Table of Contents
Introduction and Abbreviations
-
- Scope of the report
- Key Sources
- Other relevant reports
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
-
- People aren’t natural accountants – they care less about interest rates than providers perhaps give them credit for
- ‘Sexing up’ savings accounts to promote a more specific savings mentality...
- ...with expressive rather than descriptive branding
- If retailers can become banks, then banks can become retailers
- Younger savers may respond better to tangible incentives
- Scope to strengthen link between savings accounts and other products
- Small change could help fill the savings gap
Executive Summary
-
- Savings accounts compete with an array of products…
- …including property investment
- To save up or to repay?
- Other factors influencing the propensity to save
-
- Figure 1: Abridged summary of macroeconomic drivers and their implications for the savings market, 2000-04
- A fragmented, yet expanding market
-
- Figure 2: Estimated total number of deposit and savings accounts in the UK, year-end 2003
- Farewell to the Post Office Savings Account
- Halifax, Lloyds TSB and Abbey have the largest customer share
-
- Figure 3: The top 12 providers of savings accounts, by proportion of account holders, October 2004
- Increasing price competition…
- …but much inertia prevails
- A range of factors impact on product and provider selection
- Consumers prefer multi-access points
- Adspend on savings accounts trebles in five years, but remains small in comparison to loans and credit cards
- The key findings of Mintel’s consumer research
- Around half of all adults have a savings account
- Some 8% still have a Post Office Savings Account
- A third of adults do not own any savings or investment products
- One in four savers say they know what the interest rate is on their savings account
-
- Figure 4: Proportion of savings account holders who agree with various statements, October 2004
- Extra premium analysis
-
- Figure 5: Attitudes towards savings and savings accounts, ranked in order of significance, October 2004
- Market outlook: 2005 and beyond
- Market forecast
Market Drivers
-
- A bird’s eye view
-
- Figure 6: Deposit and savings accounts – the ‘higher, higher’ model
- Savings accounts jostle for space alongside a range of conventional and non-traditional savings vehicles
-
- Figure 7: Preferred uses of spare money, by gender and age group, November 2004
- Some current accounts now offer comparable rates of interest
- Other uses of money take priority over saving…
- …hence, the gap widens
- Guaranteed and structured investments benefit from ‘flight to safety’…
- …as reflected by shifting asset allocations
-
- Figure 8: Composition of household financial assets, 1999-2003
- Two in five adults would rather invest in property than savings products…
-
- Figure 9: Level of trust in financial companies and general attitudes towards saving and investing, November 2004
- …and say they don’t trust financial companies
- The macroeconomic impact
-
- Figure 10: Summary of macroeconomic drivers and their implications for the savings market, 2000-04
- Savings ratio is projected to rise from 2007
-
- Figure 11: Total PDI, consumer expenditure, savings and the savings ratio, at current prices, 1995-2009
- One in three 18-24-year-olds are not currently saving, but would like to
-
- Figure 12: Proportion of adults who save each month (including pension contributions), by amount and by age group, November 2004
- Planned governments initiatives will also help to boost savings activity
- Child Trust Fund set to strengthen the saving habit of future generations
- Rejuvenating interest in youth savings
- Some providers are also turning their attentions to regular savings accounts
Market Size and Trends
-
- UK private sector holdings reached almost £690 billion in 2003
-
- Figure 13: UK individual private sector holdings of selected Sterling assets, 1999-2003
- Interest-bearing, instant access accounts have experienced greatest growth
-
- Figure 14: Number of individual interest-bearing sight and time accounts and total Sterling deposits at year end (MBBG panel only), 1999-2003
- There are twice as many MBBG current accounts as savings accounts…
-
- Figure 15: Estimated number of current and savings accounts held by MBBGs, 1999-2003
- …but a significant proportion of both are dormant
- Some 15 million adults have a building society savings account
-
- Figure 16: Number of building society accounts and value of deposits, 1999-2003
- A cautionary note
- The success story of cash ISAs
-
- Figure 17: Number of cash mini ISAs and amounts subscribed during year, 1999/2000-2003/04
- Total cash ISA market worth over £80 billion
- The end of the Post Office Savings Account
-
- Figure 18: Number of NS&I savings accounts and total value of deposits, March 2002-November 2004
- Total market summary
-
- Figure 19: Estimated total number of deposit and savings accounts in the UK, year-end 2003
Key Players and the Competitive Environment
-
- A broad range of companies are active in the market
- Fighting the savings war with CRM…
- ...and the winners are?
