2021
9
UK Deposit and Savings Accounts Market Report 2021
2021-04-23T04:10:56+01:00
OX1044883
2195
136949
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Report
en_GB
“Banks and building societies have benefited from increased inflows of customer deposits during the pandemic. Much of this extra accumulated cash is likely to be spent – perhaps not immediately,…

UK Deposit and Savings Accounts Market Report 2021

£ 2,195 (Excl.Tax)

Report Summary

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

While COVID-19 lockdowns say a huge increase in savings, with many spending occasions being either closed or heavily restricted, low interest rates have meant many customers are unhappy with their savings. 2/3rds of savers report being dissatisfied with their savings, with a substantial minority of those on a higher income are looking into investing their money to generate better returns.

The deposits and savings industry has often relied on consumer apathy, with people paying little attention to their savings. However, the increased economic uncertainty in the wake of the pandemic is making people more concerned about their money, looking to switch to better providers as inflation rises.

The biggest threat to the market right now are low interest rates, which are going to persist for the next few years. As consumers look for alternative places to store their money, brands and companies will have the opportunity to innovate, offering different product features and benefits rather than focusing on the headline rate. Improving digital services is also a key strategy, making online investment spaces more accessible and functional for customers.

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

Quickly understand

  • The impact of COVID-19 on the retail savings market.
  • The proportion of adults who have savings and how much they have.
  • Where people hold their savings, eg in which products and with which providers.
  • Intentions to save and switch to other products/providers/asset classes over the coming year.
  • Consumer usage of, and interest in, digital savings apps.

Covered in this report

Types of Savings: Deposits and savings accounts, instant / easy access account, limited access account, notice account, fixed term account / bond, regular savings account, cash ISA, National Savings & Investments deposits, offshore savings accounts, household deposit balances, sight deposits, interest-bearing sight deposits, non-interest-bearing deposits, time deposits.

Brands: Lloyds Banking Group, Zopa, National Savings & Investments (NS&I), The Co-Operative Bank, Triodos Bank, Barclays, NatWest Group, Nationwide Building Society, HSBC, Santander, Virgin Money, TSB Bank, Halifax, Marcus By Goldman Sachs, Saga Personal Finance, Yorkshire Building Society, Skipton Building Society, Ford Money.

Expert analysis from a specialist in the field

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

Banks and building societies have benefited from increased inflows of customer deposits during the pandemic. Much of this extra accumulated cash is likely to be spent – perhaps not immediately, but over the medium term. There is no room for complacency, therefore. With interest rates set to remain very low over the next few years, this could discourage further saving and prompt more people to consider alternatives, such as equity investment.

Sarah Hitchcock
Senior Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
    • Products covered in this Report
    • Household deposit balances
  2. Executive Summary

    • COVID-19 has had a positive impact on the retail savings market
      • Figure 1: Short, medium and long-term impact of COVID-19 on the UK deposit and savings account market, March 2021
    • The market
    • Household savings ratio soared to 16.3% in 2020…
    • … as spending constraints led to an 11% rise in retail savings
      • Figure 2: Forecast of total household deposit balances, 2015-25 (prepared on 12 April 2021])
    • Current accounts and NS&I saw the greatest inflows in deposits
      • Figure 3: Household deposit balances, by product type, 2016-20
    • Record low savings rates
    • Companies and brands
    • LBG and NS&I lead the way by value of customer deposits
      • Figure 4: Total retail deposits for the largest 10 providers, shown on a group basis – UK, 2019-20
    • NS&I’s new green bond will fuel interest in eco-friendly savings
    • New digital brands compete in an increasingly crowded space
    • The consumer
    • Two thirds of adults have at least £1,000 in savings
      • Figure 5: Value of cash savings, February 2021
    • Many more savers have seen their savings grow over the past year than fall
      • Figure 6: Change in value of savings compared to 12 months ago, February 2021
    • 57% of savers are keeping at least some of their ‘savings’ in a current account
      • Figure 7: Type of account held for savings, February 2021
    • Big banks dominate in the savings arena
      • Figure 8: Company hold savings account(s) with, February 2021
    • Seven in 10 savers are putting away money regularly
      • Figure 9: Agreement with statements regarding saving behaviour, February 2021
    • 31% of savers are happy with the interest they are earning on their savings
      • Figure 10: Agreement with statements regarding saving interest rates, February 2021
    • 36% of savers are using a savings app or online tool
      • Figure 11: Usage of and interest in savings apps, February 2021
    • 59% are planning to add to their savings over the coming year
      • Figure 12: Saving intentions over the coming year, February 2021
    • Around two fifths of savers are planning to move their savings
      • Figure 13: Intentions regarding switching/transferring savings over the coming year, February 2021
  3. Issues and Insights

