2021
9
UK Consumers and Savings Market Report 2021
2021-02-23T03:01:58+00:00
OX1042295
2195
134844
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Report
en_GB
“Much of the extra saving during the pandemic has been accidental, forced by the conditions rather than choice. It is therefore understandable that many will be keen to enjoy spending…

UK Consumers and Savings Market Report 2021

£ 2,195 (Excl.Tax)

Description

Providing the most comprehensive and up-to-date information and analysis of the UK Consumers and Savings market, including the behaviours, preferences and habits of the consumer.

With the COVID-19 pandemic closing many non-essential shops and leisure activities, many people have accumulated some savings throughout 2020 and into 2021. The number of adults with savings of over £10,000 increased from 40% to 49% between October 2019 and November 2020, with £1.76 trillion saved in household deposits (an 11% increase from 2019).

The pandemic has also highlighted the continued divide between those with high and middle stable incomes and lower income households. People with better financial security were able to save more across the year, with January 2021 lockdowns further exacerbating this gap. However, those who have saved money see it as a more accidental and short-lived benefit rather than a longer-term saving plan.

Understanding how consumers are intending to spend these savings once the pandemic ends could be a major opportunity for companies, as well as connecting with lower income households already struggling to make ends meet. There is an increasingly short-lived window to encouraging long-term saving habits in consumers.

This report covers the current state of the savings market, as well as opportunities to recover the market in both the short and long term. It also explores ways for companies to offer assistance to customers to help build up more financial security.

Read on to discover more details or take a look at all of our UK Financial market research.

Quickly understand

  • The impact of COVID-19 on the savings market, exploring both the opportunities and threats of the crisis.
  • Savings product ownership, recent savings activity and plans over the next 12 months.
  • Important factors when choosing a new savings account.
  • Attitudes towards savings accounts, including interest in savings marketplaces, the impact of an ultra-low rate environment.

Covered in this report

Saving Products: Savings accounts, investment accounts, current accounts, easy-access savings accounts, cash ISA (easy access, limited access), NS&I premium bonds, stocks and shares ISA, individual company shares, fixed-rate bond, notice savings accounts.

Expert analysis from a specialist in the field

Written by Douglas Kitchen, a leading analyst in the Finance sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Much of the extra saving during the pandemic has been accidental, forced by the conditions rather than choice. It is therefore understandable that many will be keen to enjoy spending this money when the situation allows. Cancelled plans, missed family occasions and significant pent-up demand for more normal activities will undoubtedly result in a sizeable boost in consumer spending once restrictions are eased. However, savings providers still have an opportunity to help people engage with their savings and to turn a temporary situation into a longer-term behaviour.

Douglas Kitchen
Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: Market context
    • Economic and other assumptions
    • Report scope
  2. Executive Summary

    • Impact of COVID-19 on savings and investments
      • Figure 1: Short, medium and long-term impact of COVID-19 on savings and investments, January 2021
    • The market
    • The pandemic drives a significant increase in saving…
      • Figure 2: Household deposits, 2009-20
    • …but growth will slow as restrictions are lifted
      • Figure 3: Market forecast of household deposits, 2015-25
    • The savings ratio rocketed in Q2
      • Figure 4: Household savings ratio at current prices, Q1 2015-Q3 2020
    • Those on high or middle incomes have fared well
    • The proportion of people with a significant savings pot grows
      • Figure 5: Value of savings and investments, 2017-20
    • The consumer
    • Restricted-access accounts heavily skewed towards over-55s
      • Figure 6: Savings product ownership, November 2020
    • Use of current accounts suggests temporary savings
      • Figure 7: Savings activity over the last 12 months, November 2020
    • 60% of savers have met or exceeded their savings goals
      • Figure 8: Savings expectations over the last 12 months, November 2020
    • Savings priorities remained broadly unchanged
      • Figure 9: Savings priorities, 2019 and 2020
    • 30% have opened a new savings account in the last 12 months…
      • Figure 10: Savings account opening activity, November 2020
    • … with the low rate environment acting as the main barrier
      • Figure 11: Reasons for not opening a savings account in the last two years, November 2020
    • Savers seek convenience and easy access
      • Figure 12: Important factors when choosing a savings account, November 2020
    • Close to half would be interested in using a savings marketplace
      • Figure 13: Attitudes towards savings accounts, November 2020
  3. Issues and Insights

    • A significant proportion of COVID-19 saving is likely to be spent when restrictions are lifted
    • Less experienced savers need help to maximise the value of their savings
    • Helping people to rebuild their finances will require a different approach
  4. The Market – Key Takeaways

    • Household saving reaches an unprecedented level…
    • …while the proportion of people with a significant savings pot grows
    • Plans to protect loyal savers are shelved
  5. Market Size and Forecast

