2021
9
UK Current Accounts Market Report 2021
2021-12-25T03:03:04+00:00
OX1049247
2195
146524
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Report
en_GB
“Despite generally high satisfaction levels with current accounts, switching activity has grown in the second half of the year as providers bring back incentives. With more branch closures throughout the…

UK Current Accounts Market Report 2021

£ 2,195 (Excl.Tax)

Description

The UK Current Accounts industry report identifies consumer attitudes towards current accounts and account providers in the UK. This market research report on current accounts covers the market size, market forecast, market segmentation and industry trends for the Current Accounts market in the UK. 

Current Market Landscape

The financial impact of COVID-19 left many people needing support from their account providers, with temporary interest-free overdrafts boosting customer loyalty. Switching activity dropped off significantly during the first COVID-19 lockdown as incentives were removed. However, as providers have brought back incentives in 2021, switching activity and competition between providers have increased.

  • While 87% of consumers say they are satisfied with their main current account provider, 25% say they are likely to switch to another provider in the next 12 months.
  • There were 75.6 million current accounts in the UK in July 2021.
  • Over 98% of people have a current account in the UK, reflecting the essential nature of the product.

With so many fee-paying packaged accounts based around European or worldwide travel insurance and premium accounts offering airport lounge access, the limited opportunities for travel throughout the pandemic saw fee-paying account ownership decline. Any further COVID-19 disruption will likely boost current account balances with fewer opportunities to spend but could limit switching activity.

Future Market Trends in Current Accounts 

Current accounts are an essential financial service but major high street banks cannot become complacent and assume younger consumers will follow previous generations. Digital challenger banks have made inroads in terms of additional accounts and offer strong mobile app performance with smart budgeting tools proving particularly important. Beyond maintaining pace with innovation in the sector, banks must address their environmental record and investment in fossil fuels or risk alienating customers over the longer term.

There are opportunities to improve engagement with customers through digital banking. Video appointments grew significantly during the pandemic and many banks are increasing hours of availability or even offering 24/7 video service. While some will be concerned over branch closures, offering effective customer service across digital channels with short wait times could prove more popular in the long term. With most banks offering cheque pay-in via banking app, banks can further reduce the need for customers to make the journey to a branch.

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

Quickly understand

  • Ownership of current accounts and the type of accounts consumers hold.
  • Market share of UK current account providers.
  • Customer satisfaction levels with main current account providers.
  • Likelihood of switching main accounts in the next 12 months.
  • Important factors when choosing between account providers.

Covered in this report

Brands: Barclays, Lloyds Bank, Halifax, Santander, NatWest, Nationwide Building Society, HSBC, TSB, First Direct, Royal Bank of Scotland (RBS), Bank of Scotland, The Co-Operative Bank, Monzo, Starling Bank, M&S Bank, Virgin Money, Clydesdale Bank, Triodos, Banske, Ulster Bank, AIB Group, Bank of Ireland, Tesco Bank, Revolut, MasterCard, Project Imagine, ICICI Bank, Curve 1.

Expert analysis from a specialist in the field

This report, written by Adrian Reynolds, a leading analyst in the Finance sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Despite generally high satisfaction levels with current accounts, switching activity has grown in the second half of the year as providers bring back incentives. With more branch closures throughout the year, digital customer service and video appointments will grow in importance, with particular need to raise awareness of these services among demographics who are used to in-person service. Major providers must also invest in smart budgeting tools to maintain pace with the apps of challenger banks or risk losing younger customers.
Adrian Reynolds
Associate Consultant