    • Savers are dissatisfied with low rates, but apathy is maintaining the status quo
    • Despite growth in deposit balances, many people remain cautious about their finances
    • Combined easy access and time account propositions could improve take-up of the latter
  4. The Market – Key Takeaways

    • Spending restrictions boost household savings
    • Current accounts have seen the greatest inflows
    • Low savings rates reduce appetite for time deposits…
    • … and drive interest in equity investment
  5. Market Size and Forecast

    • The pandemic has exerted a positive influence over the savings market
      • Figure 14: Short, medium and long-term impact of COVID-19 on the UK deposit and savings account market, March 2021
    • Household savings grew in real terms by 10% in 2020
      • Figure 15: Household deposit balances (non-seasonally adjusted), at current and constant prices, 2015-20
    • Cautious consumers will keep saving levels high in 2021, despite an increase in spending
      • Figure 16: Forecast of total household deposit balances, 2015-25 (prepared on 12 April 2021)
      • Figure 17: Forecast of total household deposit balances, 2015-25 (prepared on 12 April 2021)
    • Market drivers and assumptions
      • Figure 18: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 31 March 2021)
    • Conditions are very different from the last recession
      • Figure 19: Household deposit balances (non-seasonally adjusted), 2006-11
    • Forecast methodology
  6. Market Segmentation

    • Time deposits decreased by 6% in 2020…
    • …while consumer apathy resulted in a 25% increase in non-interest-bearing deposits
      • Figure 20: Household deposit balances, by product type, 2016-20
    • Interest-bearing sight accounts represent 50% of total household deposits
    • Cash ISA balances barely grew in 2020…
    • …while NS&I deposits were up by 18%
  7. Market Drivers

    • Saving levels to remain high, despite increased spending in 2021
    • Spending plans are likely to centre on the home
    • Savings ratio in 2020 is the highest on record
      • Figure 21: Gross household savings and saving ratio, seasonally adjusted and at current prices, 2011-20
    • Threat of negative interest rates recedes
      • Figure 22: Annual percentage changes in CPI and RPI and Official Bank Rate – quarterly basis, 2010-20
    • Stock markets buoyed by positive vaccine news
    • Fixed-rate products still offer better returns, on average, but only just
      • Figure 23: Average monthly quoted household deposit and cash ISA interest rates, February 2012-February 2021
  8. Companies and Brands – Key Takeaways

    • Not all of the largest deposit takers managed double-digit growth
    • Current account providers and NS&I have benefitted the most from the surge in household savings
    • Providers focus on improving digital channels and functionality
    • The digital space is becoming increasingly crowded
    • Green savings to get a boost by new NS&I bond launch
  9. Market Share

    • Certain brands attract greater inflows of deposits than others
      • Figure 24: Total retail deposits for the largest 10 providers, shown on a group basis – UK, 2019-20
    • LBG retains the largest share of retail deposits in the UK…
      • Figure 25: Retail deposit balances – LBG, 2019-20
    • …but second-placed, NS&I grew balances by the greatest margin in 2020
    • Nationwide’s performance in 2020 was below par…
    • …hence, it’s upping the ante in 2021
    • Current accounts have been the main recipients of higher balances
      • Figure 26: Retail deposit balances – Santander, 2019-20
  10. Competitive Strategy and Launch Activity

    • Lack of real product innovation
    • Digital drive continues
    • Yorkshire Building Society on a ‘digital transformation journey’
    • TSB Bank’s new Spend & Save proposition
    • Digital banks face growing competitive pressure
    • Zopa enters savings market
    • JPMorgan Chase to follow Goldman Sachs in launching a digital bank
    • Going green
    • Other recent product launches
    • NatWest’s Digital Regular Saver
    • Atom’s Instant Saver
    • Revolut’s USD saving account
    • Chip’s easy access account
    • Raisin UK adds easy access accounts to its savings platform
    • Virgin Money and Principality target first-time buyers
  11. Advertising and Marketing Activity

