2021
9
UK ISAs Market Report 2021
2021-08-14T04:09:49+01:00
OX1049477
2195
141506
[{"name":"Savings and Investments","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services\/savings-investments"}]
Report
en_GB
“The pandemic has led to an increase in household deposits, but little of this has been put into ISAs. The personal savings allowance and ultra-low interest rates have undermined the…

UK ISAs Market Report 2021

£ 2,195 (Excl.Tax)

Description

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

37% of consumers think ISAs primarily benefit the well-off while 36% think they offer few benefits compared to other savings products. The personal savings allowance and low interest rates have undermined the benefits of ISAs for many, while advertising focused on maximising allowances creates an impression that ISAs are designed to support the well-off.

COVID-19 has driven a surge in deposits as households able to maintain an income found themselves less able to spend it. However, little ended up in ISAs, with most remaining in current accounts. There is an opportunity for ISA providers to encourage people to make the most of their accidental savings, before too much of it is spent.

The biggest threat to the ISA market comes from potential legislative changes. Massive spending to support the economy during the pandemic has increased pressure on public finances and the government may need to look at ways to reduce the burden. The personal savings allowance has already undermined the financial benefits of ISAs for many and a growing view of ISAs as primarily benefiting the well-off could provide the excuse to make changes.

There has been a surge of interest in investing during the pandemic, but many are cautious and uncertain how to make the most of it. Robo-investing tools and investments through trusted organisations such as banks and building societies can provide a safe, supported space to ensure people are not missing out without taking excessive risk.

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

Quickly understand

  • The impact of COVID-19 on ISA savings.
  • The current value of ISAs and the potential for growth over the next five years.
  • How much people add to their ISAs and how much they have in total.
  • What people plan to use their ISA savings for.
  • How many people transfer ISAs and how many are considering withdrawing from them.
  • How changes to the tax system and messaging around ISAs risks alienating certain parts of the population by creating an ‘elitist’ view of what was previously a product for the masses.
  • ISA trends

Covered in this report

ISA Types: Individual savings accounts, Cash ISAs, Stocks and shares ISAs, Innovative finance ISAs, Lifetime ISAs (LISAs), Help to Buy ISAs (H2B ISAs).

Brands: Nationwide, Barclays, Santander, Halifax, Bank of Scotland, Lloyds Bank, HSBC, First Direct, NatWest, RBS, Virgin Money, TSB Bank, Co-Operative, Metro Bank, Coventry BS, Leeds BS, Monzo, Shawbrook.

Expert analysis from a specialist in the field

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

The pandemic has led to an increase in household deposits, but little of this has been put into ISAs. The personal savings allowance and ultra-low interest rates have undermined the benefits of ISAs, especially for basic-rate taxpayers, making it difficult to frame the benefits of the product. The advertising focus on savers reaching the maximum allowance risks compounding the problem that ISAs are increasingly seen as primarily benefiting the well-off.

Thomas Slide
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 ISAs
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on ISAs, 2020-25
    • The market
    • Value of ISAs rise prior to the pandemic
    • Total value of ISAs set to hit £692 billion in 2021/22
      • Figure 2: COVID-19 scenario forecasts, 2016-26
    • Cash accounts for two thirds of ISAs
    • Stocks and shares ISAs look set to drive growth
    • Companies and brands
    • Nationwide leads the cash ISA market
      • Figure 3: Cash ISA provider, 2021
    • Young people turn to robo-advisers
      • Figure 4: Investment ISA provider, 2021
    • US banking giants hone in on the UK ISA market
    • COVID-19 contributes to a 34% fall in advertising spend
      • Figure 5: Total above-the-line, online display and direct mail advertising expenditure on ISAs, 2016/17-2020/21
    • A turbulent year for NS&I
    • The consumer
    • Almost three quarters of savers has an ISA
      • Figure 6: Savings products held, 2021
    • Just one in ten ISA holders gets close to the full allowance
      • Figure 7: ISA contributions in 2020/21 tax year, 2021
    • Addressing the gender divide in ISA savings
      • Figure 8: Total amount saved in ISAs, 2021
    • Car buyers and home improvers are saving the most
      • Figure 9: Planned use of ISA savings, 2021
    • ISA savers are checking regularly for better rates
      • Figure 10: Behaviours related to ISAs, 2021
    • ISAs risk developing an elitist reputation
      • Figure 11: Attitudes towards ISAs, 2021
  3. Issues and Insights

    • COVID-19 drives additional saving but little ends up in ISAs
    • Smooth the journey from cash to investment ISA
    • Encouraging a broader uptake of ISAs
  4. The Market – Key Takeaways

    • Growth in ISAs prior to the pandemic
    • Total value of ISAs set to hit £692 billion in 2021/22
    • Cash accounts for two thirds of ISAs
    • Stocks and shares ISAs look set to drive growth
    • The savings ratio spiked during the pandemic
  5. Market Size and Performance

    • COVID-19 has a mixed impact on the ISA market
      • Figure 12: Short-, medium- and long-term impact of COVID-19 on the ISA market, 2021
    • Value of ISAs rise prior to the pandemic
      • Figure 13: Total value of ISAs and annual growth, 2012/13-2019/20
    • ISAs grow popularity prior to the pandemic
      • Figure 14: Number of adult ISAs and amount subscribed, 2010/11-2019/20
  6. Market Forecast