- New entrants are shaking up the market
- ING Direct’s ‘cost of savings captured’ is six times lower than the industry average
- Yet, switching activity is constrained by inertia
-
- Figure 20: Proportion of adults who have opened current accounts and savings accounts in last 12 months, 2000-04
- Many adults have multiple savings accounts with different providers
- Halifax, Lloyds TSB and Abbey record the highest product penetration
-
- Figure 21: Proportion of savings account holders aged 18+ who hold an account with a certain brand or type of company (total stock), October 2004
Products, Pricing and Positioning
-
- Interest rate is the single most important factor in product selection, say consumers
-
- Figure 22: Most important features looked for when selecting savings account, July 2003
- ‘Reputable’ does not always imply ‘large and long-established’
- Personal experience and recommendations are especially important in choosing where to go to open a savings account for the first time
- Is it just a matter of getting the rate right?
- Newer entrants are keeping it simple
- Others are guiding customers to make the right product choice
- Traditional providers offer better rates on eSavings accounts
- Top branch-based, variable-rate, no-notice accounts
-
- Figure 23: Six of the highest-paying instant access, variable-rate savings accounts accessible via branch (with minimum balance of £1), by % gross interest rate, December 2004
- Best rates on online savings accounts
-
- Figure 24: Six of the highest-paying Internet, instant access, variable-rate savings accounts (with minimum balance of £1), by % gross interest rate, December 2004
- Sainsbury’s SaveBack scheme
- Regular savings accounts targeted at first-time buyers
-
- Figure 25: Top ten regular savings accounts, by % gross interest rate, December 2004
- Abbey and Halifax making a move on the regular saver market
- Controversy surrounds AER calculations
Distribution and the Internet
-
- The branch remains central to the distribution mix...
-
- Figure 26: Channels used to pay in money and to check balance/account details, October 2004
- ...but many consumers like the option of multiple access points
- Latest figures show branch closures have reduced considerably
-
- Figure 27: UK branch networks, 1999-2003
Advertising and Promotion
-
- Financial services providers spend more on promoting plastic cards than all savings and investment products put together...
-
- Figure 28: Total advertising expenditure on selected savings accounts and other selected finance products, 1999/2000-2003/04
- ...but adspend on savings accounts has experienced the fastest growth...
- ...with two fifths represented by television advertising
-
- Figure 29: Proportional breakdown of total advertising on savings accounts, by main media, 1999/2000-2003/04
- ING Direct’s adspend dwarfs that of rivals
-
- Figure 30: Top ten highest-spending savings account advertisers, 2002/03 and 2003/04
- ING Direct: A lesson in PR
- Britannia Building Society leads the way in the affinity marketing sector
Consumer Financial Activity
-
- Introduction to FAB
- Customers’ relationship with their main financial services provider
- Saving and investment activity will intensify
-
- Figure 31: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2002-September 2004
- ABs, full-time workers and those aged 23-39 are set to be most active
-
- Figure 32: Expected financial activity, by socio-demographic and income groups and average activity for the last 11 quarters
- Saving and debt repayment come to the fore
-
- Figure 33: Leading financial activities planned in the next six months, September 2002-September 2004
- Barclays and Lloyds TSB strengthen their leader positions
-
- Figure 34: Leading main financial services providers: Market shares, September 2003-September 2004
- Nationwide should see significant savings activity
-
- Figure 35: Expected demand for financial products and services, by activity, September 2004
- HSBC and RBS customers set to be most active over short term
-
- Figure 36: Activity levels of main financial providers’ customer bases, September 2004
The Consumer and Product Ownership
-
- Half of all adults have a deposit or savings account
-
- Figure 37: Financial product ownership, by gender, October 2004
- Around one in six adults have an NS&I product
- A third of adults do not own any savings or investment products
-
- Figure 38: Number of savings and investment products held, by gender, age, socio-economic group and region, October 2004
- Product ownership tends to increase with age
-
- Figure 39: Ownership of deposit/savings accounts and other popular savings products, by gender, age, socio-economic group and region, October 2004
- Room to improve penetration among lower-income groups
- Savings account ownership is a national issue
- Working couples are keen to save...
-
- Figure 40: Ownership of deposit/savings accounts and other popular savings products, by marital status, lifestage and Mintel’s Special Groups, October 2004
- ...but what about single earners?
- Many retired people have accounts, but how do they use them?
- Three in four people with household incomes of £50K plus have a savings account
-
- Figure 41: Ownership of deposit/savings accounts and other popular savings products, by working status, tenure, gross annual household income and ACORN category, October 2004
- Homeowners are also most likely to have a savings account
- Could better use of the Internet prove beneficial?
-
- Figure 42: Ownership of deposit/savings accounts and other popular savings products, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, October 2004
- Broadsheet and mid-market readers most likely to have ‘other’ savings and investment products
- An opening for supermarkets?
