings and fixed-term bonds offer the best rates of return
                                                          • Figure 10: Average monthly quoted deposit interest rates, January 2004-January 2012
                                                        • Savings ratio has picked up since the financial crisis
                                                          • Figure 11: Gross household savings and saving ratio, seasonally adjusted and at current prices, 2006 Q1-2011 Q4
                                                      • Broader Market Environment

                                                        • Key points
                                                          • Summary of the main macroeconomic indicators impacting on the consumer credit market
                                                            • Household income squeeze set to continue into 2012
                                                              • Figure 12: Monthly change in RPI and average weekly earnings, January 2008-January 2012
                                                            • Consumer sentiment still very pessimistic
                                                              • Figure 13: UK consumer confidence, March 1998-February 2012
                                                            • Both saving and spending confidence remain weak
                                                              • Figure 14: Saving and spending confidence, March 2001-February 2012
                                                            • Two fifths of people have ‘added to their savings’ in the past three months
                                                              • Figure 15: Usage of disposable income – recent past and near future, February 2012
                                                          • Competitive Context

                                                            • Key points
                                                              • Cash ISAs represent the main rival product
                                                                • Figure 16: Value of new ISA subscriptions, 2003/04-10/11
                                                              • Ownership of the most common types of saving and investment product
                                                                • Figure 17: Ownership of savings and investments, by asset type, November 2011
                                                              • Low returns on cash savings prompt more people to invest in equities
                                                                • Figure 18: FTSE 100 and FTSE All-Share – daily index movements, January 2003-February 2012
                                                            • Market SWOT Analysis

                                                                • Figure 19: Retail savings accounts – SWOT analysis, 2012
                                                            • Who’s Innovating?

                                                              • Key points
                                                                • Virgin Money aims to offer savers “good value”, with the launch of two new accounts
                                                                  • Other new issues in the easy-access domain
                                                                    • New accounts with restrictions on withdrawals
                                                                      • Providers use higher-paying fixed-term bonds to entice savers
                                                                        • Halifax launches monthly prize draw to ‘get Britain saving’
                                                                          • High-paying regular saving accounts
                                                                          • Market Size and Forecast

                                                                            • Key points
                                                                              • Retail deposits worth over £1.1 trillion
                                                                                • Figure 20: Retail savings balances outstanding, by sector, 2003-11
                                                                              • Savers are looking beyond instant access accounts to improve their returns
                                                                                • Figure 21: Volume and value of individual interest-bearing current and deposit accounts (MBBGs only), 2003-10
                                                                              • Retail savings industry serves a large customer base
                                                                                • Figure 22: Estimated number of retail savers in the UK, by type of account, February 2012
                                                                              • Forecast
                                                                                • Figure 23: Forecast of total retail savings balances, at current prices – fan chart, 2006-16
                                                                                • Figure 24: Forecast of total retail savings balances, 2011-16
                                                                              • Forecast methodology
                                                                                • Fan chart explanation
                                                                                • Market Share

                                                                                  • Key points
                                                                                    • Lloyds Banking Group is number one in the savings account market
                                                                                      • Figure 25: Ranking of largest providers of savings accounts, by product sector, February 2012
                                                                                    • Provider rankings based on overall retail savings balances
                                                                                      • Figure 26: Providers’ total retail savings balances, shown on a group basis – UK, 2010-11
                                                                                  • Companies and Products

                                                                                      • Lloyds Banking Group
                                                                                        • RBS Group
                                                                                          • Santander
                                                                                            • Barclays
                                                                                              • HSBC
                                                                                                • Nationwide Building Society
                                                                                                • Brand Communication and Promotion

                                                                                                  • Key points
                                                                                                    • Greater adspend on cash savings products since 2007
                                                                                                      • Figure 27: Total advertising expenditure on cash savings products, 2007-11
                                                                                                    • Cash ISAs accounted for two fifths of sector adspend in 2011
                                                                                                      • Figure 28: Total advertising expenditure on cash savings products, by product type, 2007-11
                                                                                                    • The press claim the largest share of sector adspend
                                                                                                      • Figure 29: Distribution of adspend on cash savings products, by media type, 2009-11
                                                                                                    • Halifax was the highest-spending advertiser in 2011…
                                                                                                      • Figure 30: Top ten advertisers of savings accounts (excluding cash ISAs), 2009-11
                                                                                                    • … and in the cash ISA market too
                                                                                                      • Figure 31: Top ten advertisers of cash ISAs, 2009-11
                                                                                                  • Channels to Market

