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Deposit and Savings Accounts - UK - June 2018

“Most people have an unstructured approach to saving, doing so as and when they can afford to. However, affordability constraints mean people are saving less of their disposable income than they previously have. Innovative digital savings tools can help people to establish better saving habits and ensure they meet their savings goals.”

- Jessica Galletley, Senior Financial Services Analyst

This report will look at the following areas:

  • Younger consumers more reactive to rising interest rates
  • Pent-up demand for digital saving innovations
  • Adapting to people’s saving approach is key to personalisation

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Table of contents

  1. Overview

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

          • The market
            • Savings deposits forecast to grow by around 3% annually
              • Figure 1: Forecast of total retail savings deposits, 2012-22
            • Interest bearing sight deposits account for 45% of the market
              • Figure 2: Share of household retail savings balances, by main product type, 2017
            • Savings ratio falls to historic low
              • Figure 3: Household savings ratio, 2008-17
            • Competition in the cash savings market
              • Companies and brands
                • Lloyds Banking Group has the greatest share of customer deposits
                  • Figure 4: Providers’ total retail savings balances at year end, shown on a group basis – UK, 2016-17
                • Providers respond differently to base rate increase
                  • Microsaving tools could tackle savings crisis
                    • Adspend doubles in 2018
                      • Figure 5: Above-the-line, online display and direct mail advertising expenditure on cash savings products, by type of product, 2014-18
                    • The consumer
                      • Four in five have a cash savings account
                        • Figure 6: Ownership of cash saving products, February 2018
                      • Unstructured approach to saving makes it hard to set goals
                        • Figure 7: Approach to saving, February 2018
                      • Online access is a priority
                        • Figure 8: Attitudes towards managing savings, February 2018
                      • Rising interest rates could lead to an increase in savings activity
                        • Figure 9: Impact of interest rates on savings behaviour, February 2018
                      • Positive levels of interest in digital saving innovations
                        • Figure 10: Interest in various digital saving innovations, February 2018
                      • What we think
                      • Issues and Insights

                        • Younger consumers more reactive to rising interest rates
                          • The facts
                            • The implications
                              • Pent-up demand for digital saving innovations
                                • The facts
                                  • The implications
                                    • Adapting to people’s saving approach is key to personalisation
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Savings deposits forecast to grow by around 3% annually
                                            • Interest bearing sight deposits account for 45% of the market
                                              • Savings ratio falls to a historic low
                                                • Competition in the cash savings market
                                                • Market Size and Forecast

                                                  • Annual growth in deposits drops to 3%
                                                    • Figure 11: Total retail savings deposits, 2007-17
                                                  • Savings deposits forecast to grow by around 3% annually
                                                    • Figure 12: Forecast of total retail savings deposits, 2012-22
                                                    • Figure 13: Forecast of total retail savings balances, at current and constant prices, 2017-22
                                                  • Forecast methodology
                                                  • Market Segmentation

                                                    • Interest-bearing sight deposits account for 45% of the market
                                                      • Figure 14: Household retail savings balances, by main product type, 2013-17
                                                    • Time deposits fall by 4%
                                                      • Non interest-bearing deposits grew by 8%
                                                      • Market Drivers

                                                        • Competition in the cash savings market
                                                          • Interest rates begin to rise
                                                            • Figure 15: Effective interest rates on household deposit balances versus official bank base rate, January 2010-February 2018
                                                          • Average rates still below inflation
                                                            • Figure 16: Annual change in the Consumer Price Index (CPI) and average weekly earnings (year on year 3 months average), January 2012-March 2018
                                                          • Nearly a quarter have no savings
                                                            • Figure 17: Value of savings and investments, February 2018
                                                          • Savings ratio falls to a historic low
                                                            • Figure 18: Household savings ratio, 2008-17
                                                          • Open Banking
                                                          • Companies and Brands – What You Need to Know

                                                            • Lloyds Banking Group has the greatest share of customer deposits
                                                              • Providers respond differently to base rate increase
                                                                • Microsaving tools could tackle savings crisis
                                                                  • Adspend doubles in 2018
                                                                  • Market Share

                                                                    • Lloyds Banking Group has the greatest share of customer deposits
                                                                        • Figure 19: Providers’ total retail savings balances at year end, shown on a group basis – UK, 2016-17
                                                                      • More people look elsewhere for fixed-rate or notice accounts
                                                                        • Figure 20: Savings product provider used, by product type, March 2018
                                                                      • Majority only use one savings provider
                                                                        • Figure 21: Number of different savings providers used, by age, March 2018
                                                                    • Competitive Strategies and Innovation

