Consumer Attitudes towards Challenger Brands - UK - October 2016
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“Consumer expectations of financial services providers are growing, giving challengers an opportunity to meet people’s needs where the more traditional providers cannot. However, increasing awareness levels and highlighting their differences will be key to consumer consideration of challengers. Beyond this, they will also need to prove they can get the basics right in order to build consumer trust.”
– Jessica Galletley, Financial Services Analyst
This report discusses the following key topics:
New regulation is supporting the entrance of challenger brands into the retail banking market. The Financial Conduct Authority (FCA) and Competition and Markets Authority (CMA) are working to make it easier for new brands to launch and, on the consumer side, they are implementing initiatives that will make it easier for consumers to compare a wider range of products. The hope is that this will help people understand if they would be better off switching, and to erode the inertia that has always limited the scope for new entrants to gain market share.
However, despite these efforts, consumers still strongly favour the traditional high street giants. People have a greater level of trust in the more established brands, while a lack of awareness of smaller challengers, and underlying concerns about their financial and operational stability also hinders switching to alternatives. More importantly, though, a generally high level of satisfaction with their main current account provider means they lack the incentive to switch. So much of the narrative around the current account market centres around the idea that everyone would switch banks, if only the process was easier. The truth is, though, that Mintel’s research consistently shows that a high proportion of the incumbents’ customers are actually pretty happy with their bank.
This Report examines consumer awareness and use of challenger brands in the UK retail banking market. It looks at consumers’ consideration of challenger brands for different financial services products, and the concerns they have about using banks that are new to the market. It also explores the most important qualities that people look for in a current account provider, and what opportunities this presents for new brands entering the market.
This Report examines the UK retail banking market for challenger brands. Mintel defines a ‘challenger bank’ as: a financial institution that currently competes with the big five high street banks (Barclays, HSBC, Lloyds Bank, RBS, and Santander) or has obtained a banking licence and plans to offer retail banking products.
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