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Deposit and Savings Accounts - UK - April 2015

“Although most savers say they are prepared to switch savings provider to receive a better rate, less than a third actually did so in the last year or so. With interest rates so low across the board, the cash benefit of switching accounts is usually marginal for all but the heaviest savers.”

– Chryso Kolakkides, Senior Financial Services Analyst

This report covers the following issues:

  • PFM apps have growth potential in the UK
  • Low switching in the savings market gives banks the opportunity to compete on non-price factors

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Table of contents

  1. Introduction

      • Report scope and definitions
      • Executive summary

          • The market
            • Mintel forecasts a steady growth in retail deposits over the next five years
              • Figure 1: Forecast of retail savings balances, fan chart at current prices, 2009-19
            • Retail deposits reached a total of nearly £1.3 trillion in 2014
              • Figure 2: Total value of retail savings deposits from UK households and % change year on year, 2005-14
            • Economic environment and market conditions
              • Online beats all other channels in the savings market
                • Figure 3: Activities relating to savings, by channel preference, February 2015
              • Key players
                • Lloyds Banking Group reports the highest overall retail savings balances
                  • High street players continue to develop their multi-channel capabilities
                    • All eyes on current accounts
                      • Providers target loyalty through simplification
                        • The consumer
                          • Over one quarter have no savings or investments
                            • Figure 4: Value of savings and investments, February 2015
                          • Easy-access savings accounts: the most popular savings product
                            • Figure 5: Ownership of savings products, February 2015
                          • More than half of adult savers own multiple savings products
                            • Figure 6: Number of saving product types held, February 2015
                          • Almost two fifths of savers expect to increase their savings
                            • Figure 7: Savers’ future saving plans, February 2015
                          • Fewer than one in five non-savers expect to start saving
                            • Figure 8: Non-savers’ future saving plans, February 2015
                          • Peace of mind and protection from the unexpected are the main reasons for saving
                            • Figure 9: Reasons for saving, February 2015
                          • Consumer saving habits
                            • Figure 10: Consumer saving habits, February 2015
                          • Savers’ engagement in the market
                            • Figure 11: Savers’ interest in the market, February 2015
                          • 30% have switched savings accounts in the last year
                            • Figure 12: Savers’ attitudes and switching behaviour, February 2015
                        • Issues and insights

                          • PFM apps have growth potential in the UK
                            • The facts
                              • The implications
                                • Low switching in the savings market gives banks the opportunity to compete on non-price factors
                                  • The facts
                                    • The implications
                                    • The Market – What you need to know

                                      • Retail deposits reached a total of nearly £1.3 trillion in 2014
                                        • Market forecasts a steady growth in retail deposits over the next five years
                                          • Gap between inflation and wage growth has disappeared…
                                            • …but economic recovery will take time to feed through into consumer financial wellbeing
                                              • Rates of return continue to suffer
                                                • Equity-based products are becoming a more appealing option
                                                  • Online beats all other channels in the savings market
                                                  • Market size and segmentation

                                                    • Retail deposits reached a total of nearly £1.3 trillion in 2014
                                                      • Figure 13: Total value of retail savings deposits from UK households and % change year on year, 2005-14
                                                    • Value of sight accounts is steadily increasing
                                                      • Figure 14: Volume and value of individual interest-bearing Sterling accounts (high street retail banks only), 2009-13
                                                  • Market forecast

                                                      • Figure 15: Forecast of retail savings balances, fan chart at current prices, 2009-19
                                                      • Figure 16: Forecast of total retail savings balances, 2009-19
                                                  • Economic environment

                                                    • Gap between inflation and wage growth has disappeared
                                                      • Figure 17: Monthly change in RPI and average weekly earnings (regular pay, excluding bonuses), January 2009-January 2015
                                                    • Economic recovery will take time to feed through into consumer financial wellbeing…
                                                      • …but consumer confidence edged upwards in January 2015
                                                        • Figure 18: Financial confidence index, January 2009-15
                                                      • No major change in the savings ratio in 2014
                                                        • Figure 19: Gross household savings and savings ratio, seasonally adjusted at current prices, 2004-14* (est)
                                                    • Market conditions

