Table of Contents
Introduction and Abbreviations
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- Understanding the consumer
- Key sources
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Give the gift of savings
- Fitting savings accounts into an instant gratification culture
- Higher interest rates are not enough to draw people out of branches
- Loyalty points
Executive Summary
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- Cash accounts benefit from distrust of stocks and shares
- Over 25 million people have a deposit or savings account
- Halifax dominates the savings account market
- Intense competition means high-interest rate accounts abound
- Despite the growing popularity of remote channels, the branch reigns supreme
- ING Direct is leading advertiser for the third consecutive year
- Savings account penetration has increased
- Typologies
- Future
Market Drivers
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- The savings ratio is expected to increase
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- Figure 1: Personal disposable income, consumer expenditure, savings and the savings ratio, 2000-10
- Instant gratification culture conflicts with savings activity
- Saving up to invest in property
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- Figure 2: Attitudes towards investing in property, December 2004
- Savers can expect low returns
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- Figure 3: The Bank of England base rate, November 1990-November 2005
- Stock market volatility prompts flight towards ‘safer’ products
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- Figure 4: FTSE 100, April 1996-October 2005
- Savers shy away from stocks and shares ISAs
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- Figure 5: Number of ISAs and the ammount subscribed to the stocks and shares and cash component, 1999/2000-2004/05
- Current accounts give savings accounts a run for their money
- The Internet is gaining relevance as a distribution channel
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- Figure 6: Internet usage, by frequency, November 2005
Market Size and Trends
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- UK individual private sector holdings reach £744 billion in 2004
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- Figure 7: UK individual private sector holdings of selected Sterling assets, 1999-2004
- £270 billion in interest-bearing sight account deposits in 2004
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- Figure 8: Number of individual interest-bearing sight and time accounts and total sterling deposits at year-end (MBBG panel only), 1999-2004
- An estimated £1 billion has been left in dormant savings accounts
- The number of MBBG current accounts is double that of savings accounts
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- Figure 9: Estimated number of current and savings accounts held by MBBGs, 1999-2004
- The value of building society deposits is rising
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- Figure 10: Number of building society accounts and the value of deposits, 2000-04
- Number of ISAs doubles over last five years
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- Figure 11: Number of cash mini ISAs and amounts subscribed during year, 1999/2000 to 2004/05
- NS&I takes the easy access route
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- Figure 12: Number and value of Easy Access Savings Accounts, March 2004-October 2005
- More than 25 million people have a savings account
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- Figure 13: Estimation of market size in terms of volume, November 2005
Key Players and the Competitive Environment
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- Current account providers have a natural advantage
- Building societies account for just over 18% of retail deposits
- New players make waves in the market
- Halifax dominates the savings account market
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- Figure 14: Estimated volume share of savings account market, November 2005
- Two in three savings accounts are provided by banks
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- Figure 15: Volume share of savings account market, by type of provider, November 2005
- One in five savers has 2+ savings accounts
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- Figure 16: Illustration of the number of savings accounts owned by savers, November 2005
- Regular savings accounts can be rewarding…
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- Figure 17: Top ten regular savings accounts, by % gross, November 2005
- …but attention must be paid to the small print
- Good deals to be had online
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- Figure 18: Top six Internet savings accounts, by % gross, November 2005
- Current accounts also offer interest
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- Figure 19: The top six interest-bearing current accounts, by % gross, November 2005
- Specialised accounts for serious savers
Distribution and the Internet
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- The online banking population is steadily growing
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- Figure 20: Number of personal customers registered to access their accounts by telephone and by computer, 1999-2004
- Almost half of adults with Internet access have an online account
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- Figure 21: ‘You have one or more (financial) accounts that you access over the Internet’, November 2005
- Balance information queries dominate telephone transactions
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- Figure 22: Number of transactions by telephone, 2001-04
- The number of online transactions continues to surpass telephone transactions
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- Figure 23: Number of transactions by computer, 2001-04
- The branch is still favoured by majority of savers
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- Figure 24: Channels used to pay in money and to check balance/account details, 2004-05
- NS&I: an Internet success story
- The multi-channel approach
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- Figure 25: The number of ways in which consumers manage their savings accounts, November 2005
Advertising and Promotion
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- £45 million spent advertising savings accounts in 2004/05
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- Figure 26: Advertising expenditure on financial services, by product, 2000/01 to 2004/05
- ING Direct is consistently the leading advertiser of savings accounts
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- Figure 27: Advertising expenditure on savings accounts, by advertiser, 2000/01-2004/05
- More than half of savings account adspend was dedicated to TV adverts
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- Figure 28: Advertising expenditure on deposit and savings accounts, by outlet type, October 2004-September 2005
- New approaches to advertising
Consumer Financial Activity
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- Consumer confidence falls further amid economic fears
- Relationship with the main financial services providers
- Uncertainty will impact levels of borrowing
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- Figure 29: Savings, investment, borrowing and debt repayment – consumers’ expected activity, June 2004-September 2005
- Younger and less affluent consumers to be more active relatively
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- Figure 30: Expected financial activity by socio-demographic and income groups, September 2005 and average for the last 15 quarters
- Debt repayment remains high on the agenda
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- Figure 31: Leading financial activities planned in the next six months, September 2004-September 2005
- Real promise in the property market
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- Figure 32: Intended mortgage and property purchase activity, September 2003-September 2005
- Little change year on year in MFSP share
