The UK Premium and Mass Affluent Banking Market - September 2012
- What is mass affluent banking?
- What is the sector worth?
- How successful are banking providers at reaching the mass affluent audience?
- How can banks improve their mass affluent propositions?
- What impact could the RDR have on this market?
The ‘mass affluent’ represent an important target market for the retail banks, with several offering ‘premium’ products and services designed specifically for this moderately wealthy demographic. Offering a premium or lower-entry private bank account not only helps to reach these more profitable individuals, but also acts as a useful gateway product, through which other products and services can be channelled. Sounds simple in principle, and yet Mintel’s research reveals that a large proportion of mass affluent adults in the UK do not have a premium or private bank account. In addition, some banks seem to be more proactive than others at identifying and targeting mass affluent customers. This is partly because the mass affluent have a tendency to spread their assets across different institutions, making it more difficult to identify them, and partly because they are not a homogenous group.
In the UK, mass affluent individuals tend to be more mature (typically aged 45+), although they are not exclusively so. This wealthier segment of the population comprises a diverse range of people: from young entrepreneurs and high income earners, seeking to build their wealth, to income-poor but asset-rich retirees, who are seeking to maintain a good standard of living in retirement and/or tax-efficient ways of passing on wealth. Definitions and qualification criteria vary, but mass affluent individuals are typically categorised as having at least £100,000 in investable assets and, as such, have more complex financial needs and higher expectations of service than mass-market customers. Of course, offering a premium service means providing greater privacy and exclusivity, elements which require extra investment and resources. However, the benefits – higher profit margins and greater scope for product cross-selling and relationship management – far outweigh the additional cost. Indeed, research suggests that the mass affluent banking sector in the UK generates a return in the region of 25-35%.
By drawing on targeted consumer research, this report aims to learn more about mass affluent consumers, by answering a number of key questions: What is the size of the mass affluent population? Where do these wealthier individuals hold their main bank account, and how satisfied are they with their provider? What aspects do they most like about their main account provider? Why do such a large proportion of them not possess a premium or private bank account? How has their wealth level changed over the past year? And what are their financial goals and wealth expectations over the coming months? The report also includes an overview of the market’s current size and composition, and assesses its prospects for future growth.
What's Included in the UK Mass Affluent Banking Market Report?
The focus of this report is on premium banking services aimed at the mass affluent segment (eg HSBC Premier, Barclays Premier), although reference is made to other segments (eg mass retail and private banking) in order to provide context.
Although premium bank accounts typically come with additional services and benefits and may charge a fee (sometimes waived on meeting certain criteria), they should not be confused with standard fee-based packaged accounts for mass retail consumers (eg Lloyds TSB’s Silver, Gold and Platinum current accounts and RBS’ Royalties Gold account). The key difference between them is the qualification criteria. Packaged accounts are normally available to all customers for a fee, while premium bank accounts are usually only available to customers with a certain amount of investable assets and/or household income.
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