Current Accounts - Ireland - August 2011

ISSUES IN THE MARKET
Key themes
Definitions
Data sources
Abbreviations
INSIGHTS AND OPPORTUNITIES
Premium accounts may yet find their niche among Irish consumers
Demographic changes to force a future shift in focus
MARKET IN BRIEF
Current account ownership approaches saturation
Low level of trust among consumers in banks
Banks 'spreading the net' wider in search of income
Economic challenges to remain for foreseeable future
Demographic changes pose challenges for providers
Branches and online – preferred means of account management
Interest on balance the most common feature
Interest on credit balances the main deciding factor
High level of loyalty towards current account providers
Reluctance to accumulate debt or purchase with credit
FAST FORWARD TRENDS
Trend 1: Prepare for the Worst
What’s it about?
What we’ve seen
What next?
Trend 2: Decline of Deference
What’s it about?
What we’ve seen
What next?
INTERNAL MARKET ENVIRONMENT
Key points
Banks losing the trust of Irish consumers
Figure 1: Consumers agreeing with selected statements about trust, NI and RoI, 2011
Middle-aged consumers have less trust
Figure 2: Consumers who agree with the statement ‘I have trust in banks’, by age, NI and RoI, 2011
Figure 3: Consumers who agree with the statement ‘I have trust in other financial institutions (eg Credit Unions, Post Office etc)’, by age, NI and RoI, 2011
Consumers finding more cause for complaint
Figure 4: Banking-related complaints lodged with Irish Financial Ombudsman, by type of complaint, RoI, 2010
Preference for cash remains high
Figure 5: Agreement with statement 'I like to pay cash for everything I buy', NI and RoI, 2006-10
Figure 6: Percentage of all transactions that cash accounts for, UK, 1999, 2009 and 2018
Are banks 'spreading the net' wider in search of income?
The end of ‘free banking’ in RoI?
Service charges can add up
Figure 7: Overview of service charges and overdraft fees levied on current account holder, RoI, October 2011
NI consumers face steeper service charges
Figure 8: Overview of service charges and overdraft fees levied on current account holders, NI, October 2011
High variation in interest charged on overdrafts
Figure 9: Authorised overdraft interest rates, for selected banks, RoI, October 2011
Higher variation in NI, despite lower rates
Figure 10: Authorised overdraft interest rates, for selected banks, NI, October 2011
NI banks presenting charges in clear English
Interest on credit balances no longer common
BROADER MARKET ENVIRONMENT
Key points
Economic outlook remains uncertain
Figure 11: GDP growth, actual and forecast, UK, NI and RoI, 2009-12
NI
RoI
No easy solution to unemployment
NI
Figure 12: Employment and claimant count numbers, actual, estimated and forecast, NI, 2009-12
RoI
Figure 13: Employment, labour force and unemployment, RoI, actual, estimated and forecast, RoI, 2010-12
Figure 14: Unemployment rate, actual and forecast, RoI, 2009-12
Interest rates low and unappealing
Figure 15: Interest rates, actual and forecast, RoI and NI, 2011
Consumers' incomes under increasing pressure
Figure 16: Median gross weekly pay, NI, 2005-10
Figure 17: Median gross weekly earnings, RoI, 2006-11
Confidence at close to all-time lows
Figure 18: Expectations of how household financial position will fare in next 12 months, NI, June 2011
RoI confidence low, but better than in 2008
Figure 19: Consumer sentiment index, three-month moving average, RoI, 2002-11
Online access central to current account management
Figure 20: Consumers with broadband connection at home, RoI and NI, 2004-10
Demographic changes bring challenges
Figure 21: Population, by age, RoI, 2006-41
Figure 22: Population, by age, NI, 2008-58
Exodus of foreign nationals
Figure 23: Net migration, RoI and NI, 2000-10
Young fear having to leave Ireland
Figure 24: Consumers agreeing that ‘having to emigrate to find work/go to college’ most concerns them, by age, RoI and NI, 2011
STRENGTHS AND WEAKNESSES
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
Co-op Bank offers switchers £200
Co-op Bank also appealing to football fans
Santander offering rewards for loyal customers
Northern Bank launches new smartphone app
Evolving the mobile banking offering
MARKET SIZE AND PENETRATION
Key points
More than 6 million current accounts in Ireland
Figure 25: Number of current accounts in issue, IoI, RoI and NI, 2005-15