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, 2021
    • The market
    • There are an estimated 75.6 million accounts in the UK
    • Switching activity picks up as providers bring back incentives
      • Figure 2: Number of switches per month using the CASS, 2019-21
    • COVID-19 prompted a rush of current account savings
      • Figure 3: Monthly changes in non-interest-bearing sight deposits, 2020-21
    • Companies and brands
    • Barclays is the biggest current account provider among the online population
      • Figure 4: Current account providers, main and other current accounts, 2021
    • The consumer
    • Current account ownership is near universal
    • Growth in multiple account ownership stalled in 2021
      • Figure 5: Current account ownership, 2017-21
    • 15% of over-18s pay for their current account
      • Figure 6: Type of current account held, 2021
    • Nearly nine in 10 people are satisfied with their main current account
      • Figure 7: Satisfaction with main current account provider, 2021
    • Men are more likely to shop around for new deals on accounts
      • Figure 8: Account changing activity, by gender, 2021
    • Quarter of account owners likely to move to new providers in the next year
      • Figure 9: Likelihood of switching main account, 2021
    • Branch access is the most important factor when choosing accounts
    • Smart budgeting tools are the priority for a quarter of young Brits
      • Figure 10: Important features when choosing between current accounts, 2021
  3. Issues and Insights

    • Vary switching incentives by lifestage to drive interest
    • Cashback on household bills could ease fears over energy crisis
    • Offer more personalised accounts to avoid unused rewards and benefits
    • Invest in smart budgeting tools to attract younger customers
    • Sustainable cards and environmental features can help account provider image…
    • …but banks must address environmentally harmful investments
  4. Market Size

    • Innovation should gather pace as providers move past the impact of COVID-19
      • Figure 11: Short, medium and long-term impact of COVID-19 on current accounts, 2021
    • There are an estimated 75.6 million accounts in the UK
      • Figure 12: Estimated number of current accounts, 2018-21
  5. Market Drivers

    • Switching activity picks up as providers bring back incentives
      • Figure 13: Number of switches per month using the CASS, 2019-21
    • COVID-19 prompted a rush of current account savings
      • Figure 14: Monthly changes in non-interest-bearing sight deposits, 2020-21
    • Initial unemployment level fears not realised as CJRS ends
      • Figure 15: Average annual unemployment rate, 2017-26 (OBR central scenario)
    • Bank of England maintains record low base rate in November 2021
      • Figure 16: Bank of England base rate, end of month, 2017-21
    • Overdraft borrowing expense surges after temporary COVID relief
      • Figure 17: Monthly interest rate of UK monetary financial institutions Sterling overdraft for households, 2018-21
    • Concerns about COVID-19 persist
    • Rising fuel costs are the leading financial concern
      • Figure 18: Factors impacting financial situation, 2021
    • Widespread branch closures will drive digital banking
    • Amazon’s removal of Visa credit cards could increase use of debit cards and overdraft facilities
  6. Regulatory and Legislative Changes

    • FCA and Treasury increase contactless limit to £100
    • CMA delays introduction of Variable Recurring Payments (VRPs)
    • National Insurance rate to rise 1.25 percentage points from April 2022
    • Consultation launched on the regulation of the BNPL sector
    • FCA delays SCA compliance for ecommerce until March 2022
    • FCA guidelines on branch closures seek to retain consumer access to cash
    • Government’s Coronavirus Job Retention Scheme comes to an end
    • Universal Credit £20 uplift is removed while taper rate is reduced
    • Government suspends the triple lock on state pensions for 2022
  7. Market Share

    • Barclays is the biggest current account provider among the online population
      • Figure 19: Current account providers, main and other current accounts, 2021
    • Halifax benefits as switching activity picks up…
    • …while Santander and HSBC fare the worst
      • Figure 20: Net gains and losses of full account switches using CASS, selected brands, Q2 2021
    • Starling among the favourites for switchers while Monzo falls back
      • Figure 21: Net gains of full account switches using CASS, Monzo and Starling, Q1 2019-Q2 2021
    • Monzo growth focused on younger people’s second accounts
      • Figure 22: Ownership of Monzo current accounts (main and other account), by age, 2021
    • Despite recent growth Starling remains some way behind Monzo
      • Figure 23: Ownership of Starling current accounts (main and other account), by age, 2021
  8. Competitive Strategies

