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Description

Description

“Brand familiarity remains a key factor in the choice of main current account provider. However, multi-account ownership is growing and customers using more than one account are less wedded to established brands for their additional accounts. Tools which help people make the most of their money and Open Banking partnerships offering access to other products and services, are changing people’s attitudes about what to expect from a current account. This is particularly the case for younger generations and those new to the current account market.”
- Douglas Kitchen, Financial Services Analyst

This Report will cover the following areas:

  • Multi-account ownership is growing, and brands need to adapt
  • Mobile banks have work to do to become a ‘main bank account’

What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Multi-account holders on the rise
              • Figure 1: Estimated number of current accounts, 2016-19
            • Branches decline by over a third since 2015
              • Current account interest rates decline
                • Fewer than one million switches via the CASS in 2019
                  • Figure 2: Number of switches per month using the CASS, October 2013-July 2019
                • Regulators focus on improving transparency
                  • Companies and brands
                    • Barclays is the biggest individual provider in the current account market
                      • Figure 3: Current account providers, by share of main accounts, August 2019
                    • Online or app-only banks appeal to those with more than two accounts
                      • Figure 4: Current account providers, by share of other current accounts, May 2019
                    • High street banks launch digital solutions aimed at specific customers
                      • The consumer
                        • Over a third own more than one current account
                          • : Figure 5: Current account ownership, August 2019 vs May 2016
                        • Just under 50% have not switched or opened an account in the last five years
                          • Figure 6: Current account switching/account opening activity, August 2019
                        • Multi-account holders are switching, or opening a new account elsewhere
                          • Figure 7: Current account switching/account opening behaviour among multi-account holders, August 2019
                        • 28% are planning to switch or open a new account in the next 12 months
                          • Figure 8: Likelihood to switch/open new current account in the next 12 months, August 2019
                        • Over 60% plan on retaining use of their main current account
                          • Figure 9: Future current account switching/account opening behaviours, August 2019
                        • Definite switchers prioritise high street brands
                          • Figure 10: Likelihood to switch to different types of provider, by Likelihood to switch/open new current account in the next 12 months, August 2019
                        • 30% do not see the importance of branch services
                          • Figure 11: Attitudes towards current accounts and current account switching, August 2019
                        • Multi-account ownership is driving improved money management
                          • Figure 12: Attitudes towards current accounts and current account switching, August 2019
                        • What we think
                        • Issues and Insights

                          • Multi-account ownership is growing, and brands need to adapt
                            • The facts
                              • The implications
                                • Mobile banks have work to do to become a ‘main bank account’
                                  • The facts
                                    • The implications
                                    • The Market – What You Need to Know

                                      • Multi-account holders on the rise
                                        • Branches decline by over a third since 2015
                                          • Current account interest rates decline
                                            • Less than one million switches via CASS in 2019
                                              • Regulators focus on improving transparency
                                              • Market Environment

                                                • Number of consumers with multiple current accounts grows
                                                  • Figure 13: Estimated number of current accounts, 2016-19
                                                • Online channels now dominate current account distribution
                                                  • Figure 14: Current account purchase channels, March 2019
                                                • Branch closures reach record levels
                                                  • Current account interest rates continue to fall
                                                    • Figure 15: Monthly average of UK resident banks' Sterling weighted average interest rate – interest-bearing current account deposits from individuals and individual trusts, January 2016-June 2019
                                                  • Slight decline in use of high street overdrafts
                                                      • Figure 16: Sterling amounts outstanding on personal current account overdrafts with high street banks, August 2017-August 2019
                                                  • Switching Activity

                                                    • Switching via the CASS remains low
                                                      • Figure 17: Number of switches per month using the CASS, October 2013 – July 2019
                                                    • Nationwide and HSBC achieve most gains in 2018/19
                                                      • Challenger banks make up three of the top five
                                                        • Ethical concerns move up the consumer agenda
                                                          • Figure 18: Net gains and losses of full account switches using CASS, Q2 2018-Q1 2019
                                                      • Regulatory and Legislative Changes

                                                        • Increased focus on improving transparency in the current account market
                                                          • Through the official bank service league…
                                                            • …and the publishing of mandated and voluntary information
                                                              • Despite difficulties, Open Banking is set to drive further innovation
                                                                • Banks react to recent overdraft regulations
                                                                • Companies and Brands – What You Need to Know

                                                                  • Barclays and LBG dominate the current account market
                                                                    • Online or app-only banks appeal to those with more than two accounts
                                                                      • High street banks launch digital solutions aimed at specific customers
                                                                        • New innovation on the high street…
                                                                          • …and through app-only banks
                                                                          • Providers Share of the Current Account Market

                                                                            • Close to one in five holds their main account with Barclays
                                                                              • LBG accounts for one quarter of main current accounts
                                                                                • Figure 19: Current account providers, by share of main accounts, August 2019
                                                                              • Online or app-only banks more common among those with more than two accounts
                                                                                • Figure 20: Current account providers, by share of other current accounts, May 2019
                                                                            • Competitive Strategies and Innovation

                                                                              • Banks introduce separate accounts targeted at specific customers
                                                                                • Santander launches Openbank
                                                                                  • RBS develops BÓ
                                                                                    • Revolut targets Gen Z
                                                                                      • HSBC revamps First Direct to appeal to the younger market
                                                                                        • Cash switching deals return to the market…
                                                                                          • …while Barclays improves upon its rewards offering
                                                                                            • Lloyds, Bank of Scotland and Nationwide reduce their in-credit interest rates
                                                                                              • NatWest leads innovation on the high street
                                                                                                • Through a new video banking service…
                                                                                                  • … and Open Banking partnerships
                                                                                                    • App-only banks use Open Banking to build their ‘Marketplace’…
                                                                                                      • …while premium accounts have a mixed impact
                                                                                                      • The Consumer – What You Need to Know