    • Savings market continues to attract low levels of adspend
      • Figure 27: Above-the-line, online display and direct mail advertising expenditure on savings products, by type of product, 2018-20
    • Nationwide was again the highest spending advertiser in 2020, despite cutting adspend by a third
    • Recent entrants, Marcus and Ford Money make the top 10
      • Figure 28: Top 10 advertisers of above-the-line, online display and direct mail advertising on savings products, 2019-20
    • Ad Intel coverage
  12. The Consumer – Key Takeaways

    • Many more savers have seen savings grow than fall over the past year
    • 57% of savers are holding their savings in a current account
    • Scope for challenger brands to target savers with smaller balances
    • Disenchantment with savings rates could see more transfer to equities
  13. Impact of COVID-19 on Saving Behaviour

    • Just over half of all savers say their ability to save has changed as a result of the pandemic
      • Figure 29: Impact of pandemic on ability to save, by gender and age, February 2021
    • Many more have seen their savings increase than decrease over the past year…
      • Figure 30: Change in value of savings compared to 12 months ago, by gender and age, February 2021
    • …although wealthier households are more likely to have benefited
      • Figure 31: Change in value of savings compared to 12 months ago, by value of cash savings, February 2021
    • As outgoings have reduced, many are prompted to add to their savings
      • Figure 32: How consumers have been affected or changed their behaviour as a result of the outbreak, by gender and age, February 2021
    • Having a savings buffer signals financial success for many UK adults
      • Figure 33: Own definition of financial success, by gender and age, February 2021
    • Over-55s are less eager to try out new technology
      • Figure 34: Agreement with statement “I like to be amongst the first to try technologies”, by age, February 2021
    • Many people are concerned about the security of their personal data
      • Figure 35: Agreement with statement “It is important to know that companies protect my personal information”, by age, February 2021
  14. Amount of Savings and Type of Accounts Held

    • Two thirds of UK adults have at least £1,000 in savings
      • Figure 36: Value of cash savings, by gender and age, February 2021
    • Significant gender savings gap among under-55s
      • Figure 37: Value of cash savings, by combined gender and age, February 2021
    • The average saver uses 2.4 different account types
      • Figure 38: Type of account held for savings, February 2021
    • NS&I’s Premium Bonds remain popular despite reduced chances of winning
    • Those with the largest savings balances show strong preference for fixed-term bonds
      • Figure 39: Type of account held for savings, by value of cash savings, February 2021
  15. Where Accounts Are Held

    • 86% of savers hold their savings with one of the top six banking groups
      • Figure 40: Company hold savings account(s) with, by product type, February 2021
    • Challenger brands are better at attracting savers with higher balances
      • Figure 41: Company hold savings account(s) with, by total value of cash savings, February 2021
  16. Attitudes and Behaviours of Savers

    • Nine in 10 savers try to maintain a certain level of savings
      • Figure 42: Agreement with statements regarding saving behaviour, February 2021
    • Roughly four in five will use savings to fund major purchases
    • Under-45s more likely to save for a specific reason
    • 60% of savers are keeping most or all of their savings with one provider
    • Two in three savers are dissatisfied with the interest they are earning
      • Figure 43: Agreement with statements regarding saving interest rates, February 2021
  17. Take-up of Savings Apps

    • Just over a third of savers are using a saving/banking app or online tool
      • Figure 44: Usage of and interest in savings apps, February 2021
    • 52% of adults are interested in a savings alert service
  18. Intentions to Save and Switch

    • More than a quarter of savers are planning to dip into their savings over the coming year…
      • Figure 45: Saving intentions over the coming year, February 2021
    • …of which, nearly half are planning to make a major purchase
      • Figure 46: Expectations among those planning to dip into their savings, February 2021
    • Three in five people with balances of £50,000+ are planning to move at least some of their savings
      • Figure 47: Intentions regarding switching/transferring savings over the coming year, by value of savings, February 2021
  19. Appendix – Data Sources and Abbreviations

    • Abbreviations
    • Consumer research methodology
    • Other sources
  20. Appendix – Market Size and Forecast

    • Total market forecast – best- and worst-case scenarios
      • Figure 48: Forecast of household deposit balances – Best- and worst-case scenarios, 2020-25
    • Forecast methodology

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.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

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*databooks not available with UK B2B Industry reports.

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