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Consumers and Retail Banking - UK - September 2019

Covered in this report

This report covers the ‘big picture’ relationships between consumers and retail banking providers. This includes everyday banking products: current accounts, savings accounts and credit cards, as well as loans, mortgages and insurance. The report explores the strategies of the leading players, new innovations in the market and above-the-line advertising expenditure.

Mintel’s exclusive consumer research explores the relationship between consumers and their main retail bank. This includes the range of products held and their satisfaction with different aspects of the banking experience. It looks at consumers’ switching habits and motivations to switch between banks as well as their preferred method of communication with banks.

“Despite growth from the challenger banks, the incumbents continue to dominate and are investing heavily to neuter the appeal of the newcomers. It’s now so easy to set up a new bank account that consumers find they don’t need to commit to fully switching to get the advantages of using different providers. Remarkably it appears that just as banks are breaking down silos in retail banking, savvy consumers are deliberately rebuilding them to suit their needs.”

– Thomas Slide, Senior Financial Services Analyst

This report examines the following issues:

  • Are banks placing too much focus on digital?
  • Challenger banks face a struggle to become the ‘main bank’
  • Is it time for more targeted banking brands?

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Table of contents

  1. Overview

    • What you need to know
      • Scope of this Report
      • Executive Summary

          • The market
            • Confidence has increased in 2019
              • Figure 1: Consumers’ financial wellbeing, three-month moving average, January 2017-July 2019
            • FCA introduces rules to fix ‘dysfunctional’ overdraft market
              • Companies and brands
                • Lloyds Banking Group is the biggest retail banking provider
                  • Goldman Sachs offers savings and digital banks offer loans
                    • Advertising spend returns to marginal growth
                      • Nationwide is the most recommended brand
                        • Figure 2: Key metrics for selected brands, August 2019
                      • The consumer
                        • Barclays tops the list for current accounts
                          • Figure 3: Current accounts held, July 2019
                        • Nationwide account holders are most likely to hold additional products
                          • Figure 4: Other banking products held, July 2019
                        • 25-44s most likely to use their main current account for daily spend
                          • Figure 5: Method of daily spending, by age and gender, July 2019
                        • People are generally pretty satisfied with their bank
                          • Figure 6: Satisfaction with banking services, July 2019
                        • A fifth have switched banks
                          • Figure 7: Likelihood to switch account, by age, July 2019
                        • Bonus and cashback are the biggest drivers of switching
                          • Figure 8: Motivations to switch, July 2019
                        • People prefer to deal with issues in person
                          • Figure 9: Preferred methods of communication with banks, July 2019
                        • What we think
                        • Issues and Insights

                          • Are banks placing too much focus on digital?
                            • The facts
                              • The implications
                                • Challenger banks face a struggle to become the ‘main bank’
                                  • The facts
                                    • The implications
                                      • Is it time for more targeted banking brands?
                                        • The facts
                                          • The implications
                                          • The Market – What You Need to Know

                                            • Confidence has increased in 2019
                                              • FCA introduces rules to fix ‘dysfunctional’ overdraft market
                                              • Market Drivers

                                                • Confidence has increased in 2019
                                                  • Figure 10: Consumers’ financial wellbeing, three-month moving average, January 2017-June 2019
                                                • Wage growth continues to exceed inflation
                                                  • Figure 11: Inflation versus earnings growth, July 2016-June 2019
                                                • Household savings ratio recovers slightly in 2018
                                                  • Figure 12: Household savings ratio, 2000-18
                                                • Bank of England holds interest rates at 0.75%
                                                  • Figure 13: Quoted household interest rates January 2014-July 2019
                                                • Banking and credit card complaints flat year-on-year
                                                  • Figure 14: Aggregate complaints data, H2 2017-H2 2018
                                              • Regulatory and Legislative Changes

                                                • Open Banking develops, but slower than expected
                                                  • Changes to overdraft regulation
                                                    • PPI deadline closes in
                                                      • FCA launched a consultation on fair treatment of vulnerable customers
                                                        • Strong Customer Authentication changes delayed
                                                        • Companies and Brands – What You Need to Know

                                                          • Lloyds Banking Group is the biggest retail banking provider
                                                            • Goldman Sachs offers savings and digital banks offer loans
                                                              • Advertising spend returns to marginal growth
                                                                • Nationwide is the most recommended brand
                                                                • Leading Players

