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Deposit and Savings Accounts - UK - May 2019

Covered in this report

The focus of this report is retail deposit and savings accounts for the adult market. Cash ISAs and current accounts are the subjects of separate Mintel reports, although these products are covered in this report to some extent, due to their close association. Children’s savings accounts are not covered in this report, and are the subject of a separate report.

There are various types of deposit and savings accounts available to UK adults. The main ones are as follows:

  • Easy access (or instant access) savings account– the most widely available and commonly held type of account, which does not impose any restrictions on making withdrawals and provides either a variable interest rate or a fixed/guaranteed interest rate for an introductory period
  • Notice account– this is where the account holder must give a certain number of days’ notice before making a withdrawal so as not to lose any interest
  • Fixed-term/fixed-rate savings account or bond– offers a fixed rate for a fixed term, usually between one and five years
  • Regular savings account – where the account holder is required to make regular monthly payments (usually ranging from £25 to £250 or £500 a month) in return for a higher interest rate
  • Cash ISA (individual savings account) – similar to ordinary savings accounts, in that there are different varieties (eg instant access, fixed term), but all interest earned is paid tax free. In 2018/19, individuals aged 16+ can invest or save up to £20,000 in an ISA
  • National Savings & Investments (NS&I)– provides a range of tax-free cash savings products, backed by HM Treasury, the most popular of which are Premium Bonds

“Consumers remain reluctant to look beyond easy access accounts. They need more help to identify their savings goals and understand how they can make the most of higher paying limited access accounts. Online tools and open banking technology have the potential to give people new perspective when managing their savings.”
– Douglas Kitchen, Financial Services Analyst

This Report looks at the following areas:

  • Improving brand profile and gaining consumer trust is vital for savings superstores
  • High street brands must adapt in order to attract younger savers

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Table of contents

  1. Overview

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

          • The market
            • Growth stays at 3% in 2018
              • Figure 1: Total retail savings deposits, 2008-18
            • Total savings deposits forecast to near £2 trillion by 2023
              • Figure 2: Forecast of total retail savings deposits, 2013-23
            • Rate rises filter through to new fixed-rate accounts
              • Figure 3: Effective interest rates on household deposit balances versus official Bank of England base rate, January 2010-February 2019
            • Earnings growth outpacing inflation
              • Figure 4: Annual change in the Consumer Price Index (CPI) and average weekly earnings (year on year 3 months average), October 2012-January 2019
            • Over one third hope to add to their savings
              • Figure 5: Trends in saving activities over the last three months, June 2012-January 2019
            • Companies and brands
              • LBG accounted for 17% of retail savings balances in 2018
                • Figure 6: Providers’ total retail savings balances at year end, shown on a group basis – UK, 2017-18
              • Goldman Sachs’ ‘Marcus’ account looks set to disrupt the easy access market
                • Best buy cash ISA rates reach highest level since 2016
                  • The consumer
                    • Easy access accounts continue to be strongly favoured
                      • Figure 7: Ownership of cash savings products, February 2019
                    • Providers face challenge to accommodate a range of preferences
                      • Figure 8: Incentives when choosing a savings account provider, February 2019
                    • Current account providers retain strong grip on the market
                      • Figure 9: Preferred sources of information when looking for a new savings account provider, February 2019
                    • Saving for security tops the list of motivations
                      • Figure 10: Saving plans over the next two years, February 2019
                    • Few expect to save in a limited access account
                      • Figure 11: Saving expectations over the next two years, February 2019
                    • Savings superstores appeal to over half
                      • Figure 12: Awareness of and interest in savings superstores, February 2019
                    • What we think
                    • Issues and Insights

                      • Improving brand profile and gaining consumer trust is vital for savings superstores
                        • The facts
                          • What this means
                            • High street brands must adapt in order to attract younger savers
                              • The facts
                                • What this means
                                • The Market – What You Need to Know