    • COVID-19 pandemic has boosted household savings
      • Figure 14: Short, medium and long-term impact of COVID-19 on savings and investments, January 2021
    • A huge increase in saving in 2020
      • Figure 15: Household deposits, 2009-20
    • Savings growth is expected to slow from 2021 onwards
      • Figure 16: Market forecast of household deposits, 2015-25
      • Figure 17: Market forecast of household deposits, 2020-25
    • Market drivers and assumptions
      • Figure 18: Key drivers affecting Mintel’s market forecast, 2015-25 prepared in January 2021
    • Learnings from the last recession
      • Figure 19: Household deposits, 2005-10
    • Forecast methodology
  6. Market Segmentation

    • Cash ISA growth expected to outpace stocks and shares in 2019/20
      • Figure 20: Number of cash and stocks and shares ISAs and amounts subscribed, 2013/14-2019/20
    • Non-interest-bearing deposits account for the majority of increased savings
      • Figure 21: Outstanding balances on household deposits, by account type, 2015-20
  7. The Savings Environment

    • Saving reaches unprecedented levels…
      • Figure 22: Household savings ratio at current prices, Q1 2015-Q3 2020
    • …but a large split exists between those well off and those struggling financially
    • More people have built a significant savings pot in 2020
      • Figure 23: Value of savings and investments, 2017-20
    • GDP is expected to return to growth in 2021
      • Figure 24: Annual GDP, 2015-25 (central forecast)
    • A fall in unemployment may lead to people cutting costs
      • Figure 25: Annual unemployment rate, 2015-25
    • Interest rates fall to historic lows
      • Figure 26: Consumer deposits quoted interest rates to households, October 2012-October 2020
  8. The Regulatory Environment

    • Plans to tackle loyalty penalty on hold as rates plummet
    • Government responds to COVID-19 crisis by improving access to LISAs
  9. The Consumer – Key Takeaways

    • Savings will provide a boost to spending once COVID-19 restrictions are lifted
    • Scope to increase ownership of restricted-access accounts
    • Savings priorities remain broadly unchanged
    • Re-engaging consumers in a low rate environment
  10. Impact of COVID-19 on Consumer Behaviour

    • A third say that they are financially worse off
      • Figure 27: Change in financial situation since the COVID-19 outbreak, November 2020
    • Consumers are more used to the impact of the virus on their lives
      • Figure 28: Level of concern about COVID-19 affecting lifestyle, 26 March-16 December 2020
    • Incentives to save increased at the start of January
      • Figure 29: Trend in extra money saved, January 2020-January 2021
  11. Savings Product Ownership

    • Easy-access accounts dominate the savings market
      • Figure 30: Savings product ownership, November 2020
    • Scope to increase ownership of restricted-access accounts
      • Figure 31: Savings product ownership, by value of savings and investments, November 2020
  12. Accounts Used for Saving in the Last Year

    • Current accounts led the way for saving in 2020…
      • Figure 32: Savings activity over the last 12 months, November 2020
    • …particularly among those who have seen their financial position improve
      • Figure 33: Savings activity over the last 12 months, by change in financial situation since the COVID-19 outbreak, November 2020
  13. Saving Over the Last Year

    • 60% met or exceeded their savings goals in the last year…
      • Figure 34: Savings expectations over the last 12 months, November 2020
    • …providers have an opportunity to help lower-value savers make up for lost time
      • Figure 35: Savings expectations over the last 12 months, by value of savings and investments, November 2020
  14. Savings Priorities

    • Savings priorities remain broadly unchanged
    • Holidays are less of a driver of saving…
    • …but saving for home improvements gains ground
    • Emergencies and unexpected events remain the key priority
      • Figure 36: Savings priorities, 2019 and 2020
    • People who have saved more than expected are more likely to be saving for future holidays
      • Figure 37: Savings priorities, by savings expectations, November 2020
  15. Savings Account Opening Activity

    • 30% have opened a new account in the last year
    • Boosted savings have driven new account openings
      • Figure 38: Savings account opening activity, November 2020
    • The low rate environment is disincentivising switching…
    • …but younger savers are more put off by the perceived hassle
      • Figure 39: Reasons for not opening a savings account in the last two years, November 2020
    • Helping people to make the most of their savings
      • Figure 40: People who have not opened a savings account with a new provider in the last two years because they do not have enough saved to make it worthwhile, by value of savings and investments, November 2020
  16. Important Factors when Choosing a Savings Account

    • Adding value and convenience to savings accounts is key in low rate environment
      • Figure 41: Important factors when choosing a savings account, November 2020
    • A competitive rate, easy access and good online functionality will appeal to 80% of savers
      • Figure 42: TURF Analysis – Consumers and Saving, November 2020
  17. Attitudes towards Savings Accounts

    • An emphasis on rewarding loyalty would be well received
      • Figure 43: Attitudes towards savings accounts, November 2020
    • Modest savers are interested in exclusive rewards
      • Figure 44: Response to the statement ‘The offer of exclusive rewards would make me willing to open a 0% interest rate account’, by value of savings and investments, November 2020
    • Recent switchers are most likely to use a savings marketplace
      • Figure 45: Response to the statement ‘I would use a savings marketplace (ie a savings platform where you can transfer money between different providers to access better rates/products)’, by savings account opening activity, November 2020
  18. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • Methodology
      • Figure 46: TURF Analysis – Consumers and Saving, November 2020

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