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Premium and Mass-affluent Banking - UK - November 2015

“Banks still have their work cut out to convince most in the affluent and HNW markets that premium accounts are worthwhile or value for money. Affluent consumers are most interested in a competitive interest rate and customer service, with comparatively few looking for more exclusive premium services.”

Deborah Osguthorpe, Head of UK Financial Services Research

This report looks at the following areas:

  • The switching market for affluent consumers is growing
  • Affluent consumers are not convinced by premium banking services

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Table of contents

  1. Overview

    • What you need to know
      • Scope of the report
      • Executive Summary

          • The market
            • Figure 1: Net financial wealth pyramid (investable assets), GB population, 2015
          • Only a minority of the wealth target market have a premium account
            • Figure 2: Type of current account owned by those in the wealth target market, August 2015
          • The affluent have weathered the downturn well
            • Figure 3: Current financial situation compared to a year ago, by gross annual household income, August 2015
          • The market needs to do more to help companies compare accounts
            • Large retail banks face a number of key challenges
              • Companies and brands
                • The biggest retail banks dominate the affluent current account market
                  • Figure 4: Main current account provider, by wealth target market, for top 8 providers, August 2015
                • Challenger banks are targeting affluent consumers
                  • Banks turn attention back to advice services
                    • The consumer
                      • Affluent consumers switch more often than the average
                        • Figure 5: Current account switching behaviour, by wealth tier (investible assets), August 2015
                        • Figure 6: Current account switching behaviour, by age, August 2015
                      • Credit interest and customer service are key for affluent consumers
                        • Figure 7: factors that consumers are looking for in a new current account, August 2015
                      • What it means
                      • Issues and Insights

                        • The switching market for affluent consumers is growing
                          • The facts
                            • The implications
                              • Affluent consumers are not convinced by premium banking services
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Only a minority of affluent consumers have a premium account
                                      • Affluent consumer priorities remain conservative
                                        • Large retail banks face a number of key challenges
                                        • Market Size

                                          • 12% of the UK population are Mass Affluent, Affluent or HNW
                                            • Figure 8: Net financial wealth pyramid (investable assets), GB population, 2015
                                          • Only a minority of the target wealth market have a premium account
                                            • Figure 9: Type of current account owned, by wealth tier (investible assets), August 2015
                                        • Market Drivers – Consumer Context

                                          • Consumers are keen to provide themselves with a financial cushion
                                              • Figure 10: Current Financial Situation, by gross annual household income, August 2015
                                            • 45% of higher earners are feeling better-off than they did a year ago
                                                • Figure 11: Current financial situation compared to a year ago, by gross annual household income, August 2015
                                              • Protecting assets remains the main priority for savings
                                                  • Figure 12: Consumers’ saving and investment priorities over the next 12 months, August 2015
                                                • High income households use a wider range of banking services
                                                    • Figure 13: Any use of banking services, by household income, May 2015
                                                • Regulatory and Legislative Changes

                                                  • The CMA publishes its findings on retail banking competitiveness
                                                    • Branch closure consultation period introduced
                                                      • Ring-fencing could push up costs for customers
                                                        • Moving away from a sales culture
                                                        • Companies and Brands – What You Need to Know

                                                          • Large retail banks dominate the affluent current account market
                                                            • More competitors are entering the race for affluent switchers
                                                              • Banks turn attention back to advice services
                                                              • Market Share

                                                                • Major high street banks continue to dominate the market
                                                                  • Figure 14: Main current account provider, by wealth tier (investible assets), August 2015
                                                                • Former challenger banks have the largest share of secondary accounts
                                                                  • Figure 15: Provider of main current account and other/secondary accounts, August 2015
                                                                • Affluent investors are looking for innovative options
                                                                  • Figure 16: Top 15 wealth managers, by assets under management and number of client accounts, UK, 2013 and 2014
                                                              • Competitive Strategies

                                                                • Main retail banks are trying to shore up their affluent consumer base
                                                                  • Challenger banks look to attract affluent clients
                                                                  • Innovation and Launch Activity

                                                                    • Retail banks relaunch advisory services
                                                                      • Britain’s first mobile app only bank launches
                                                                        • Social media banking arrives with Fidor Bank
                                                                          • Private bank Hampden & Co opens its doors
                                                                            • Challenger banks introduce new loyalty schemes
                                                                            • Advertising and Marketing Activity

