2020
9
UK Current Accounts Market Report 2020
2020-11-10T03:00:56+00:00
OX989404
2195
127184
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Report
en_GB
“Current account providers offered significant support to customers during the first six months of the COVID-19 pandemic, and this will boost perceptions of the industry. However, as brands look to…

UK Current Accounts Market Report 2020

£ 2,195 (Excl.Tax)

Report Summary

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

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What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

Current accounts are essential products and therefore largely insulated from the worst effects of COVID-19. Consumers will continue to need accounts. However, as unemployment is expected to rise in the coming months, this will put pressure on household finances and threaten the health of current accounts, with increased reliance on overdrafts likely and defaults expected to rise.

Expert analysis from a specialist in the field

Written by Richard Shepherd, a leading analyst in the Financial Services sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Current account providers offered significant support to customers during the first six months of the COVID-19 pandemic, and this will boost perceptions of the industry. However, as brands look to shift focus back to competing for new customers, they must continue to stand by existing customers as many are likely to suffer deteriorating finances in the coming months
Richard Shepherd
Associate Director – Financial Services

Table of Contents

  1. Overview

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

    • Impact of COVID-19 on current accounts
      • Figure 1: Short, medium and long term impact of COVID-19 on current accounts, 19 October 2020
    • The market
    • There are an estimated 75 million accounts in the UK
      • Figure 2: Estimated number of current accounts, 2017-20
    • Current account deposits spiked under lockdown restrictions …
      • Figure 3: Monthly changes in non-interest bearing sight deposits, January 2019-August 2020
    • … but switching activity fell sharply
      • Figure 4: Number of switches per month using the CASS, January 2016-August 2020
    • Companies and brands
    • Barclays is the biggest current account provider among the online population
      • Figure 5: Current account providers, main and other current accounts, August 2020
    • A sharp drop in advertising outlay
      • Figure 6: Total above-the line, online display and direct mail advertising expenditure on current accounts, 2015/16-2019/20
    • The consumer
    • 40% of consumers have more than one current account
      • Figure 7: Current account ownership, August 2020
    • 17% of over-18s pay for their current account
      • Figure 8: Type of current account held, August 2020
    • Product choice is driven by cost but additional benefits are also big considerations
      • Figure 9: Important factors when choosing a current account, August 2020
    • Consumers are satisfied with banks’ COVID-19 support
      • Figure 10: Satisfaction with main current account providers’ support for customers impacted by COVID-19, August 2020
    • Overdraft use is more likely to have increased than declined in the last year
      • Figure 11: Changes in overdraft use over the last year, August 2020
    • Support for free banking is universal
      • Figure 12: Attitudes towards current accounts, August 2020
  3. Issues and Insights

    • Current accounts will be disrupted, not damaged by COVID-19
    • Monetising relationships remains a difficult task
  4. The Market – Key Takeaways

    • COVID-19 has brought short-term benefits but concerns for the future
    • Multiple account ownership is driving up account numbers
    • Overdraft rate rises will dampen appetite to borrow
  5. Market Size

    • COVID-19 has increased pressures but current accounts are insulated from the worst effects
      • Figure 13: Short, medium and long term impact of COVID-19 on current accounts, 19 October 2020
    • There are an estimated 75 million accounts in the UK
      • Figure 14: Estimated number of current accounts, 2017-20
  6. Market Drivers

    • Rising unemployment will weaken current account health
      • Figure 15: Average annual unemployment rate, 2015-24 (OBR central scenario)
    • COVID-19 prompted a rush of current account savings …
      • Figure 16: Monthly changes in non-interest bearing sight deposits, January 2019-August 2020
    • … and a dramatic dip in switching activity
      • Figure 17: Number of switches per month using the CASS, January 2016-August 2020
    • A record low base rate
      • Figure 18: Bank of England base rate, end of month, January 2015-September 2020
    • The cost of overdraft borrowing has rocketed
      • Figure 19: Monthly interest rate of UK monetary financial institutions Sterling overdraft for households, January 2016-September 2020
  7. Regulatory and Legislative Changes

    • Relaxed overdraft rules were key to COVID-19 support …
    • … but new regulation means the cost of arranged facilities has soared
    • EEA-based Brits face account closures
    • Millions redistributed from dormant accounts to support COVID crisis
  8. Companies and Brands – Key Takeaways

    • COVID-19 slashed competition but prompted innovation
    • Reassurance and sensitivity are the key marketing messages
    • Monzo and Starling reach challenger status
  9. Market Share