                                                                                                    • Key points
                                                                                                      • The branch remains an important sales channel…
                                                                                                        • Figure 32: UK bank and building society combined branch networks, 1998-2010
                                                                                                      • … but online is now the preferred channel to access a savings account
                                                                                                        • Figure 33: Channel most used to access savings account, by type of account held, February 2012
                                                                                                    • Ownership of Savings Accounts

                                                                                                      • Key points
                                                                                                        • Survey background
                                                                                                          • Four in five UK adults have some form of cash savings product
                                                                                                            • Figure 34: Ownership of cash savings products, February 2012
                                                                                                          • Over-55s record the highest take-up rates…
                                                                                                            • Figure 35: Ownership of cash savings products, February 2012
                                                                                                          • … due to their greater asset holdings
                                                                                                            • Figure 36: Value of investible assets, by age and gender, February 2012
                                                                                                          • Fixed-rate bonds and notice accounts appeal most to those with substantial assets
                                                                                                            • Figure 37: Value of investible assets, by type of savings product owned, February 2012
                                                                                                        • Saving Motivations

                                                                                                          • Key points
                                                                                                            • Building up an ‘emergency fund’ is the top reason for saving
                                                                                                                • Figure 38: Main reasons for saving, February 2012
                                                                                                              • Retirement is a more pressing concern among the over-55s
                                                                                                                • Figure 39: Main reasons for saving, by gender and age group, February 2012
                                                                                                              • Motivations vary depending on the type of account held
                                                                                                                • Figure 40: Main reasons for saving, by type of account held, February 2012
                                                                                                              • Wealthier savers are looking for products that offer tax benefits
                                                                                                                • Figure 41: Main reasons for saving, by value of investible assets, February 2012
                                                                                                            • Saving Behaviour and Attitudes

                                                                                                              • Key points
                                                                                                                • Most savers are disappointed by the rates of returns they are getting
                                                                                                                    • Figure 42: Agreement with statements about savings behaviour and attitudes, February 2012
                                                                                                                  • The over-55s are more likely to scrutinise the savings rates they are getting
                                                                                                                    • Figure 43: Agreement with statements about savings behaviour and attitudes, by gender and age group, February 2012
                                                                                                                • Appendix – Market Forecast

                                                                                                                    • Figure 44: Forecast of total retail savings balances, best and worst case scenario, 2011-16
                                                                                                                • Appendix – Market Share

                                                                                                                    • Figure 45: Comparison of customer profiles for the top seven providers of savings accounts, February 2012
                                                                                                                • Appendix – Ownership of Savings Accounts

                                                                                                                    • Figure 46: Ownership of savings accounts, by product type and demographic sub-group, February 2012
                                                                                                                  • Profile of savings account holders
                                                                                                                    • Figure 47: Demographic profile of savings account holders versus total sample, February 2012
                                                                                                                  • Value of investible assets
                                                                                                                    • Figure 48: Value of savings and investments, by demographic sub-group, February 2012
                                                                                                                • Appendix – Saving Motivations

                                                                                                                    • Figure 49: Top seven reasons for savings, by demographic sub-group, February 2012
                                                                                                                • Appendix – Saving Behaviour and Attitudes

                                                                                                                    • Figure 50: Saving behaviour and attitudes, by demographic sub-group, February 2012
                                                                                                                    • Figure 51: Saving behaviour and attitudes, by demographic sub-group continued, February 2012
                                                                                                                    • Figure 52: Saving behaviour and attitudes, by demographic sub-group continued, February 2012

                                                                                                                Companies Covered

                                                                                                                • Alliance & Leicester
                                                                                                                • Bank of England
                                                                                                                • Barclaycard
                                                                                                                • Barclays Bank plc
                                                                                                                • Bradford & Bingley plc
                                                                                                                • Derbyshire Building Society
                                                                                                                • Dunfermline Building Society
                                                                                                                • First Direct
                                                                                                                • Grupo Santander Central Hispano S.A.
                                                                                                                • HBOS plc (Halifax Bank of Scotland)
                                                                                                                • HSBC Private Bank (UK) Limited
                                                                                                                • Lloyds Banking Group
                                                                                                                • Nationwide Building Society
                                                                                                                • NatWest
                                                                                                                • Nokia Corporation (UK)
                                                                                                                • Portman Building Society
                                                                                                                • Research in Motion Uk Ltd.
                                                                                                                • Royal Bank of Scotland Group plc
                                                                                                                • Scottish Widows Bank plc

                                                                                                                Deposit and Savings Accounts - UK - April 2012

                                                                                                                US $2,672.70 (Excl.Tax)