                                                                  • Lloyds Bank continues to lead the sector
                                                                    • Figure 15: Customer deposit and loan values for the leading banks, 2018*
                                                                  • Lloyds Banking Group
                                                                    • Barclays
                                                                      • RBS Group
                                                                        • Santander
                                                                          • HSBC Group
                                                                            • Nationwide Building Society
                                                                              • Others
                                                                                • Botched IT migration creates the most challenging year for TSB
                                                                                  • Monzo hits 2 million customers
                                                                                    • Metro Bank accounting scandal
                                                                                      • CYBG moves forward with Virgin Money integration
                                                                                        • Starling aims to break even in 2020
                                                                                        • Launch Activity and Innovation

                                                                                          • Open Banking
                                                                                            • Lloyds launches Open Banking app for credit cards and savings
                                                                                              • CYBG launches energy switching service
                                                                                                • Nationwide and Starling Bank partner with CreditLadder
                                                                                                  • Investing in innovation
                                                                                                    • First Direct launches mobile co-creation lab
                                                                                                      • Nationwide and Lloyds launch digital innovation centres
                                                                                                        • Security enhancements
                                                                                                          • TSB and NatWest offer account opening by selfie
                                                                                                            • Santander adds combined voice and phone ID authentication
                                                                                                              • NatWest launches first biometric card in the UK
                                                                                                                • Figure 16: NatWest Biometric card, March 2019
                                                                                                              • New launches
                                                                                                                • Marcus by Goldman Sachs launched in the UK
                                                                                                                  • RBS prepares to launch Bó
                                                                                                                    • Digital banks start offering loans
                                                                                                                    • Advertising and Marketing Activity

                                                                                                                      • Advertising expenditure by retail banks stabilises
                                                                                                                        • Figure 17: Above-the-line, online display and direct mail advertising expenditure on retail banking, 2014/15-2018/19
                                                                                                                      • Halifax moves into top spot
                                                                                                                        • Figure 18: Leading spenders on above-the-line, online display and direct mail advertising expenditure on retail banking, 2014/15-2018/19
                                                                                                                      • TV takes lion’s share of spend
                                                                                                                        • Figure 19: Above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2018/19
                                                                                                                      • TSB places greatest focus on TV advertising
                                                                                                                        • Figure 20: 10 leading spenders on above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2018/19
                                                                                                                      • Brand building is the focus of advertising
                                                                                                                        • Figure 21: Above-the-line, online display and direct mail advertising expenditure on retail banking, by product type, 2018/19
                                                                                                                      • Nielsen Ad Intel coverage
                                                                                                                        • Sponsorships
                                                                                                                        • Brand Research

                                                                                                                            • Brand map
                                                                                                                              • Figure 22: Attitudes towards and usage of selected brands, August 2019
                                                                                                                            • Key brand metrics
                                                                                                                              • Figure 23: Key metrics for selected brands, August 2019
                                                                                                                            • Brand attitudes: Santander seen to reward loyalty
                                                                                                                              • Figure 24: Attitudes, by brand, August 2019
                                                                                                                            • Brand personality: Challenger banks create a sense of fun
                                                                                                                              • Figure 25: Brand personality – Macro image, August 2019
                                                                                                                            • Nationwide is viewed as reliable, honest and helpful
                                                                                                                              • Figure 26: Brand personality – Micro image, August 2019
                                                                                                                            • Brand analysis
                                                                                                                              • Nationwide is the most recommended brand
                                                                                                                                • Barclays and Lloyds – prestigious and authoritative but impersonal
                                                                                                                                  • Santander and Halifax enjoy high levels of trust
                                                                                                                                    • HSBC and NatWest suffer low recommendations
                                                                                                                                      • First Direct delivers an excellent experience
                                                                                                                                        • TSB and Co-operative struggle to rebuild brands
                                                                                                                                          • Digital banks leverage a playful and progressive image
                                                                                                                                            • Metro Bank struggles to stand out
                                                                                                                                            • The Consumer – What You Need to Know

                                                                                                                                              • Barclays tops the list for current accounts
                                                                                                                                                • Nationwide account holders are most likely to hold additional products
                                                                                                                                                  • 25-44s most likely to use their main current account for daily spend
                                                                                                                                                    • People are generally pretty satisfied with their bank
                                                                                                                                                      • A fifth have switched banks
                                                                                                                                                        • Bonus and cashback are the biggest drivers of switching
                                                                                                                                                          • People prefer to deal with issues in person
                                                                                                                                                          • Current Account Ownership

