Table of Contents
Issues in the Market
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- Key issues in the market
- Product definitions
- Abbreviations
Future Opportunities
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- Changing consumer perceptions
- Increasing the appeal of packaged accounts
- Packaged accounts amid the downturn
- Current account rationalisation
- A different perspective on segmentation
Market in Brief
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- Overall current account numbers show slight decline
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- Figure 1: Estimated number of current accounts in the UK, 2004-09
- Lloyds TSB tops current account market share
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- Figure 2: Main or primary current account providers, March 2009
- Banking turmoil creates new landscape
- Potential new entrants to the market
- Legal proceedings continue to create negative headlines
- Packaged accounts drive adspend
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- Figure 3: Proportion of adspend on ordinary and value-added (prem) accounts, 2006-08
- An innovative market
- Remote channels develop but branch remains key
- 90% of adults have a current account
- Switchers are more likely to be tempted by incentives
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- Figure 4: Reasons to change existing current account provider, March 2009
- There is still considerable resistance to packaged accounts
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- Figure 5: Attitudes towards packaged and premium current accounts, March 2009
Overview of the OFT Investigation
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- Key points
- OFT investigation dominates current account market
- OFT investigation – two years of uncertainty
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- Figure 6: Timeline of OFT investigation into unarranged overdraft charges, May 2009
- Overdraft charges continue to create negative headlines
- Consumer perspective on overdraft charges
- Potential consequences of OFT ruling
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- Figure 7: Breakdown of personal current account revenue, 2006
- Pros and cons of a new current account model
Internal Market Environment
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- Key points
- Bank rate falls to an historic low
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- Figure 8: Official end of month bank rate and monthly bank and building society overdraft interest rate, January 2002-May 2009
- FSA to take more control of retail banking activities
- Replacing the Banking Code
- Faster Payments Service should benefit customers and providers
- OFT to investigate consumer credit market
Broader Market Environment
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- Key points
- Economic crisis brings turmoil to retail banking sector
- Impact of the recession on current accounts
- Industry thoughts on the impact of the downturn
- Consumer confidence begins to level out
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- Figure 9: Monthly consumer confidence index, March 1988-March 2009
- Financial activity indicators reveal a change in consumer priorities
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- Figure 10: Savings, investment, borrowing and debt repayment – consumers’ expected activity, quarterly indices, 2002-09 (Q2)
- Growing population will continue to drive demand for current accounts
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- Figure 11: Overview of UK population, by age group, 1994-2014
- Some 70% of the UK population are now online
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- Figure 12: British internet penetration at home/work/place of study or elsewhere, April 2002-January 2009
Competitive Context
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- Key points
- Only a small minority of population exist without a current account
- More than 7 million basic bank accounts in the UK
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- Figure 13: Number of basic bank accounts in operation in the UK, 2003-07
- Prepaid cards – a growing niche
Strengths and Weaknesses in the Market
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- Figure 14: Current account SWOT analysis, May 2009
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Who’s Innovating?
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- Key points
- What is driving innovation?