Current account ownership approaching saturation
Figure 26: Current account ownership, NI and RoI, 2008 and 2010
Ownership lowest among consumers aged 15-24
Figure 27: Consumers with no current account, by age and socio-economic group, NI and RoI, 2010
Lower ownership among the less affluent
Ownership highest among married consumers
Figure 28: Current account ownership, by marital status, NI and RoI, 2010
Little interest in premium and packaged accounts
Figure 29: Type of current account owned, NI and RoI, 2010
COMPANIES AND PRODUCTS
Figure 30: Profiled banks, 2011
AIB
Figure 31: AIB current accounts, RoI, October 2011
Figure 32: AIB current account service charges, RoI, October 2011
Bank of Ireland
RoI
Figure 33: Bank of Ireland current account, RoI, October 2011
NI
Figure 34: Bank of Ireland current account portfolio, NI, October 2011
Figure 35: Bank of Ireland current account service charges, RoI, October 2011
Figure 36: Bank of Ireland service and overdraft charges, NI, October 2011
First Trust Bank
Figure 37: First Trust Bank current account portfolio, NI, October 2011
Figure 38: First Trust Bank current account service charges, NI, October 2011
HSBC
Figure 39: HSBC current account portfolio, UK (including NI), October 2011
National Irish Bank
Figure 40: National Irish Bank current accounts, RoI, October 2011
Figure 41: Northern Bank current account service charges, RoI, October 2011
Northern Bank
Figure 42: Northern Bank current accounts, NI, October 2011
Figure 43: Northern Bank current account service charges, NI, October 2011
Permanent TSB
Figure 44: PTSB current accounts, RoI, October 2011
Figure 45: PTSB current account service charges, RoI, October 2011
Santander
Figure 46: Santander current account portfolio, UK (including NI), October 2011
Ulster Bank
Figure 47: Ulster Bank current accounts, NI and RoI, October 2011
Figure 48: Ulster Bank current account service charges, RoI, October 2011
THE CONSUMER – HOW ACCOUNTS ARE ACCESSED
Key points
Branches retain role in current account management
Figure 49: Financial transactions conducted through a branch, RoI, 2006 and 2010
Figure 50: Financial transactions conducted through a branch, NI, 2006 and 2010
Consumers particularly keen on branches when seeking advice
Figure 51: Platform used to access financial advice, NI and RoI, 2006-10
Telephone banking facilities losing relevance
Figure 52: Financial transactions conducted via telephone, RoI, 2006 and 2010
Figure 53: Financial transactions conducted via telephone, NI, 2006 and 2010
Online emerging as preferred way to manage account
Figure 54: Financial transactions conducted online, RoI, 2006 and 2010
Figure 55: Financial transactions conducted online, NI, 2006 and 2010
THE CONSUMER – FEATURES AND TRANSACTIONS
Key points
Interest on balance the most common feature
Figure 56: Features on main current account, NI and RoI, 2010
Direct debit bill paying the most popular transaction
Figure 57: Transactions with main current account, NI and RoI, 2010
ABC1s engage more with their current accounts
Figure 58: Consumers who have salary paid directly into main current account, by socio-economic background, NI and RoI, 2010
Figure 59: Consumers who conduct bill payments by direct debit through main current account, by socio-economic background, NI and RoI, 2010
THE CONSUMER – FACTORS WHEN CHOOSING CURRENT ACCOUNT PROVIDER
Key points
Interest rates most important factor when choosing bank
Figure 60: Most important factors when choosing a bank for a current account, RoI and NI, 2010
Locality a rising concern for Irish consumers
Figure 61: Consumers who mention 'Locality' as an important factor when choosing a bank for a current account provider, RoI and NI, 2002 and 2010
Growing concern about company reputation
Figure 62: Consumers who mention 'Locality' as an important factor when choosing a bank for a current account provider, RoI and NI, 2006 and 2010
Online facilities now central to consumers' selection
Figure 63: Consumers who mention 'Telephone/internet banking facilities' as an important factor when choosing a bank for a current account provider, RoI and NI, 2002-10
Personal recommendations becoming slightly more influential among RoI consumers
Figure 64: Consumers who mention 'Personal recommendation' as an important factor when choosing a bank for a current account provider, RoI and NI, 2008 and 2010