                                  • Growth stays at 3% in 2018
                                    • Significant growth among easy access savers, and interest-paying current accounts
                                      • Interest rates are on the rise
                                        • Earnings growth outpacing inflation
                                        • Market Size and Forecast

                                          • Growth remained low in 2018…
                                            • …but competition and focus on savings is increasing
                                              • Figure 13: Total retail savings deposits, 2008-18
                                            • Total savings deposits forecast to near £2 trillion by 2023
                                              • Figure 14: Forecast of total retail savings deposits, 2013-23
                                              • Figure 15: Forecast of total retail savings balances, at current and constant prices, 2013-23
                                            • Forecast methodology
                                            • Market Segmentation

                                              • Interest-bearing sight deposits increase market share
                                                • Non-interest bearing deposits fall by 11%
                                                  • Figure 16: Household retail savings balances, by main product type, 2014-18
                                              • Market Drivers

                                                • Interest rates edge upwards…
                                                  • Figure 17: Effective interest rates on household deposit balances versus official Bank of England base rate, January 2010-February 2019
                                                • …however future movement is largely dependent on Brexit
                                                  • FCA discussion paper looks to increase competition in the market
                                                    • Earnings growth on the rise as inflation falls
                                                      • Figure 18: Annual change in the Consumer Price Index (CPI) and average weekly earnings (year on year 3 months average), October 2012-January 2019
                                                    • Saving ratio increases but is still negative
                                                      • Figure 19: UK households’ cash basis saving ratio and national accounts saving ratio, seasonally adjusted and at current prices, Q1 2014-Q2 2018
                                                    • Over one in three have more than £10,000 saved
                                                      • Figure 20: Value of savings and investments, February 2018 vs February 2019
                                                  • Consumer Environment

                                                    • Opportunities to boost focus on saving
                                                        • Figure 21: Trends in saving activities over the last three months, June 2012-January 2019
                                                      • Half are concerned about the effect of Brexit on the cost of living …
                                                          • Figure 22: Attitudes towards the effect of Brexit on the cost of living, July 2016-January 2019
                                                        • …and a third about the impact on the value of their savings and investments
                                                            • Figure 23: Attitudes towards the effect of Brexit on the value of savings and investments, July 2016-January 2019
                                                        • Companies and Brands – What You Need to Know

                                                          • LBG accounts for 17% of retail savings balances
                                                            • Best buy cash ISA rates reach highest level since 2016
                                                              • Goldman Sachs’ ‘Marcus’ account looks set to disrupt the easy access market
                                                                • Hargreaves Lansdown launches the latest savings superstore
                                                                  • Savings adspend increased by 5% in 2018/19
                                                                  • Market Share

                                                                    • Lloyds Banking Group remains the dominant force in the market
                                                                      • Figure 24: Providers’ total retail savings balances at year end, shown on a group basis – UK, 2017-18
                                                                    • High-street banks lead the way for easy-access and regular saver accounts
                                                                      • Fixed-rate savers are more likely to use lesser-known providers
                                                                        • Figure 25: Savings product provider used, by product type, February 2019
                                                                    • Competitive Strategies

                                                                      • Smaller savings providers look to have reinvigorated the cash ISA
                                                                        • Lloyds and Nationwide place emphasis on saving for the future
                                                                          • High-street banks offer preferential rates to current customers
                                                                          • Launch Activity and Innovation

                                                                            • Marcus shakes up the easy access market
                                                                              • Hargreaves Lansdown launches online savings marketplace
                                                                                • Open Banking developments offer tools to boost savings
                                                                                  • On the high street…
                                                                                    • …and through new partnerships
                                                                                      • Case study: mobile- and online-only brands are developing their savings account offerings
                                                                                      • Advertising and Marketing Activity

