Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
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- Figure 1: Number of active current account holders and number of current accounts, 2010
- Channels to market
- 85% of consumers hold standard accounts
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- Figure 2: Type of current account held – main account only, 2010
- Market factors
- Present economic and demographic conditions unfavourable
- Overdrafts rates have continued to get more expensive
- FSA warns about the potential for current account mis-selling
- ICB working to create a more competitive marketplace
- Companies, brands and innovation
- A lack of differentiation among the major players
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- Figure 3: Attitudes towards and usage of current account brands, April 2011
- Led by LBG, top five banking groups control 85% of main accounts
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- Figure 4: Share of main current account holder customer base, by banking group, April 2011
- LBG and Barclays control nearly three fifths of packaged accounts
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- Figure 5: Share of main packaged account holder customer base, by banking group, April 2011
- Who’s innovating?
- The consumer
- Attitudes towards current accounts
- Popularity of packaged account benefits
- Usage of current account benefits
- Attitudes towards potential challengers
- What we think
Issues in the Market
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- What impact will changing population dynamics have on the market?
- Who’s most likely to switch their current account, and to where?
- Are supermarkets and current accounts really a good fit?
- Are providers making the most of cross-selling opportunities?
Future Opportunities
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- The freedom to personalise
- Food and finance
Internal Market Environment
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- Key points
- Overdraft rates have continued to drift upwards
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- Figure 6: Official monthly bank and building society overdraft interest rate, UK Inter-bank, three-month rate, and official bank rate** April 2006-April 2011
- New minimum standards introduced for overdrafts by LSB
- Consumer apathy and dominance of a few hurt market competitiveness
- ICB working to create a more competitive marketplace
- FSA continues to warn about packaged account mis-selling
Broader Market Environment
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- Key points
- Challenging economic conditions persist
- Incomes being squeezed by inflation
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- Figure 7: Monthly change in RPI and average weekly earnings, 2005- April 2011
- Consumer confidence remains subdued
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- Figure 8: GFK NOP Consumer Confidence Index, May 2005 - May 2011
- Premium accounts a tough sell in current environment
- Population dynamics could hurt new account growth
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- Figure 9: Size of the UK population, by age, 2001-20
Loyalty and Cross-selling
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- Key points
- Nearly three fifths have been with their main bank for at least a decade
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- Figure 10: Length of time with main bank, march 2011
- Loyalty by provider
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- Figure 11: Length of time with main bank, by main bank, March 2011
- Most products not held with main provider…
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- Figure 12: Product ownership, March 2011
- … but having an existing relationship is still advantageous
- The push for cross-sales
- Lloyds TSB best at increasing product holdings
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- Figure 13: Repertoire of product ownership with main bank, by main bank, March 2011
SWOT Analysis
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- Figure 14: UK current account market – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- Lloyds TSB enhances online banking experience with ‘Money Manager’
- Lloyds, Visa and Samsung collaborating on mobile payment technology
- First Direct iPhone App with ‘banking on the go’ technology
- ‘Act Now’ alerts from NatWest and RBS
- Co-operative free packaged account trial
- Co-op current account for premier league football supporters
- Nationwide now offering main account holders free travel insurance
- Barclays, Halifax and the Co-op helping prisoners open bank accounts
Market Size
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- Key points
- Market growth has stalled in 2010
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- Figure 15: Number of active current account holders and number of current accounts, 2008-11(est)
- 85% of consumers hold standard/basic, fee-free accounts
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- Figure 16: Type of current account held – main account only, 2010
- One in seven accounts are premium/packaged accounts
Market Share
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- Key points
- One in six hold their main current account with Lloyds TSB
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- Figure 17: Main current account provider, by individual brand, April 2011
- Led by LBG, top five banking groups control 85% of main accounts
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- Figure 18: Share of main current account holder customer base, by banking group, April 2011
- LBG and Barclays control nearly three fifths of packaged accounts
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- Figure 19: Share of main packaged account holder customer base, by banking group, April 2011
Companies and Products
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- Key players
- Barclays
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- Figure 20: Barclays’ current account range, April 2011
- Figure 21: Key financial data for Barclays Plc (UK Retail Banking Division), 2009-10
- HSBC/First Direct
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- Figure 22: HSBC’s current account range, April 2011
- Figure 23: First Direct’s current account range, April 2011
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- Figure 24: Key financial data for HSBC (UK Retail Banking division), 2009-10
- Lloyds Banking Group
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- Figure 25: Current account range of Lloyds TSB
- Figure 26: Halifax/Bank of Scotland current account range, April 2011
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- Figure 27: Key financial data for Lloyds Banking Group (Retail Division), 2009-10
- Nationwide
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- Figure 28: Nationwide’s current account range, April 2011
- Figure 29: Key financial data for Nationwide, 2009-10
- RBS/NatWest
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- Figure 30: RBS’ current account range, April 2011
- Figure 31: NatWest’s current account range, April 2011
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- Figure 32: Key financial data for RBS Group (UK Retail Banking Division), 2009-10
- Santander
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- Figure 33: Santander’s current account range, April 2011
- Figure 34: Key financial data for Santander UK (Retail Banking Division), 2009-10