                                                                                                                                                            • Barclays is most widely used current account provider
                                                                                                                                                              • Big four continue to dominate
                                                                                                                                                                • Figure 27: Current accounts held, July 2019
                                                                                                                                                              • Nationwide has the oldest customer base
                                                                                                                                                                • Figure 28: Current accounts held, by age and socio-economic group, July 2019
                                                                                                                                                              • Challenger banks struggle to gain ‘Main Bank’ status
                                                                                                                                                                • Figure 29: Proportion of current account holders saying it is their main current account, July 2019
                                                                                                                                                              • More than a third of 25-34 year olds hold multiple current accounts
                                                                                                                                                                • Figure 30: Repertoire analysis of current accounts held, by age, July 2019
                                                                                                                                                            • Banking Products Held

                                                                                                                                                              • More than half hold credit cards or savings accounts
                                                                                                                                                                • Figure 31: Other banking products held, July 2019
                                                                                                                                                              • Savings accounts are most likely to be held with the main account
                                                                                                                                                                • Figure 32: Other banking products held with main bank, July 2019
                                                                                                                                                              • Nationwide members are most likely to hold additional products
                                                                                                                                                                • Figure 33: Other banking products held with main bank, by main bank, July 2019
                                                                                                                                                            • Account Used for Daily Spending

                                                                                                                                                              • 25-44s are most likely to use their current account for daily spend
                                                                                                                                                                • Less than a fifth rely on cash
                                                                                                                                                                  • Over-65s are most likely to use credit cards for daily spending
                                                                                                                                                                    • Figure 34: Method of daily spending, by age and gender, July 2019
                                                                                                                                                                • Satisfaction with Banking Services

                                                                                                                                                                  • People are generally satisfied with their online banking services…
                                                                                                                                                                    • …and least happy with interest rates
                                                                                                                                                                      • Figure 35: Satisfaction with banking services, July 2019
                                                                                                                                                                    • Nationwide customers value the branch network
                                                                                                                                                                      • Figure 36: Satisfaction with communication channels (any satisfied), by main bank, July 2019
                                                                                                                                                                    • RBS customers less happy about service
                                                                                                                                                                      • Figure 37: Satisfaction with banking service (any satisfied), by main bank used, July 2019
                                                                                                                                                                    • Most people are satisfied with their main bank
                                                                                                                                                                      • Figure 38: Overall satisfaction, July 2019
                                                                                                                                                                  • Key Driver Analysis

                                                                                                                                                                    • Service is key but customers are still attached to branches
                                                                                                                                                                      • Figure 39: Key drivers of overall satisfaction with main current account provider, July 2019
                                                                                                                                                                      • Figure 40: Overall satisfaction with main current account provider – Key driver output, July 2019
                                                                                                                                                                  • Switching Habits

                                                                                                                                                                    • A fifth have switched in the last three years
                                                                                                                                                                      • Switching peaks among 25-34 year olds
                                                                                                                                                                        • Figure 41: Switching habits, by age and gender, July 2019
                                                                                                                                                                      • Switching peaks among higher-income households
                                                                                                                                                                        • Figure 42: Switching habits, by household income, July 2019
                                                                                                                                                                      • Over a quarter of non-switchers under 45 would consider switching
                                                                                                                                                                        • Figure 43: Likelihood to switch account, by age, July 2019
                                                                                                                                                                    • Motivations and Barriers to Switching

                                                                                                                                                                      • Bonuses encourage switchers but banks are scaling back
                                                                                                                                                                        • Figure 44: Motivations to switch, July 2019
                                                                                                                                                                      • Spending tools hold greater appeal to the young
                                                                                                                                                                        • Figure 45: Encouragements to switch, by age and socio-economic group, July 2019
                                                                                                                                                                      • Happy customers don’t switch
                                                                                                                                                                        • Figure 46: Discouragements to switch, July 2019
                                                                                                                                                                    • Preferred Methods of Communication

                                                                                                                                                                      • People prefer to deal with issues in person
                                                                                                                                                                        • Figure 47: Preferred methods of communication with banks, July 2019
                                                                                                                                                                      • The key is making real people easily accessible
                                                                                                                                                                        • Figure 48: Preferred methods of communication with banks, by age, July 2019
                                                                                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                        • Abbreviations
                                                                                                                                                                          • Consumer research methodology
                                                                                                                                                                          • Appendix – Key Driver Analysis

                                                                                                                                                                              • Interpretation of results
                                                                                                                                                                                • Figure 49: Overall satisfaction with main current account provider – Key driver output, July 2019
                                                                                                                                                                                • Figure 50: Satisfaction with main current account provider, July 2019

                                                                                                                                                                            Consumers and Retail Banking - UK - September 2019

                                                                                                                                                                            £2,195.00 (Excl.Tax)