                                                                                        • Savings adspend increased by 5% in 2018/19
                                                                                          • Figure 26: Above-the-line, online display and direct mail advertising expenditure on cash savings products, by type of product, 2016-19
                                                                                        • Nationwide tops advertising spend for 2018/19
                                                                                          • Figure 27: Top 15 advertisers of above-the-line, online display and direct mail advertising on cash savings products, 2016/17-2018/19
                                                                                        • TV adspend share falls, but remains the dominant channel
                                                                                          • Figure 28: Share of above-the-line, online display and direct mail advertising expenditure on cash savings products, by type of media, 2018/19
                                                                                        • Nielsen Ad Intel coverage
                                                                                        • The Consumer – What You Need to Know

                                                                                          • Easy access accounts remain the most popular
                                                                                            • Providers face challenge to accommodate a range of preferences
                                                                                              • Current account providers retain strong grip on the market
                                                                                                • Saving for security tops the list of motivations
                                                                                                  • Few expect to save in a limited access account
                                                                                                    • Savings superstores appeal to over half
                                                                                                    • Product Ownership

                                                                                                      • Over half own an easy access account
                                                                                                        • Figure 29: Ownership of cash savings products, February 2019
                                                                                                      • Scope to increase ownership of limited access accounts
                                                                                                        • Figure 30: Ownership of cash savings products, by value of savings and investments, February 2019
                                                                                                    • Important Factors When Choosing a Savings Account Provider

                                                                                                      • Cash incentives top the list
                                                                                                        • Branch-based providers have strong appeal
                                                                                                          • Figure 31: Incentives when choosing a savings account provider, February 2019
                                                                                                        • High-street banking savers want cross-channel access
                                                                                                          • Figure 32: Incentives when choosing a savings account provider, by savings account provider used, February 2019
                                                                                                        • Generation Z and Millennials are the most likely to be tempted by budgeting tools
                                                                                                          • Figure 33: Importance of budgeting tools when choosing a new savings provider, by generation, February 2019
                                                                                                      • Preferred Sources of Saving Account Information

                                                                                                        • Current account providers are the most popular sources of information
                                                                                                          • Figure 34: Preferred sources of information when looking for a new savings account provider, February 2019
                                                                                                        • 43% of customers of the big five banking groups would use a price comparison site
                                                                                                          • Figure 35: Preferred sources of information when looking for a new savings account provider, by savings account provider used, February 2019
                                                                                                      • Saving Plans

                                                                                                        • Building a savings buffer is the major priority
                                                                                                          • Almost one third of Generation Z are saving for a big ticket purchase
                                                                                                            • Figure 36: Saving plans over the next two years, February 2019
                                                                                                          • Budgeting tools can help people achieve their goals
                                                                                                            • Figure 37: Saving plans over the next two years, by incentives when choosing a new savings provider, February 2019
                                                                                                        • Saving Expectations

                                                                                                          • Little interest in limited access products
                                                                                                            • Competition from high interest-paying current account persists
                                                                                                              • Figure 38: Saving expectations over the next two years, February 2019
                                                                                                            • Price comparison sites are the main source of information for those looking to open a new account or switch
                                                                                                              • Figure 39: Preferred channels used when looking for a new savings account provider, by savers expecting to open a new savings account or switch their saving provider, February 2019
                                                                                                          • Interest in Online Savings Marketplaces

                                                                                                            • Over 50% are interested in using savings superstores…
                                                                                                              • …but trust remains a barrier
                                                                                                                • Figure 40: Awareness of and interest in savings superstores, February 2019
                                                                                                              • Those looking to save for a deposit are key targets
                                                                                                                • Figure 41: Awareness of and interest in savings superstores, by savings plans, February 2019
                                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

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

                                                                                                                      • Figure 42: Best and worst case forecasts scenarios for total retail savings deposits, 2018-23
                                                                                                                    • Forecast methodology

                                                                                                                    Deposit and Savings Accounts - UK - May 2019

                                                                                                                    US $2,552.20 (Excl.Tax)