    • Barclays is the biggest current account provider among the online population
      • Figure 20: Current account providers, main and other current accounts, August 2020
    • Mobile-only banks are growing, but still mostly for secondary accounts
      • Figure 21: Ownership of Monzo current accounts (main and other account), by age, August 2020
    • HSBC attracted the most switchers in Q1 2020
      • Figure 22: Net gains and losses of full account switches using CASS, selected brands, Q1 2020
    • Monzo and Starling have become established favourites for switchers
      • Figure 23: Net gains of full account switches using CASS, Monzo and Starling, Q2 2018-Q1 2020
  10. Competitive Strategies

    • Switching incentives return as banks bounce back from COVID-19
    • New products and features in FinTechs’ drive to grow revenues
    • Digital innovation continues to be a major focus
    • Linked cards launched to support shielding customers
    • Barclays reaches Open Banking milestone with third-party payments
    • Starling goes back to the future with web portal for online banking
    • Current account perks have been cut
  11. Advertising and Marketing Activity

    • A sharp drop in advertising outlay …
      • Figure 24: Total above-the line, online display and direct mail advertising expenditure on current accounts, 2015/16-2019/20
    • … driven by the impact of COVID-19
      • Figure 25: Total above-the line, online display and direct mail advertising expenditure on current accounts, September 2019-October 2020
    • Challengers rank high for current account adspend
      • Figure 26: Top 10 advertisers of above-the line, online display and direct mail advertising expenditure on current accounts, 2017/18-2019/20
    • Major brands have focused on reassurance and showing their human side
    • Nielsen Ad Intel coverage
  12. The Consumer – Key Takeaways

    • Providers have passed the COVID-19 test so far
    • There are opportunities to grow the packaged account segment …
    • … but support for free banking is universal
  13. Impact of COVID-19 on Consumer Behaviour

    • Worsening household finances will put pressure on account balances …
      • Figure 27: Changes in household finances, January 2015-September 2020
    • … but financial wellbeing has held up well so far
      • Figure 28: The financial wellbeing index, January 2015-September 2020
    • The COVID-19 boost to savings was not entirely intentional
      • Figure 29: Actual and planned saving activity, January 2019-September 2020
  14. Current Account Ownership

    • Almost all internet users have a current account
      • Figure 30: Current account ownership, August 2020
    • Multiple account ownership is a growing trend
      • Figure 31: Current account ownership, 2016-20
    • Almost a third hold a joint account
      • Figure 32: Join account ownership, August 2020
  15. Current Account Types

    • 17% of over-18s pay for their current account
      • Figure 33: Type of current account held, August 2020
    • Big scope for growth of premium accounts among younger groups
      • Figure 34: Ownership of selected types of current accounts, by age, August 2020
  16. Important Factors when Choosing a Current Account

    • Low fees and charges are the biggest considerations
      • Figure 35: Important factors when choosing a current account, August 2020
    • A third of standard account holders consider additional benefits
      • Figure 36: Important factors when choosing a current account, by type of current account held, August 2020
    • Older consumers are more interested in banking channels
    • Ethical and eco issues remain niche factors
  17. Satisfaction with Providers’ Response to COVID-19

    • Consumers are satisfied with banks’ COVID-19 support …
      • Figure 37: Satisfaction with main current account providers’ support for customers impacted by COVID-19, August 2020
    • … but vulnerable consumers are less positive
      • Figure 38: Satisfaction with main current account providers’ support for customers impacted by COVID-19, by current financial situation, August 2020
  18. Overdraft Access and Use

    • Just one in five say they use an overdraft facility
      • Figure 39: Access to and use of overdraft facilities, August 2020
    • Student account holders are most likely to use overdrafts regularly
      • Figure 40: Access to and use of overdraft facilities, by type of current account held, August 2020
    • Overdraft use is more likely to have increased than declined in the last year
      • Figure 41: Changes in overdraft use over the last year, August 2020
  19. Attitudes towards Current Accounts

    • Consumers trust their main bank
      • Figure 42: Attitudes towards current accounts, August 2020
    • Support for free banking is universal
    • Current account providers can be community pillars …
      • Figure 43: Agreement with the statement “I think current account providers should do more to support their local communities” – CHAID – Tree output, August 2020
    • … and are the first stop for many when looking for other products
      • Figure 44: Agreement with selected attitudes towards current accounts, by age, August 2020
  20. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • CHAID methodology
      • Figure 45: Current Accounts – CHAID – Table output, August 2020

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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*databooks not available with UK B2B Industry reports.

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