                                                      • Rates of return continue to suffer
                                                        • Figure 20: Average monthly quoted interest rates of UK monetary financial institutions (excluding Central Bank), not seasonally adjusted, January 2011-15
                                                      • Equity-based products are becoming a more appealing option
                                                        • Figure 21: Value of new adult ISA subscriptions, 2009/10 – 2013/14
                                                      • Budget 2015: New personal savings allowance and cash ISA flexibility
                                                        • FCA probe into the cash savings market
                                                          • NS&I Pensioner Bonds: a savings gift to the over-65s
                                                          • Channels to market

                                                            • Online beats all other channels in the savings market
                                                              • Figure 22: Activities relating to savings, by channel preference, February 2015
                                                            • Providers increasingly promote digital channels
                                                            • Key Players – What you need to know

                                                              • Lloyds Banking Group reports the highest overall retail savings balances
                                                                • NS&I grew savings balances significantly in 2014
                                                                  • Adspend on cash savings products down by 38% in 2014
                                                                    • Greater focus on brand building in 2014
                                                                      • High street players are embracing a multi-channel approach
                                                                        • All eyes on current accounts
                                                                          • Providers target loyalty
                                                                            • A look towards their customers with disabilities
                                                                            • Market share

                                                                              • NS&I holds less than 10% of the savings market share
                                                                                • Figure 23: Retail savings balances from households and market share, by sector, 2010-14
                                                                              • Lloyds Banking Group reports the highest overall retail savings balances
                                                                                • Figure 24: Big providers’ total retail savings balances, shown on a group basis – UK, 2013-14
                                                                              • Lloyds Banking Group holds leading position in the easy-access savings account market
                                                                                • Figure 25: Ranking of the largest group providers of each savings product, by proportion of customers, February 2015
                                                                            • Advertising spend

                                                                              • Greater focus on brand building in 2014
                                                                                • Figure 26: Total advertising expenditure on cash savings products, by product type, 2010-14
                                                                              • Halifax remains the highest-spending advertiser in the savings account market
                                                                                • Figure 27: Top ten advertisers of cash savings products (excluding cash ISAs and children’s saving products), 2012-14
                                                                              • TV and press claimed 88% of sector adspend in 2014
                                                                                • Figure 28: Total advertising expenditure on cash savings products (excluding cash ISAs and children’s saving products), by media type, 2014*
                                                                              • A note on adspend
                                                                              • Competitive strategies – Channel evolution

                                                                                • High street players continue to develop their multi-channel capabilities
                                                                                  • Lloyds Bank: Online appointment booking system
                                                                                    • Barclays: Video Banking
                                                                                      • Nationwide NOW
                                                                                        • Digital-only banks are on the way…
                                                                                          • …while the big high street players are developing their digital services
                                                                                            • Lloyds Banking Group: Electronic identification
                                                                                              • Barclays: Cheque imaging service
                                                                                                • RBS/NatWest: Fingerprint login
                                                                                                  • Nationwide: Impulse Saver
                                                                                                  • Competitive strategies – Product development

                                                                                                    • All eyes on current accounts
                                                                                                      • Providers target loyalty
                                                                                                        • Simplification of savings products…
                                                                                                          • …and introduction of ‘loyalty’ products
                                                                                                            • A look towards customers with disabilities
                                                                                                              • RBS/NatWest: Accessible cards for the partially sighted and blind
                                                                                                                • Barclays: In-branch beacon technology
                                                                                                                • Brand research