                                                                              • Advertising spend on Premium accounts doubles
                                                                                • Figure 17: Total above-the line, online display and direct mail advertising expenditure on banking and asset management products and services, by product category, 2010/11-2014/15
                                                                              • Advertising spend by the top seven doubled over the last year
                                                                                • Figure 18: Top seven advertisers of packaged/premium accounts and mass-market wealth management services, 2010/11-2014/15
                                                                              • TV spend accounts for two thirds of adspend
                                                                                • Figure 19: Share of advertising expenditure on packaged/premium accounts and mass-market wealth management, by media type, 2012/13-2014/15
                                                                              • Search and social media strategies enhance brand perception
                                                                                • Nielsen Media Research coverage
                                                                                • The Consumer – What You Need to Know

                                                                                  • The majority are not prepared to pay fees for current accounts
                                                                                    • Switching levels remain low
                                                                                      • Younger consumers are the most likely switchers
                                                                                        • In-credit interest rates and customer service are most important factors in choosing an account
                                                                                        • Account Ownership

                                                                                          • Nearly three quarters of the market have a non-fee charging account
                                                                                            • Figure 20: Type of current account owned, by wealth tier(investible assets), August 2015
                                                                                          • Nearly half of premium account holders also have a standard current account
                                                                                            • Figure 21: Type of current account owned, by top three most popular types of account, August 2015
                                                                                          • 45-64-year-olds are the least likely to own a premium account
                                                                                            • Figure 22: Type of current account owned, by age, August 2015
                                                                                          • Barclays, HSBC and NatWest lead the way on premium accounts
                                                                                            • Figure 23: Main current account provider, by top three most popular types of account held, August 2015
                                                                                          • Cash-based products are universally popular
                                                                                            • Figure 24: Ownership of savings and investment products, by wealth tier (investible assets),, August 2015
                                                                                        • Switching Behaviour

                                                                                          • Only 22% of the market have switched their account in the last 5 years
                                                                                            • Figure 25: Current account switching behaviour, August 2015
                                                                                          • Switching levels are similar across the wealth target market
                                                                                            • Figure 26: Current account switching behaviour, by wealth tier (investible assets), August 2015
                                                                                          • Younger consumers are more likely to switch
                                                                                            • Figure 27: Current account switching behaviour, by age, August 2015
                                                                                          • Packaged account holders are more likely to have switched
                                                                                            • Figure 28: Current account switching behaviour, by top three most popular types of account, August 2015
                                                                                          • Only 7% of the wealth target market plan to switch in the next 12 months
                                                                                            • Figure 29: Current account switching intentions, August 2015
                                                                                            • Figure 30: Current accounts switching intentions, by wealth tier (investible assets), August 2015
                                                                                          • Once a customer has switched they are more likely to do so again in future
                                                                                            • Figure 31: Current accounts switching intentions, by previous switching behaviour, August 2015
                                                                                        • Attitudes towards Premium Accounts

                                                                                          • Two thirds are happy with basic current accounts
                                                                                            • Figure 32: Attitudes to premium or fee-paying services, August 2015
                                                                                          • Over half of HNW individuals believe that private banking is more about status than service
                                                                                            • Figure 33: Attitudes to premium or fee-paying services, by wealth tier (investible assets), August 2015
                                                                                        • Features Sought in a New Account

                                                                                          • Interest rates are the most important factor in choosing a new account
                                                                                            • Figure 34: What consumers are looking for in a new current account, August 2015
                                                                                          • Premium account holders are looking for a wider range of services
                                                                                            • Figure 35: What consumers are looking for in a new current account, by type of account held, August 2015
                                                                                          • Aspirational consumers want better rates on other products
                                                                                            • Figure 36: What consumers are looking for in a new current account, by wealth tier (investible assets), August 2015
                                                                                        • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                          • Abbreviations
                                                                                            • Consumer research methodology
                                                                                              • Key sources

                                                                                              Companies Covered

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

                                                                                              Premium and Mass-affluent Banking - UK - November 2015

                                                                                              US $2,583.33 (Excl.Tax)