    • High street banks increasing switching incentives
    • Growing importance of video banking sees NatWest offer 24/7 support
    • Monzo targets the BNPL sector with Monzo Flex
    • NatWest introduces paying in cheques on smartphones
    • Digital banks adding to users’ investment options
    • Starling looks at portrayal of women in latest #MakeMoneyEqual campaign
    • Growing emphasis on environmentally friendly debit cards
    • TreeCard and Tred set to launch green bank cards in the UK
    • Starling releases the first recycled plastic debit card
    • Revolut limited edition and personalised cards go against the sustainability trend
  9. Advertising and Marketing Activity

    • Current account adspend showing signs of recovery
      • Figure 24: Total above-the-line, online display and direct mail advertising expenditure on current accounts, 2016/17-2020/21
    • Television leads the way as providers showcase switching incentives
      • Figure 25: Total above-the-line, online display and direct mail advertising expenditure on current accounts, by advertising medium, 22019/20 and 2020/21
    • Santander boosts adspend as it promotes cashback on household bills
    • Starling remains in top 10 spenders with “set yourself free” campaign
      • Figure 26: Top 10 advertisers of above-the-line, online display and direct mail advertising expenditure on current accounts, 2018/19-2020/21
    • Nielsen Ad Intel coverage
  10. Current Account Ownership

    • Current account ownership is near universal
      • Figure 27: Current account ownership, 2021
    • Growth in multiple account ownership stalled in 2021
      • Figure 28: Current account ownership, 2017-21
    • Nearly three in 10 people have joint bank accounts
      • Figure 29: Join account ownership, by age, 2021
  11. Types of Current Account

    • 15% of over-18s pay for their current account
      • Figure 30: Type of current account held, 2021
      • Figure 31: Ownership of selected types of current accounts, by age, 2021
    • More personalisation could boost fee-paying account take-up
      • Figure 32: Ownership of fee-paying current accounts, by age, 2021
  12. Consumer Satisfaction with Main Current Accounts

    • Nearly nine in 10 people are satisfied with their main current account
      • Figure 33: Satisfaction with main current account provider, 2021
    • Over four in five are satisfied with their online banking experience…
    • …but older demographics are slow to adopt mobile banking apps
      • Figure 34: Satisfaction with main current account provider, by type of service, 2021
    • Providers must promote their reliability of service and online banking
    • High street providers must ensure mobile apps maintain pace with challenger banks
    • Addressing unethical practice is a priority for account providers
    • Continued investment in fossil fuel industries will harm brand image
      • Figure 35: Key drivers of overall satisfaction with main current account provider, 2021
    • High satisfaction levels at major banks will limit switching activity
      • Figure 36: Overall satisfaction with main current account provider, by bank/building society, 2021
  13. Current Account Switching Activity

    • 7% of account holders have used CASS in the last year
    • Men are more likely to shop around for new deals on accounts
      • Figure 37: Account changing activity, by gender, 2021
    • Younger customers are the most likely to switch accounts
      • Figure 38: Account changing activity, by age, 2021
    • Quarter of account owners likely to move to new providers in the next year
    • Men and younger adults are the most likely to be planning a switch
      • Figure 39: Likelihood of switching main account, 2021
  14. Important Factors when Choosing Current Accounts

    • Branch access is the most important factor when choosing accounts
    • Challenger banks have helped simplify overseas spending
      • Figure 40: Important features when choosing between current accounts, 2021
    • Access to branches is far more important for older demographics
    • Smart budgeting tools are the priority for a quarter of young Brits
    • Nearly one in five 16-24s would like banks to provide carbon footprint calculators
      • Figure 41: Important features when choosing between current accounts, by age, 2021
    • 24/7 customer support is a major factor in choosing an account
      • Figure 42: TURF Analysis – Current Accounts, 2021
  15. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • Key Driver analysis – Methodology
    • Interpretation of results
      • Figure 43: Overall satisfaction with main current account provider – key driver output, July 2021
    • TURF analysis – Methodology
      • Figure 44: Table – TURF Analysis – Current Accounts, July 2021

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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