- Taking a different approach
- Barclays overhauls overdraft structure
- HSBC amends its current account proposition
- Product bundling becomes more prominent
- Lloyds TSB offers account add-ons to suit individual needs
- Packaged accounts evolve to target different consumer groups
- Mobile banking developments
Trade Perspective
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- Changing customer perspective is biggest challenge facing market
- Downturn is having a limited impact…
- …but economic conditions are increasing the level of competition
- Competition and OFT case are driving innovation
- Some developments in switching activity but activity remains low
- Many packaged accounts lack differentiation
Market Size and Forecast
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- Key points
- Overall number of current account numbers shows slight decline
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- Figure 15: Estimated number of current accounts in the UK, 2004-09
- Account ownership levels off, after period of sustained growth
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- Figure 16: Percentage of people with a current account, 2001-08
- Multiple account ownership is on a downward trend
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- Figure 17: Trends in number of current accounts held by individuals and estimated total number of current accounts in the UK, 2006-08
- Several factors contribute to fall in multiple account ownership
- Individual sight account numbers to continue to rise
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- Figure 18: Number of individual sight accounts (MBBG only), 2002-07
- Figure 19: Deposits into individual sight accounts (MBBG only), 2002-07
- Overdraft advances fall as the credit crisis bites
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- Figure 20: Overdraft advances to individuals and individual trusts (MBBG only), 2002-07
- Forecast
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- Figure 21: Forecast for the number of current accounts in the UK, 2004-14
- Factors used in the forecast
Market Share
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- Key points
- Lloyds TSB remains the largest current account provider
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- Figure 22: Main or primary current account providers, March 2009
- A new landscape for current accounts
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- Figure 23: Main or primary current account providers, by main banking groups, March 2009
- Lloyds TSB is also number one main financial services provider
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- Figure 24: Leading main financial services providers brands’, 2008 and 2009
Companies and Products
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- Key points
- Packaged accounts make up around a quarter of the market
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- Figure 25: Overview of number of products in the current account market, April 2009
- The possibility of new entrants
- Segmentation drives innovation in current account market
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- Figure 26: Current accounts distribution, by provider, April 2009
- Overdraft structures overhauled
- Company profiles of major players
- Lloyds Banking Group
- Royal Bank of Scotland
- HSBC
- Santander Group
- Barclays
- Nationwide
Brand Communication and Promotion
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- Key points
- Adspend for current accounts impacted by financial crisis
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- Figure 27: Total adspend on current accounts and associated products, 2005-08
- Packaged accounts take a greater proportion of adspend
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- Figure 28: Proportion of adspend on ordinary and value-added (prem) accounts, 2006-08
- TV advertising dominates current account market
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- Figure 29: Adspend on current accounts, by media type, 2006-08
- HSBC tops the current account adspend chart
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- Figure 30: Adspend on current accounts, by top providers, 2006-08
Channels to Market
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- Key points
- Branch network remains the most used banking channel
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- Figure 31: Use of banking channels, April 2008
- Telephone banking transactions in decline…
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- Figure 32: The number of personal customers registered for telephone and internet banking, and the number of transactions, 2003-07
- …but online transactions continue to increase sharply
- Mobile banking – still in the early stages
- Branch numbers fall further…
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- Figure 33: Branch numbers, 2003-07 (end-December figures)
- …but branch network integral to gaining market share
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- Figure 34: Comparison of current account market share and branch network share
- ATM numbers remain stable, but withdrawals increase
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- Figure 35: Number of ATMs and cash withdrawls (MBBG only), 2003-07
The Consumer – Product Ownership
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- Key points
- Near universal ownership of current accounts
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- Figure 36: Ownership of various financial products and services, March 2009
- Account ownership peaks among over-35s
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- Figure 37: Ownership of current accounts and premium/packaged accounts, by age group, March 2009
- Packaged accounts appeal to an older audience
- Opportunities exist to extend ownership among those in education
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- Figure 38: Ownership of current accounts and premium/packaged accounts, by working group, March 2009
- Account ownership boosted among lower income groups
- Appeal of package accounts increases with affluence
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- Figure 39: Ownership of current accounts and premium/packaged accounts, by annual household income, March 2009
- Current accounts provide ‘gateway’ for cross-sale opportunities
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- Figure 40: Ownership of current accounts and premium/packaged accounts, by ownership of other financial products, March 2009
- Four in ten have more than one current account
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- Figure 41: Current account ownership – number of current accounts, 2008
The Consumer – Current Account Providers
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- Key points