    • ISA market forecast to grow 25% in value over five years
      • Figure 15: Market size and forecast for the total value of funds held in UK cash or stocks and shares ISAs, 2016/17-2026/27
      • Figure 16: Market size and forecast for the total value of funds held in the UK ISA market, at current and 2021 prices, 2016/17-2026/27
    • Market drivers and assumptions
      • Figure 17: Key drivers affecting Mintel’s market forecast, 2015-25
    • Forecast methodology
  7. COVID-19 Scenario Performance

    • Mintel’s approach to predicting the impact of COVID-19
    • Fundamental differences in how COVID-19 is affecting consumer markets
    • COVID-19 scenario forecast for ISAs
    • An extended period of disruption will boost ISA savings
    • A more rapid recovery will reduce ISA growth
      • Figure 18: COVID-19 scenario forecasts for total value of funds held in the ISA market, 2016-26
    • COVID-19 market disruption: risks and outcomes
      • Figure 19: Summary of Mintel scenario expectations and the impact on the ISA market, 2021
  8. Market Segmentation

    • Cash accounts for two thirds of ISAs
    • Stocks and shares ISAs benefit from increased allowances
    • LISAs experience growth
      • Figure 20: Segmentation of the ISAs by value of annual subscriptions, 2008/09-2019/20
    • Cash ISA market set for slower growth
      • Figure 21: Value of total amount held in cash ISAs, 2016/17-2026/27
      • Figure 22: Value of total amount held in cash ISAs, at current and 2021 prices, 2016/17-2026/27
    • Stocks and shares ISAs
      • Figure 23: Value of total amount held in stocks and shares ISAs, 2016/17-2026/27
      • Figure 24: Value of total amount held in stocks and shares ISAs, at current and 2021 prices, 2016/17-2026/27
    • Forecast methodology
  9. Market Drivers

    • Interest rates on ISAs fall to an all-time low
      • Figure 25: Monthly interest rates of UK monetary institutions, 2015-21
    • Gap between ISAs and non-ISA savings narrows
      • Figure 26: Interest rates of instant access cash savings versus cash ISAs, 2015-21
    • Savings ratio spikes during the pandemic
      • Figure 27: Household savings ratio, Q1 2015-Q1 2021
    • Unplanned pandemic saving is focused on the affluent
      • Figure 28: Saving realty versus expectations, 2020
    • Consumer confidence recovers during vaccine rollout
      • Figure 29: Mintel’s Consumer Confidence Tracker , January 2019-July 2021
  10. Regulatory and Legislative Changes

    • No change to ISA allowances for 2021-22
    • Emergency withdrawals put LISA penalties in the spotlight
  11. Companies and Brands – Key Takeaways

    • Nationwide leads the cash ISA market
    • Young people turn to robo-advisers
    • US banking giants hone in on the UK ISA market
    • COVID-19 contributes to a 34% fall in advertising spend
    • A turbulent year for NS&I
  12. Market Share

    • Nationwide leads the cash ISA market
      • Figure 30: Cash ISA provider, 2021
    • Half use an investment platform for their ISA
      • Figure 31: Investment ISA provider, 2021
    • Young people turn to robo-advisers
      • Figure 32: Investment ISA provider, by age, 2021
  13. Competitive Strategies and Innovation

    • US banking giants enter the ISA market
    • Marcus by Goldman Sachs launches a cash ISA
    • JP Morgan acquires Nutmeg
    • Ikigai launches a stocks & shares ISA
    • TSB partners with Wealthify to offer investment ISAs
    • Unity Mutual offers a hybrid ISA product
    • Ethical ISAs to improve society
    • The Big Exchange launches an ethical ISA range
    • Wealth 8 launches ISA aimed at Black and multi-ethnic communities
    • Nationwide launches first ever ISA transfer incentive
  14. Advertising and Marketing Activity

    • ISA adspend falls by a third
      • Figure 33: Total above-the-line, online display and direct mail advertising expenditure on ISAs, 2016/17-2020/21
    • Spending is heavily focused on tax year end
      • Figure 34: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by month, 2017-21
    • Spending is dominated by investment firms
      • Figure 35: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by advertiser, 2020/21
    • Cash ISA providers focus on TV
      • Figure 36: Above-the-line, online display and direct mail advertising expenditure on ISAs, by type of ISA and media type, 2020/21
    • Nielsen Ad Intel coverage
  15. Brand Research