- Women more likely to have an instant access savings account than men
-
- Figure 43: Type of savings account held, by gender, October 2004
- Notice accounts appeal most to ABC1s and those aged 55-64
-
- Figure 44: Demographic profile of savings account holders, by account type, October 2004
- Half of all savings account customers hold their account with a traditional high street bank
-
- Figure 45: Where savings account is held, by type of provider, October 2004
- NS&I and former building societies are more appealing to women
-
- Figure 46: Gender profile of savings account holders, by type of provider, October 2004
- Almost a third of people who have a savings account with a non-traditional or direct provider are aged 35-44
-
- Figure 47: Age profile of savings account holders, by type of provider, October 2004
- Eight in ten customers of non-traditional providers are ABC1s
-
- Figure 48: Socio-economic profile of savings account holders, by type of provider, October 2004
- Building societies attract a greater proportion of people from Anglia and the Midlands
-
- Figure 49: Regional profile of savings account holders, by type of provider, October 2004
- Halifax appeals to the young…
-
- Figure 50: Proportion of savings account holders who hold an account with one of the top five providers, by gender, age, socio-economic group and region, October 2004
- …although take-up of its savings accounts is fairly evenly spread among the socio-economic groups
- Just one in four savers have a ‘rough’ idea of the interest rate on their account
-
- Figure 51: Level of agreement to various statements relating to savings accounts, October 2004
- Switching behaviour is most acute among ABs...
-
- Figure 52: Switching behaviour, by gender, age, socio-economic group and region, October 2004
- ...yet just two fifths of ABs know what the interest rate is on their savings account
-
- Figure 53: Rate-sensitivity, by gender, age, socio-economic group and region, October 2004
- Younger age groups are more likely to view online services favourably
-
- Figure 54: Attitudes towards online savings accounts, by gender, age, socio-economic group and region, October 2004
- ABs, C2s and 25-34-year-olds are most likely to have their savings and current account with the same company
-
- Figure 55: Other product relationships, by gender, age, socio-economic group and region, October 2004
- Further analysis
Consumer Attitudes and Targeting Opportunities
-
- CHAID analysis pinpoints the major target groups
-
- Figure 56: Target groups identified for selected savings products, October 2004
- There is a significant negative correlation between the type of people who have savings accounts and those who have a personal loan
-
- Figure 57: Correlation analysis on types of financial product owned, October 2004
- ABs and those living in the South are most likely to use multiple methods to pay money into their accounts
-
- Figure 58: Number of channels used by savings account holders to pay in money, by gender, age, socio-economic group and region, October 2004
- One in four ABs transfer funds into their savings account online
-
- Figure 59: Channels used to pay money into savings account, by gender, age, socio-economic group and region, October 2004
- 35-44-year-olds are just as likely to use the Internet as a branch counter service to check their account details
-
- Figure 60: Channels used to check balance and review account details, by gender, age, socio-economic group and region, October 2004
- One in three adults say they don’t have the money spare to save…
-
- Figure 61: Attitudes towards savings and savings accounts, by ownership of selected savings products, October 2004
- …while one in five intend to increase or start saving over the next 12 months…
- …and one in seven prefer to invest in cash ISAs
- The interest rate is the most important thing to consider when choosing a savings account according to a third of savers
- Holders of multiple savings products are more likely to be concerned by the interest rate
-
- Figure 62: Attitudes towards savings and savings accounts, by number of savings and investment products held, October 2004
- Cluster analysis
-
- Figure 63: Dissecting the consumer base into four savings-related clusters, October 2004
- Over two fifths of Prudent Depositors have three or more savings or investment products
-
- Figure 64: Number of savings and investment products held, by cluster, October 2004
- A third of ABs are Prudent Depositors
-
- Figure 65: Savings clusters, by gender, age, socio-economic group and region, October 2004
- Seemingly uninterested in saving
- A quarter of married couples are Prudent Depositors
-
- Figure 66: Savings clusters, by marital status, lifestage and Mintel’s Special Groups, October 2004
- Homeowners find the cash to invest
-
- Figure 67: Savings clusters, by working status, tenure, gross annual household income and ACORN category, October 2004
- Do Internet users use online savings accounts?
-
- Figure 68: Savings clusters, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, October 2004
Industry Views
-
- Tackling the savings gap
- New product development: perhaps greater linkage with other products?
- New entrants shaking up the market
The Future
-
- Savings activity to pick up...
- ...as consumers curb spending
- Interest rates may breach the 5% barrier in 2005
- Opportunities await, with the return of first-time buyers
- Stability of cash will remain king
- Greater demand, greater price competition...
- ...and greater innovation
- Not all are happy with traditional providers’ response
- On the future agenda: things to watch out for in 2005 and beyond
- In summary
Forecast
-
- MBBG time accounts are expected to experience faster growth than sight, albeit from a smaller base
-
- Figure 69: Forecast of the number of MBBG individual interest-bearing, instant access and notice accounts and value of deposits at year end, 2003-09
- Building society accounts are also set to experience increased demand
-
- Figure 70: Forecast of the number of building society accounts and value of deposits, 2003-09
- Multiple account holding will increase
-
- Figure 71: Forecast of total number of MBBG and building society savings accounts, 2003-09
- Factors incorporated
Back to top