- Lloyds TSB remains the leading current account provider
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- Figure 42: Main or primary current account providers, March 2009
- Winners and losers in the packaged account market
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- Figure 43: Ownership of current accounts and premium/packaged current accounts, by main or primary current account provider, March 2009
- Banking crisis leads to a new landscape for current accounts
- Almost 30% have a current account with the Lloyds Banking Group
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- Figure 44: Main or primary current account providers, by main banking groups, March 2009
- Lloyds Banking Group also dominates packaged/premium account market
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- Figure 45: Ownership of current accounts and premium/packaged current accounts, by main or primary current account provider (main banking groups), March 2009
- RBS and HSBC attract a younger demographic
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- Figure 46: Main or primary current account providers, by main banking groups, by demographics, March 2009
- HSBC more likely than average to attract higher earners
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- Figure 47: Main or primary current account providers, by main banking groups, by demographics, March 2009
The Consumer – Switching Activity
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- Key points
- More than four in ten are not interested in switching
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- Figure 48: Reasons to change existing current account provider, March 2009
- Packaged/premium account holders more likely to value safety and flexibility
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- Figure 49: Reasons to change existing current account provider, by ownership of various financial products and services, March 2009
- Likelihood to switch varies between current account providers
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- Figure 50: Reasons to change existing current account provider, by main or primary current account providers (main banking groups), March 2009
- Account features provide the strongest motivation to switch
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- Figure 51: Reasons to change existing current account provider, March 2009
- Younger adults are much more likely to consider switching providers
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- Figure 52: Reasons to change existing current account provider, by demographics, March 2009
- More affluent consumers are more likely to switch accounts
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- Figure 53: Reasons to change existing current account provider, by demographics, March 2009
The Consumer – Attitudes towards Packaged Accounts and Targeting Opportunities
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- Key points
- Majority are not keen on paying for packaged/premium accounts…
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- Figure 54: Attitudes towards packaged and premium current accounts, March 2009
- …but there is some scope to extend ownership
- Monthly fee appears to be creating a barrier
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- Figure 55: Attitudes towards packaged and premium current accounts, by ownership of current and packaged accounts, March 2009
- Santander and Nationwide account holders are the most resistant…
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- Figure 56: Attitudes towards packaged and premium current accounts, by main or primary current account held, March 2009
- …but Barclays account holders seem to be the most positive
- A third of account holders are looking for better rates
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- Figure 57: Benefits most appealing from premium and packaged current accounts, March 2009
- Winning people over to the concept of packaged accounts
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- Figure 58: Benefits most appealing from premium and packaged current accounts, by people not prepared to pay for packaged/premium accounts, March 2009
- Providers need to take different approach to packaged account concept
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- Figure 59: Benefits most appealing from premium and packaged current accounts, by main or primary current account held, March 2009
- Target group analysis
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- Figure 60: Current account target groups, March 2009
- Non-movers
- Pro-packaged account switchers
- Anti-packaged account switchers
- Service & safety switchers
- Incentive-led switchers
- Different motivations to switch providers
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- Figure 61: Reasons to change existing current account provider, by target groups, March 2009
- A wide range of attitudes towards packaged accounts
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- Figure 62: Attitudes towards fee on premium and packaged current accounts, by target groups, March 2009
Appendix – Internal Market Environment
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- Banking Code Revisions – March 2008
Appendix – Brand Promotion and Communication
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- Figure 63: Current account adspend, by category, 2004-08
- Figure 64: Current account adspend of the top providers, by media type, 2008
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Appendix – The Consumer – Product Ownership
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- Figure 65: Ownership of various financial products and services, by demographics, March 2009
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Appendix – The Consumer – Current Account Providers
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- Figure 66: Main or primary current account held, by demographics, March 2009
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- Figure 67: Main or primary current account held, by demographics, March 2009
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Appendix – The Consumer – Attitudes towards Packaged Accounts and Targeting Opportunities
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- Figure 68: Ownership of current accounts and packaged/premium accounts, by target groups, March 2009
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- Figure 69: Main or primary current account held, by target groups, March 2009
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- Figure 70: Benefits most appealing from premium and packaged current accounts, by target groups, March 2009
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- Figure 71: Target groups, by demographics, March 2009
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