    • Brand map
      • Figure 37: Attitudes towards and usage of selected brands, 2021
    • Key brand metrics
      • Figure 38: Key metrics for selected brands, 2021
    • Brand attitudes: NS&I remains a trusted brand despite a challenging year
      • Figure 39: Attitudes, by brand, 2021
    • Brand personality: Marcus is perceived as being exclusive
      • Figure 40: Brand personality – Macro image, 2021
    • The big banks are seen as reliable and competent
      • Figure 41: Brand personality – Micro image, 2021
    • Brand analysis
    • A challenging year for a trusted brand
      • Figure 42: User profile of NS&I, 2021
    • Newcastle Building Society is perceived as ethical and fair to its customers
      • Figure 43: User profile of Newcastle Building Society, 2021
    • Shawbrook Bank is a little-known brand with a good reputation
      • Figure 44: User profile of Shawbrook Bank, 2021
    • Marcus by Goldman Sachs stands out from the crowd with a prestigious brand
      • Figure 45: User profile of Marcus by Goldman Sachs, 2021
    • Lloyds Bank is a trusted brand but lacks differentiation
      • Figure 46: User profile of Lloyds Bank, 2021
    • Barclays is viewed as accessible and helpful
      • Figure 47: User profile of Barclays, 2021
    • Moneybox delivers an excellent experience but lacks awareness
      • Figure 48: User profile of Moneybox, 2021
    • Reading word clouds
  16. The Consumer – Key Takeaways

    • Almost three quarters of savers have an ISA
    • Just one in ten ISA holders gets close to the full allowance
    • Addressing the gender divide in ISA savings
    • Car buyers and home improvers are saving the most
    • ISA savers are checking regularly for better rates
    • ISAs risk developing an elitist reputation
  17. Impact of COVID-19 on Consumer Behaviour

    • Households deposits surge as spending is restricted
      • Figure 49: Total outstanding deposits from households, 2016-21
    • Uneven financial impact of the pandemic
      • Figure 50: COVID-19 impact on financial situation, by household income, 2021
    • Fear of the virus falls but could lead to a longer-term savings habit
      • Figure 51: Consumers’ fear of being exposed to the virus, 2020-21
  18. Savings Products Held

    • Half of UK savers has a cash ISA
      • Figure 52: Savings products held, 2021
    • Women should be encouraged to take more risks with savings
      • Figure 53: ISA product ownership, by gender, 2021
  19. ISA Products Held

    • Access becomes increasingly important amid uncertainty
      • Figure 54: Types of cash ISA held, 2021
    • Young people sacrifice access for returns
      • Figure 55: Types of cash ISA held, by age, 2021
  20. ISA Contributions

    • A fifth of ISA holders contributed nothing in the 2020/21 tax year
    • One in ten reaches maximum contributions
      • Figure 56: ISA contributions in 2020/21 tax year, 2021
    • Amount being saved polarises with age
      • Figure 57: ISA contributions in the 2020/21 tax year, by age, 2021
    • People are optimistic about saving more
      • Figure 58: Expected future contributions to ISAs, 2021
  21. Total ISA Savings

    • A quarter of ISA holders have more than £30,000 saved
      • Figure 59: Total amount saved in ISAs, 2021
    • A clear gender divide in ISA savings
      • Figure 60: Total saved in ISAs, by age and gender, 2021
  22. Planned Use of ISA savings

    • Saving goals vary through the ages
    • Ensure people understand the risks
      • Figure 61: Planned use of ISA savings, 2021
    • ISAs could appeal to parents looking to save for kids but maintain control
      • Figure 62: Plans for ISA savings, by age, 2021
    • Car buyers and home improvers are saving the most
      • Figure 63: ISA contributions, by ISA savings goals, 2021
  23. Behaviours related to ISAs

    • Half have increased their savings during the pandemic
      • Figure 64: Behaviours related to ISAs, 2021
    • Many are looking but far fewer are switching
      • Figure 65: Behaviours related to ISAs, by type of ISA held, 2021
    • Biggest ISA holders are most likely to transfer
      • Figure 66: Behaviours related to ISAs, by total amount saved in an ISA, 2021
  24. Attitudes towards ISAs

    • A third think ISAs offer few benefits
    • ISAs risk alienating those with less to save
      • Figure 67: Attitudes towards ISAs, 2021
    • Young people struggle to understand ISAs
      • Figure 68: Attitudes towards ISAs, 2021
  25. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  26. Appendix – Central Forecast Methodology

    • Market forecast and prediction intervals
    • Total ISA funds
      • Figure 69: Forecast and prediction intervals for the total value of funds held in the ISA market, 2021/22 – 2026/27
    • Cash ISA funds
      • Figure 70: Forecast and prediction intervals for value of funds held in the cash ISA market, 2021/22 – 2026/27
    • Stocks and shares ISA funds
      • Figure 71: Forecast and prediction intervals for value of funds held in the stocks and shares ISA market, 2021/22-2026/27
    • Market drivers and assumptions
      • Figure 72: Key drivers affecting Mintel’s market forecast, 2021-26
    • Forecast methodology
  27. Appendix – COVID Scenario Performance Methodology and Assumptions

    • Scenario performance
    • Total ISA funds
      • Figure 73: Scenario forecasts for the total ISA market, 2016/17-2026/27
    • Cash ISA funds
      • Figure 74: Scenario forecasts for the value of the cash ISA market, 2016/17-2026/27
    • Stocks and shares ISA funds
      • Figure 75: Scenario forecasts for the value of the stocks and shares ISA market, 2016/17-2026/27
    • Rapid COVID recovery, central and extended COVID disruption scenarios outline
    • Scenario 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.

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

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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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