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- Figure 33: Leading main financial services providers: market shares, September 2004-September 2005
- RBS should benefit from increased life and pensions business
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- Figure 34: Saving, investment and lending market sizes, by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), September 2005
- The Scottish banks will have the most active customer base
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- Figure 35: Activity levels of main financial providers’ customer bases, September 2005
- HSBC and RBS can expect deposits to be built up
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- Figure 36: Activity intentions and current household financial situation, by MFSP, September 2005
The Consumer and Product Ownership
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- More and more people are saving
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- Figure 37: Financial product ownership, 2004-05
- Seven in ten ABs have a savings account
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- Figure 38: Savings product ownership, by gender, age, socio-economic group and region, November 2005
- Savings products are important to those approaching retirement
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- Figure 39: Ownership of savings products, by age, November 2005
- NS&I products appeal to retired consumers
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- Figure 40: Savings product ownership, by working status, gross annual household income and tenure, November 2005
- Heavy Internet users are highly likely to be savers
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- Figure 41: Savings product ownership, by newspaper readership, new technology, daily commercial TV viewing and weekly Internet usage, November 2005
- Notice accounts appeal to a relatively small proportion of the saving population
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- Figure 42: Type of savings account, 2004-05
- Joint accounts are less popular than individual accounts
- More affluent consumers are drawn to notice accounts
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- Figure 43: Savings account ownership, by type of account, by gender, age, socio-economic group and region, November 2005
- Families are the most likely to invest in a child account
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- Figure 44: Savings account ownership, by type, by detailed lifestage, November 2005
- Where savers put their money
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- Figure 45: Savings account providers, by category, 2004-05
- ABs are most attracted to non-traditional providers
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- Figure 46: Savings account providers, by category, by gender, age, socio-economic group and region, November 2005
- Most child accounts are held at former building societies
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- Figure 47: Type of savings account, by savings account provider, November 2005
- Most consumers prefer branches, regardless of age or affluence
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- Figure 48: Methods by which money is paid into the savings account, by gender, age, socio-economic group and region, November 2005
- More than 1 in 3 ABC1s check their account details online
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- Figure 49: Methods by which account details are checked, by gender, age, socio-economic group and region, November 2005
Consumer Attitudes and Targeting Opportunities
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- Consumer inertia is starting to dissipate
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- Figure 50: Attitudes towards savings accounts, 2004-05
- Suspicion of the web appears to be growing
- More consumers are opting for savings accounts with their current account provider
- ABC1s have no qualms about moving their savings
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- Figure 51: Statements pertianing to switching activity, by gender, age, socio-economic group and region, November 2005
- Who has a rough idea of what their interest rate is?
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- Figure 52: Rate sensitivity and interest in online accounts, by gender, age, socio-economic group and region, November 2005
- Some 30% of savings account holders have their savings account and current account with the same company
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- Figure 53: Other product relationships, by gender, age, socio-economic group and current account provider, November 2005
- For one in three consumers, the intention is there, but the cash isn’t
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- Figure 54: Attitudes towards savings accounts, by savers and non-savers, November 2005
- Perhaps rates are not so important after all…
- A specific reason couldn’t motivate those with no spare cash to save
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- Figure 55: Cross-analysis of attitudinal statements, November 2005
- Typologies
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- Figure 56: Savings account typologies, November 2005
- The Super Savers are ecstatic about ISAs
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- Figure 57: Savings account typologies, by type of product owned, November 2005
- More than half of Super Savers have 2+ savings products
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- Figure 58: Savings account typologies, by savings product repertoire, November 2005
- The Super Savers are super switchers
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- Figure 59: Savings account typologies by switching activity, November 2005
- Scared of the Internet
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- Figure 60: Savings account typologies, by attitudes towards online accounts and rate sensitivity, November 2005
- Current account providers will benefit from increased savings activity
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- Figure 61: Savings account typologies, by other product relationships, November 2005
- Who are in these typologies?
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- Figure 62: Savings account typologies, by gender, age, socio-economic group and region, November 2005
- Why are so many full-time workers Cash Strapped?
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- Figure 63: Savings account typologies, by working status, gross annual household income and tenure, November 2005
- RBS/NatWest has opportunity to capture new business
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- Figure 64: Savings account typologies by current account providers, November 2005
- CHAID analysis
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- Figure 65: CHAID analysis of typology and savings product penetration, November 2005
Industry Views
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- The declining popularity of notice accounts
- Branches vs the Internet
- Current and future challenges
The Future
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- As the housing market picks up, what will happen to savings?
- Demand for child savings accounts will boost sector…
- …as will the greying of the UK’s population
- Competition may increase customer churn
- More savers will turn to the Internet to manage their accounts
- Deposit accounts will continue to decrease in popularity
Forecast
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- Sight accounts to grow in volume and value
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- Figure 66: Forecast of MBBG sight accounts, by volume and value, 2004-10
- Demand for time accounts begins to falter
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- Figure 67: Forecast of MBBG time accounts, by volume and value, 2004-10
- Building societies will benefit from increased focus on saving
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- Figure 68: Forecast of building society accounts, by volume and value, 2004-10
- Factors used in the forecast
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