Table of Contents
Executive Summary
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- The market
- Consumer credit is once again a key focus for banks
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- Figure 1: Growth rates for personal deposits, mortgage lending and consumer credit among the main high street banks*, 2009-15
- Companies and brands
- High concentration continues to define UK retail banking
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- Figure 2: Main banking groups, by aggregated share of main current account market, May 2015
- Banks split on branch and tech strategies
- Banks make the most of TV advertising to get their message across
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- Figure 3: Recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2013-15
- The consumer
- The majority have just one current account
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- Figure 4: Number of current accounts owned, May 2015
- 71% of current account holders use four or more banking services
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- Figure 5: Number of different types of banking services used, May 2015
- Banks must keep a close eye on cost sensitivity
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- Figure 6: Attitudes towards switching and value, May 2015
- Convenience reigns when it comes to banking preferences
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- Figure 7: Attitudes towards banking channels, May 2015
- Excessive charges and data breaches get under customers’ skin
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- Figure 8: Consumer concerns over various issues in the financial services industry, May 2015
- Trust is on the up, with branches acting as a driving force
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- Figure 9: Proportion of people with any trust in different elements of the banking industry, June 2014 and May 2015
- Customers are not convinced banks have their best interests at heart
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- Figure 10: Agreement with statements concerning different concepts of trust in retail banking, May 2015
- What we think
Issues and Insights
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- Making the best return on tech strategies will make all the difference
- The facts
- The implications
- Cost sensitivity is one of few factors that can drive customers away
- The facts
- The implications
- Loyalty has few rewards, encouraging customers to look for better deals
- The facts
- The implications
The Market – What You Need to Know
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- Consumer credit gets competitive
- Banks are growing overdrafts and loans at the same rate as credit cards
Market Overview
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- Growth in consumer credit borrowing overtakes personal deposits
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- Figure 11: Growth rates for personal deposits, mortgage lending and consumer credit among the main high street banks*, 2009-15
- Banks clash with specialist lenders over booming credit market
- MMR slows growth in mortgage lending
- Growth in overdrafts and loans is back in line with credit cards
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- Figure 12: Growth rates for credit card lending and personal loans & overdrafts among the main high street banks*, 2009-15
Companies and Brands – What You Need to Know
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- High concentration continues to define the market
- The relative importance of technology and branch networks divides opinion
- Year-on-year adspend is on the up, and heavyweights use TV to get their message across
Retail Banking Providers: Market Share
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- High concentration prevails despite spin-off activity
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- Figure 13: Current account providers, by share of main and other current account market, May 2015
- Challenger brands fight for a small share
- Switching service is benefiting established providers more than new entrants
- Lloyds Banking Group stays dominant despite loss of TSB
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- Figure 14: Main banking groups, by aggregated share of main current account market, May 2015
Company Strategies
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- Branching out or going without?
- Barclays
- HSBC
- Metro Bank
- TSB
- Atom Bank
- Innovate or integrate?
- Apple
- Barclays
- Banks get personal to win wary customers
- Yorkshire Bank and Clydesdale Bank
- Tesco Bank
- TSB
Brand Communication and Promotion
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- Barclays cranks up the pressure with growing adspend…
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- Figure 15: Top 15 highest spenders for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, 2013-15
- …and TV takes the starring role
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- Figure 16: Recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2013-15
- Banks use digital media to support personal focus
- Search is crucial in gaining share of voice
- Note on NMR Data
The Consumer – What You Need to Know
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- Attractive credit card and mortgage deals hamper banks’ cross-selling
- 92% of banking customers say they use in-branch counter services
- Cost sensitivity is high when it comes to banking products
- Employed 16-34s are leading the charge for ultimate convenience
- Excessive charges and neglecting existing customers get the thumbs down
- Trust in banks is rising and branches have a key role to play
- Only half of customers feel banks have their best interests at heart
Product Ownership and Cross-sales
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- The majority have just one current account
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- Figure 17: Number of current accounts owned, May 2015
- Savings accounts remain the most cross-sold product but rate rises could drive more switching
- Mortgage and credit card deals have encouraged customers to look elsewhere
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- Figure 18: Financial services product ownership and cross-sales, May 2015
- Credit card loyalty wanes as current account holders age
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- Figure 19: Credit card ownership among women, by provider and age group, May 2015
- Banks have missed out on mortgages from 35-44-year-old customers
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- Figure 20: Mortgage ownership, by provider and age group, May 2015
Frequency of Banking Service Use
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- 92% of current account holders use in-branch counter services
- Telephone services still have a role to play…
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- Figure 21: Banking services, by frequency of use, May 2015
- …but online and mobile services are used more often
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- Figure 22: Proportion of current account holders that use each banking service provided by their main current account provider two or three times a month or more often, by age, May 2015
- 71% of current account holders use four or more banking services
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- Figure 23: Number of different banking services used, May 2015
Attitudes towards Switching and Value
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- Current account holders reveal sensitivity over cost…
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- Figure 24: Attitudes towards switching and value, May 2015
- …and experience does little to break this down
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- Figure 25: Agreement with the statements ‘I don’t believe banking is ever really free’ and ‘I’d switch accounts if my bank ever tried to charge me a monthly fee’, by age, May 2015
Attitudes towards Banking Channels
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- Convenience reigns when it comes to banking preferences
- Human interaction remains a key part of branch banking experience
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- Figure 26: Attitudes towards banking channels, May 2015
- 16-34s will demand a more flexible branch service
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- Figure 27: Agreement with the statement ‘I would make use of bank services offered in different locations (ie supermarket, from a vehicle)’, by age, May 2015
Level of Concern over the Industry’s Failings
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- Charges and data breaches are key customer concerns…
- …while mis-selling continues to cloud perceptions of the industry
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- Figure 28: Consumer concerns over various issues in the financial services industry, May 2015
- Rewarding only new customers is starting to get old
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- Figure 29: Credit card ownership, by proportion concerned by better deals offered to new customers only, May 2015
Trust in Different Elements of the Banking Industry
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- Local branches play a key role in maintaining customer relationships…
- …but call centre staff find it harder to build trust
- Scepticism increases at corporate and industry level
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- Figure 30: Trust in different elements of the banking industry, May 2015
- Overall trust levels are improving year on year in all areas
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- Figure 31: Proportion of people with any trust in different elements of the banking industry, June 2014 and May 2015
Different Concepts of Trust in Retail Banking
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- Customers are confident their banks are here for good…
- …but the majority are not convinced banks have their best interests at heart
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- Figure 32: Different concepts of trust in retail banking, May 2015
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