Competitor Landscape
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- Key points
- Forced divestment for recipients of heavy government aid
- Lloyds Banking Group:
- RBS
- New and Potential Entrants
- Metro Bank
- Virgin Money
- Tesco Bank
- NBNK
Brand Communication and Promotion
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- Key points
- Overall adspend up by a quarter in year to April 2011
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- Figure 35: Advertising expenditure on current accounts and related services, by sub-product category, 2009-11
- Top four account for over four fifths of total industry adspend
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- Figure 36: Top ten advertisers of current accounts and related services, 2009-11
- Most money spent on TV and press advertising
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- Figure 37: Share of advertising expenditure on current accounts and related services, by media type, 2011
- Halifax holds its position as top advertiser of ordinary accounts
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- Figure 38: Top five advertisers of ordinary current accounts, 2009-11
- HSBC leading advertiser of premium accounts
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- Figure 39: Top five advertisers of packaged/premium accounts, 2009-11
- Note about NMR data
Brand Research
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- Brand map
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- Figure 40: Attitudes towards and usage of current account brands, April 2011
- Brand attitudes
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- Figure 41: Attitudes, by current account brand, April 2011
- Brand personality
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- Figure 42: Current account brand personality – macro image, April 2011
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- Figure 43: Current account brand personality – micro image, April 2011
- Correspondence analysis
- Brand experience
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- Figure 44: Current account brand usage, April 2011
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- Figure 45: Satisfaction with various current account brands, April 2011
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- Figure 46: Consideration of current account brands, April 2011
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- Figure 47: Consumer perceptions of current account brand performance, April 2011
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- Figure 48: Current account brand recommendation – Net Promoter Score, April 2011
- Brand index
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- Figure 49: Current account brand index, April 2011
- Figure 50: Current account brand index vs. recommendation, April 2011
- Target group analysis
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- Figure 51: Target groups, April 2011
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- Figure 52: current account brand usage, by target groups, April 2011
- Group One – The Conformists
- Group Two – Simply the Best
- Group Three – Shelf Stalkers
- Group Four – Habitual Shoppers
- Group Five – The Individualists
Channels to Market
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- Key points
- The multi-channel approach to distribution and administration
- Branch network remains vital
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- Figure 53: Number of branches belonging to the largest current account providers (shown on group basis), year-end 2010
- ATM network helps to strengthen brand presence
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- Figure 54: Number of ATMs belonging to the largest current account providers (shown on group basis), 2009
- The most frequent point of contact with a bank is online
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- Figure 55: Use of banking channels, April 2011
- Mobile online banking channel still in early stages but growing
- Rapid growth in the number of online banking transactions continues
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- Figure 56: Number of registered telephone and online banking customers and number of transactions (MBBGs only), 2002 and 2009
Current and Packaged Account Ownership
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- Key points
- 85% hold standard/basic current accounts
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- Figure 57: Type of current account held – main account only, 2010
- One in seven own a packaged account
- Slight decline in multiple account ownership
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- Figure 58: Trends in current account ownership, 2006-10
- Fee-based packaged account ownership in detail
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- Figure 59: Ownership of fee-based packaged and free/ordinary current accounts, April 2011
- Packaged account ownership highest among 25 to 54s
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- Figure 60: Type of current account held, by gender and age, April 2011
- Room to increase ownership levels among over-55s
- Annual income more relevant than socio-economic status
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- Figure 61: Type of current account held, by socio-economic group, April 2011
- Figure 62: Type of current account held, by gross annual household income, April 2011
Consumer Attitudes Towards Current Accounts
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- Key points
- Most happy with existing account
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- Figure 63: Agreement with statements about current accounts, April 2011
- Many lukewarm about supermarket-based current accounts
- NatWest and Nationwide customers most positive
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- Figure 64: Agreement with statements about current accounts, by main current account provider, April 2011
- Packaged account holders expect more
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- Figure 65: Agreement with statements about current accounts, by type of account, April 2011
- Young affluent men most open to ‘branchless’ banking
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- Figure 66: Agreement with statements about current accounts by demographics, April 2011
Popularity of Packaged Account Benefits
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- Key points
- Account benefits available by amount paid
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- Figure 67: Benefits have access to, by type of account, April 2011
- Travel insurance and roadside assistance most used packaged benefits
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- Figure 68: Benefits actually used, by type account, April 2011
- There is a difference between valued benefits and ‘nice to haves’
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- Figure 69: Ownership and use of benefits – fee-charging packaged account customers only, April 2011
- Impact of age on account benefits used
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- Figure 70: Benefits actually used, by gender and age, April 2011
- Positive link with income and use of benefits
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- Figure 71: Benefits actually used, by socio-economic status, April 2011
- Figure 72: Benefits actually used, by type gross annual household income, April 2011
Top Providers and Usage of Current Account Benefits