                                                                                                                  • What you need to know
                                                                                                                    • Brand map
                                                                                                                      • Figure 29: Attitudes towards and usage of selected financial services brands, December 2014
                                                                                                                    • Key brand metrics
                                                                                                                      • Figure 30: Key metrics for selected financial services brands, December 2014
                                                                                                                    • Brand attitudes: The Co-operative Bank maintains a socially responsible reputation despite negative headlines
                                                                                                                      • Figure 31: Attitudes, by brand, December 2014
                                                                                                                    • Brand personality: First Direct enjoys fun and vibrant brand image
                                                                                                                      • Figure 32: Brand personality – Macro image, December 2014
                                                                                                                    • Brands with a high street presence tend to have stronger customer service associations
                                                                                                                      • Figure 33: Brand personality – Micro image, December 2014
                                                                                                                    • Brand analysis
                                                                                                                      • Nationwide has a strong overall brand image
                                                                                                                        • Figure 34: User profile of Nationwide, December 2014
                                                                                                                      • First Direct is most likely to be seen as upbeat
                                                                                                                        • Figure 35: User profile of First Direct, December 2014
                                                                                                                      • NS&I is thought to offer something different
                                                                                                                        • Figure 36: User profile of NS&I, December 2014
                                                                                                                      • Yorkshire Building Society has an all-round brand image
                                                                                                                        • Figure 37: User profile of Yorkshire Building Society, December 2014
                                                                                                                      • Halifax uses branch network to boost perceptions of customer service
                                                                                                                        • Figure 38: User profile of Halifax, December 2014
                                                                                                                      • Clydesdale Bank has strong Scottish bias
                                                                                                                        • Figure 39: User profile of Clydesdale Bank, December 2014
                                                                                                                      • The Co-operative Bank continues to feel the effects of negative stories
                                                                                                                        • Figure 40: User profile of The Co-operative Bank, December 2014
                                                                                                                      • Aldermore lacks overall awareness and exposure to develop strong brand image
                                                                                                                        • Figure 41: Demographic breakdown of consumers aware of Aldermore, December 2014
                                                                                                                    • The Consumer – What you need to know

                                                                                                                      • Over one quarter with no savings or investments in 2014
                                                                                                                        • Easy-access savings accounts: the most popular savings product
                                                                                                                          • More than half of adult savers own multiple savings products
                                                                                                                            • Bank branches are still alive and kicking
                                                                                                                              • Almost two fifths of savers expect to increase their savings…
                                                                                                                                • …while fewer than one in five non-savers expect to start saving
                                                                                                                                  • Peace of mind and protection against the unexpected are the main reasons for saving
                                                                                                                                    • Over one third of savers keep savings in their current accounts
                                                                                                                                      • Personal financial management mobile apps mostly used by younger savers
                                                                                                                                        • Price comparison sites used by over half of savers
                                                                                                                                          • Consumers split over confusion in the savings market
                                                                                                                                            • Nearly one third have switched savings accounts in the last year
                                                                                                                                            • Value of savings and investments

                                                                                                                                              • Over one quarter of over-18s have no savings or investments
                                                                                                                                                • Figure 42: Value of savings and investments, February 2015, January 2014, January 2013
                                                                                                                                              • Value of savings increases with age…
                                                                                                                                                • Figure 43: Value of savings and investments, by Age, February 2015
                                                                                                                                              • …and income
                                                                                                                                                • Figure 44: Value of savings and investments, by gross annual household income, February 2015
                                                                                                                                              • But the lower end of the market should not be ignored
                                                                                                                                              • Ownership of savings products

                                                                                                                                                  • Easy-access savings accounts: the most popular savings product
                                                                                                                                                    • Figure 45: Ownership of savings products, February 2015
                                                                                                                                                  • Higher-value savers attracted to tax-exempt savings products…
                                                                                                                                                    • …but also to fixed-rate/notice savings accounts
                                                                                                                                                      • Figure 46: Ownership of savings products, by value of savings and investments, February 2015
                                                                                                                                                  • Number of saving products held