                                                                                                        • Over a third own more than one current account
                                                                                                          • Just under 50% have not switched or opened an account in the last five years
                                                                                                            • Multi-account holders are switching or opening a new account elsewhere
                                                                                                              • 28% are planning to switch or open a new account in the next 12 months
                                                                                                                • Over 60% plan on retaining use of their main current account
                                                                                                                  • Definite switchers prioritise high street brands
                                                                                                                    • 30% do not see the importance of branch services
                                                                                                                      • Multi-account ownership is driving improved money management
                                                                                                                      • Current Account Ownership

                                                                                                                        • Majority own just the one account…
                                                                                                                          • …but over one third own more than one account
                                                                                                                            • Figure 21: Current account ownership, August 2019 vs May 2016
                                                                                                                        • Current Account Switching Activity

                                                                                                                          • Almost half have not switched or opened a new account in the last five years…
                                                                                                                            • …with over-55s among the least likely to be active in the market
                                                                                                                              • Figure 22: Current account switching/account opening activity, August 2019
                                                                                                                            • Multi-account holders drive account opening/switching activity
                                                                                                                              • Figure 23: Current account switching/account opening activity, by current account ownership, August 2019
                                                                                                                          • Current Account Switching Behaviours

                                                                                                                            • Consumers holding their first account offer a unique opportunity
                                                                                                                              • Figure 24: Current account switching/account opening behaviour among single account holders, August 2019
                                                                                                                            • 60% of multi-account holders have established a new banking relationship…
                                                                                                                              • …although higher income households are more likely to be moving accounts at their main bank
                                                                                                                                • Figure 25: Current account switching/account opening behaviour among multi-account holders, August 2019
                                                                                                                              • 80% of additional accounts are being used alongside a main account
                                                                                                                                • Figure 26: Current account switching/account opening behaviour among those who last opened an additional account, August 2019
                                                                                                                            • Likelihood to Switch Account

                                                                                                                              • 28% expect to switch or open a new account in the next 12 months
                                                                                                                                • Figure 27: Likelihood to switch/open new current account in the next 12 months, August 2019
                                                                                                                              • Nationwide customers the least likely to be looking for a change
                                                                                                                                • Figure 28: Likelihood to switch/open new current account in the next 12 months, by current account ownership, August 2019
                                                                                                                              • Recent switchers are more likely to do so again
                                                                                                                                • Figure 29: Likelihood to switch/open new current account in the next 12 months, by current account switching/account opening activity, August 2019
                                                                                                                              • Customers holding their first account are looking for a change
                                                                                                                                • Figure 30: Likelihood to switch/open new current account in the next 12 months, by current account switching behaviours, August 2019
                                                                                                                            • Future Switching Behaviours

                                                                                                                              • Most potential switchers intend to retain use of their existing account
                                                                                                                                • Figure 31: Future current account switching/account opening behaviours, August 2019
                                                                                                                              • Multi-account holders are more likely to be looking for a secondary account
                                                                                                                                • Figure 32: Future current account switching/account opening behaviours, by current account ownership, August 2019
                                                                                                                            • Likelihood to Switch to Different Types of Provider

                                                                                                                              • Well-known brands appeal to definite switchers…
                                                                                                                                • …while lesser-known banks are more popular among those who are less sure
                                                                                                                                  • Figure 33: Likelihood to switch to different types of provider, by Likelihood to switch/open new current account in the next 12 months, August 2019
                                                                                                                                • High street banks appeal to those looking to close their existing account
                                                                                                                                  • Figure 34: Likelihood to switch to different types of provider, by future current account switching/account opening behaviours, August 2019
                                                                                                                              • Important Factors in Choice of Current Account Provider

                                                                                                                                • Almost a third do not see the importance of branch services
                                                                                                                                  • Figure 35: Attitudes towards current accounts and current account switching, August 2019
                                                                                                                                • New innovations appeal to likely switchers
                                                                                                                                    • Figure 36: Agreement with attitudes towards current accounts and current account switching, by Likelihood to switch/open new current account in the next 12 months, August 2019
                                                                                                                                  • Traditional switchers prioritise rewards and offers
                                                                                                                                    • Figure 37: Agreement with attitudes towards current accounts and current account switching, by future current account switching/account opening behaviour, August 2019
                                                                                                                                • Attitudes towards Current Accounts and Current Account Switching

                                                                                                                                  • Over half think that multiple current accounts can help money management…
                                                                                                                                    • …but many still see switching as a hassle
                                                                                                                                      • Figure 38: Attitudes towards current accounts and current account switching, August 2019
                                                                                                                                    • The account opening process can be off-putting
                                                                                                                                      • Figure 39: Attitudes towards current accounts and current account switching, by Likelihood to switch/open new current account in the next 12 months, August 2019
                                                                                                                                    • Those new to the current account market are a unique proposition
                                                                                                                                      • Figure 40: Attitudes towards current accounts and current account switching, by current account switching/account opening behaviours, August 2019
                                                                                                                                  • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                      • Abbreviations
                                                                                                                                        • Consumer research methodology

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