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- Key points
- Packaged account ownership at major providers
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- Figure 73: Type of current account held, by main account provider (top seven only), April 2011
- Above-average access to benefits at Lloyds TSB
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- Figure 74: Benefits have access to, by main current account provider (top seven only), April 2011
- Lloyds TSB and NatWest customers making use of benefits
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- Figure 75: Benefits actually used, by main current account provider (top seven only), April 2011
Attitudes Towards Potential Challengers
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- Key points
- Awareness of potential challenger brands
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- Figure 76: Awareness of select financial services providers, April 2011
- A fifth willing to switch main account to Tesco or Virgin Money
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- Figure 77: Willingness to switch main current account to a select financial services provider, April 2011
- Over two fifths of Santander customers willing to switch to new brand
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- Figure 78: Willingness to switch to the listed brands, by main current provider, April 2011
- Two in five packaged account holders willing to switch
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- Figure 79: Willingness to switch to selected brands, by type of account held, April 2011
- Willingness to switch provider and attitudes towards current accounts
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- Figure 80: Agreement with statements about current accounts, by willingness to switch main current account to select financial services provider, April 2011
- Men and 25 to 34s most open to switching
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- Figure 81: Willingness to switch to the listed brands, by gender and age, April 2011
- The more one earns the more likely they may be willing to switch
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- Figure 82: Willingness to switch to the listed brands, by socio-economic group, April 2011
- Figure 83: Willingness to switch to the listed brands, by gross annual household income, April 2011
Targeting Opportunities
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- Key points
- Key target groups
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- Figure 84: Key current and packaged account target groups, April 2011
- Supermarkets superior
- Current account content
- Defection risk
- Branchless banking
- Target groups and ownership of fee-based packaged accounts
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- Figure 85: Ownership of fee-based packaged and free/ordinary current accounts, by target groups, April 2011
- Target groups and account benefits used
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- Figure 86: Account benefits used, by target groups, April 2011
- Target groups by main current account provider
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- Figure 87: Target groups by main current account provider, April 2011
- Target groups and potential challenger brands
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- Figure 88: Willingness to switch main current account to select financial services provider, by target groups, April 2011
Appendix – Broader Market Environment
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- Figure 89: Employment and unemployment, by gender, 2006-16
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Appendix – Market Share
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- Figure 90: Main current account provider, by type of account, April 2011
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Appendix – Brand Research
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- Figure 91: Brand usage, April 2011
- Figure 92: Brand commitment, April 2011
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- Figure 93: Brand momentum, April 2011
- Figure 94: Brand diversity, April 2011
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- Figure 95: Brand satisfaction, April 2011
- Figure 96: Brand recommendation, April 2011
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- Figure 97: Brand attitude, April 2011
- Figure 98: Brand image - Macro image, April 2011
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- Figure 99: Brand image - Micro image, April 2011
- Figure 100: Profile of target groups, by demographics, April 2011
- Figure 101: Psychographic segmentation, by Target groups, April 2011
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- Figure 102: Brand usage by Target groups, April 2011
- Figure 103: Brand index, April 2011
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Appendix – Channels to Market
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- Figure 104: Use of banking channels, by main current account provider, April 2011
- Figure 105: Current account type, by use of banking channel, April 2011
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- Figure 106: Use of banking channel, by type of current account, April 2011
- Figure 107: Account benefits used, by use of banking channel, April 2011
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Appendix – Current and Packaged Account Ownership
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- Figure 108: Breakdown of current account holders, 2010
- Figure 109: Ownership of fee-based packaged and free/ordinary current accounts, by demographics, April 2011
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Appendix – Consumer Attitudes Towards Current Accounts
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- Figure 110: Agreement with statements about current accounts, by demographics, April 2011
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- Figure 111: Agreement with selected statements about current accounts, by use of banking channel, April 2011
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Appendix – Popularity of Packaged Account Benefits
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- Figure 112: Most popular account benefits used, by demographics, April 2011
- Figure 113: Next most popular account benefits used, by demographics, April 2011
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Appendix – Attitudes Towards Potential Challengers
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- Figure 114: Willingness to switch main current account to select financial services provider, by demographics, April 2011
- Figure 115: Willingness to switch main current account to select financial services provider, by demographics (continued), April 2011
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- Figure 116: Willingness to switch main current account to select financial services provider, by use of banking channel, April 2011
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Appendix – Targeting Opportunities
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- Figure 117: Agreement with select statements about current accounts, by target groups, April 2011
- Figure 118: Account benefits available, by target groups April 2011
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- Figure 119: Use of banking channel, by target groups, April 2011
- Figure 120: Target groups, by demographics, April 2011
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