                                                                                                                                                    • More than half of adult savers own multiple savings products
                                                                                                                                                      • Figure 47: Number of saving product types held, February 2015
                                                                                                                                                      • Figure 48: Ownership of savings products, by number of saving product types held, February 2015
                                                                                                                                                    • Over-55s and higher earners most likely to have multiple savings products
                                                                                                                                                    • Consumer channel preferences

                                                                                                                                                      • Online dominates across all ages, but particularly Millennials…
                                                                                                                                                          • Figure 49: Activities relating to savings, by channel preference, February 2015
                                                                                                                                                          • Figure 50: Activities relating to savings by channel preference, by generations, February 2015
                                                                                                                                                        • …but Millennials also value personal contact when applying for a savings product
                                                                                                                                                          • Bank branches are still alive and kicking
                                                                                                                                                              • Figure 51: Agreement with the statement ‘I wouldn’t want to save with a company that doesn’t have high street branches’, February 2015
                                                                                                                                                          • Consumer saving plans

                                                                                                                                                            • Almost two fifths of savers expect to increase their savings
                                                                                                                                                                • Figure 52: Savers’ future saving plans, January 2014 and February 2015
                                                                                                                                                              • Fewer than one in five non-savers expect to start saving
                                                                                                                                                                  • Figure 53: Non-savers’ future saving plans, January 2014 and February 2015
                                                                                                                                                                • Millennials are confident about the next six months
                                                                                                                                                                    • Figure 54: Savers’ future saving plans, by age, February 2015
                                                                                                                                                                    • Figure 55: Non-savers’ future saving plans, by age, February 2015
                                                                                                                                                                • Reasons for saving

                                                                                                                                                                  • Peace of mind and protection from the unexpected are the main reasons for saving
                                                                                                                                                                    • Figure 56: Reasons for saving, February 2015
                                                                                                                                                                  • Consumers’ financial confidence affects their motivations to save
                                                                                                                                                                    • Millennials most likely to save towards a deposit to buy a home
                                                                                                                                                                      • Individuals with savings of £100,000 or more look towards retirement
                                                                                                                                                                        • Figure 57: Reasons for saving, by value of savings and/or investments, February 2015
                                                                                                                                                                    • Consumer saving habits

                                                                                                                                                                      • Over one third of savers keep savings in their current accounts
                                                                                                                                                                          • Figure 58: Consumer saving habits, February 2015
                                                                                                                                                                        • Intentions may be good, but actions speak louder than words
                                                                                                                                                                          • Regular savings account holders are more disciplined
                                                                                                                                                                            • Figure 59: Consumer saving habits, by savings product ownership, February 2015
                                                                                                                                                                          • Personal financial management mobile apps mostly used by younger savers
                                                                                                                                                                          • Savers’ interest in the market

                                                                                                                                                                            • More than two fifths of savers say that they regularly check the market
                                                                                                                                                                                • Figure 60: Savers’ interest in the market, February 2015
                                                                                                                                                                              • Price comparison sites used by over half of savers
                                                                                                                                                                                • Consumers split over confusion in the savings market
                                                                                                                                                                                  • Engagement is greatest among adults with higher savings
                                                                                                                                                                                    • Figure 61: Savers’ interest in the market, by value of savings and investments, February 2015
                                                                                                                                                                                • Savers’ attitudes and switching behaviour

                                                                                                                                                                                  • Nearly one third have switched savings accounts in the last year
                                                                                                                                                                                    • Figure 62: Savers’ attitudes and switching behaviour, February 2015
                                                                                                                                                                                  • Accounts with introductory bonuses are considered by 75% of savers
                                                                                                                                                                                  • Abbreviations

                                                                                                                                                                                    Companies Covered

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

                                                                                                                                                                                    Deposit and Savings Accounts - UK - April 2015

                                                                                                                                                                                    US $2,672.70 (Excl.Tax)