                                                                      • Providers respond differently to base rate increase
                                                                        • Microsaving tools could tackle savings crisis
                                                                          • AI-based affordability saving
                                                                            • Rounding up
                                                                              • Savings ‘pots’ give people greater control over their savings
                                                                                • Current account interest on balances falling
                                                                                • Advertising and Marketing Activity

                                                                                  • Adspend doubles in 2018
                                                                                    • Figure 22: Above-the-line, online display and direct mail advertising expenditure on cash savings products, by type of product, 2014-18
                                                                                  • Halifax accounts for 30% of total adspend
                                                                                    • Figure 23: Top 15 advertisers of above-the-line, online display and direct mail advertising on cash savings products, 2015/16-17/18
                                                                                  • TV share of spend continues to rise
                                                                                    • Figure 24: Share of above-the-line, online display and direct mail advertising expenditure on cash savings products, by type of media, 2015/16-2017/18
                                                                                  • Nielsen Ad Intel coverage
                                                                                  • The Consumer – What You Need to Know

                                                                                    • Four in five have a cash savings account
                                                                                      • Unstructured approach to saving makes it hard to set goals
                                                                                        • Online access is a priority
                                                                                          • Rising interest rates could lead to an increase in savings activity
                                                                                            • Positive levels of interest in digital saving innovations
                                                                                            • Ownership of Cash Saving Products

                                                                                              • Four in five have a cash savings account
                                                                                                  • Figure 25: Ownership of cash saving products, February 2018
                                                                                                • Higher-value savers have a greater variety of accounts
                                                                                                  • Figure 26: Ownership of cash saving products, by value of savings, February 2018
                                                                                                • Higher penetration of accounts among over 55s
                                                                                                  • Online saving pots could appeal to younger generations
                                                                                                    • Figure 27: Repertoire of ownership of cash saving products, February 2018
                                                                                                • Approach to Saving

                                                                                                  • Unstructured approach to saving makes it hard to set goals
                                                                                                      • Figure 28: Approach to saving, February 2018
                                                                                                    • Financial pressures challenge structured saving activities
                                                                                                      • Figure 29: Approach to saving, by age, February 2018
                                                                                                    • Lower earners find it difficult to save regularly
                                                                                                      • Figure 30: Approach to saving, by household income, February 2018
                                                                                                  • Attitudes towards Managing Savings

                                                                                                    • Savings protection is key
                                                                                                        • Figure 31: Attitudes towards managing savings, February 2018
                                                                                                      • Online access is a priority
                                                                                                        • People look beyond their main provider for restricted access accounts
                                                                                                          • Figure 32: Agreement with the statement ‘I have a savings account with a provider other than my main current account provider’
                                                                                                      • Impact of Interest Rates on Saving Behaviour

                                                                                                        • Rising interest rates could lead to an increase in savings activity
                                                                                                            • Figure 33: Impact of interest rates on savings behaviour, February 2018
                                                                                                          • Most people are likely to stay put
                                                                                                            • Timed account holders more likely to switch
                                                                                                              • Figure 34: Agreement with the statement ‘I am considering moving some savings to another provider or product that offers a better rate’, February 2018
                                                                                                            • Financially healthy Millennials more open to alternative providers
                                                                                                                • Figure 35: Target groups based on attitudes towards saving – CHAID – Tree output, February 2018
                                                                                                            • Interest in Digital Saving Innovations

                                                                                                              • Positive levels of interest in digital saving innovations
                                                                                                                  • Figure 36: Interest in various digital saving innovations, February 2018
                                                                                                                • Younger generations more interested in digital saving innovations
                                                                                                                  • Figure 37: Interest in various digital saving innovations, by age, February 2018
                                                                                                                • Financial strugglers interested in automated saving
                                                                                                                  • Figure 38: Interest in various digital saving innovations, by financial situation, February 2018
                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                  • Abbreviations
                                                                                                                    • Consumer research methodology
                                                                                                                    • Appendix – Market Size and Forecast

                                                                                                                        • Figure 39: Best and worst case forecast scenarios for total retail savings deposits, 2017-22

                                                                                                                    Deposit and Savings Accounts - UK - June 2018

                                                                                                                    US $2,693.85 (Excl.Tax)