Figure 65: Consumers who mention 'Range of services' as an important factor when choosing a bank for a current account provider, RoI and NI, 2008 and 2010
Overdraft charges attracting more attention
Figure 66: Consumers who mention 'Overdraft charges' as an important factor when choosing a bank for a current account provider, RoI and NI, 2002-10
Most consumers choose own current account
Figure 67: Who chose main current account, NI and RoI, 2010
THE CONSUMER – LENGTH OF TIME CURRENT ACCOUNT HELD
Key points
Half of RoI consumers bank for more than a decade
Figure 68: How long main current has been held, NI and RoI, 2010
Age of account tends to correlate with age of consumer
Evidence of higher loyalty among ABC1 consumers
Figure 69: Consumers who have held their main current account for more than ten years, by socio-economic background, NI and RoI, 2010
Even additional accounts tend to be 'long held'
Figure 70: How long other (not main) current account held, NI and RoI, 2010
THE CONSUMER – ATTITUDES TOWARDS FINANCE
Key points
Consumers reluctant to be in debt
Figure 71: Agreement with selected statements relating to personal finance, RoI and NI, 2010
Growing aversion to debt
Figure 72: Agreement with the statement 'I don't like the idea of being in debt', NI and RoI, 2007-10
Aversion to debt increases with age
Figure 73: Agreement with statement 'I don't like the idea of being in debt', by age, NI and RoI, 2010
High level of reluctance to shop on credit
Figure 74: Agreement with statement 'If there's something I want, I save up for it', by gender, NI and RoI, 2010
Growing awareness of personal finance among consumers
Figure 75: Agreement with statement 'I am more aware of personal finance than I used to be', by age and socio-economic background, NI and RoI, 2010
CONSUMER TARGET GROUPS
Key points
 NI TARGET GROUPS
Figure 76: NI consumer typologies, 2010
Financial Controllers
Disengaged
Traditionalists
Moderates
 ROI TARGET GROUPS
Figure 77: RoI consumer typologies, 2010
Informed and Involved
Disinterested
Interested Observers
Relationship Seekers
APPENDIX
NI TGI
Figure 78: Number of current or savings accounts held, by demographics, NI, 2010
Figure 79: Number of current accounts held, by demographics, NI, 2010
Figure 80: Own/joint account, by ownership, by demographics, NI, 2010
Figure 81: Type of current account owned (main account), by demographics, NI, 2010
Figure 82: Type of current account owned (other accounts), by demographics, NI, 2010
Figure 83: Features of main current account, by demographics, NI, 2010
Figure 84: Features of other current account, by demographics, NI, 2010
Figure 85: Transactions with main current accounts, by demographics, NI, 2010
Figure 86: Transactions with other current accounts, by demographics, NI, 2010
Figure 87: How long main current account has been held, by demographics, NI, 2010
Figure 88: How long other current account has been held, by demographics, NI, 2010
Figure 89: Who choose main current account, by demographics, NI, 2010
Figure 90: Who choose other current account, by demographics, NI, 2010
Figure 91: Consumers who have opened new current accounts, by demographics, NI, 2010
Figure 92: Most important factors when choosing a bank for a current account, by demographics, NI, 2010
Figure 93: Most important factors when choosing a bank for a current account (continued), by demographics, NI, 2010
RoI TGI
Figure 94: Number of current or savings accounts held, by demographics, RoI, 2010
Figure 95: Number of current accounts held, by demographics, RoI, 2010
Figure 96: Own/joint account, by ownership, by demographics, RoI, 2010
Figure 97: Type of current account owned (main account), by demographics, RoI, 2010
Figure 98: Type of current account owned (other accounts), by demographics, RoI, 2010
Figure 99: Features of main current account, by demographics, RoI, 2010
Figure 100: Features of other current account, by demographics, RoI, 2010
Figure 101: Transactions with main current accounts, by demographics, RoI, 2010
Figure 102: Transactions with other current accounts, by demographics, RoI, 2010
Figure 103: How long main current account has been held, by demographics, RoI, 2010
Figure 104: How long other current account has been held, by demographics, RoI, 2010
Figure 105: Who choose main current account, by demographics, RoI, 2010
Figure 106: Who choose other current account, by demographics, RoI, 2010
Figure 107: Consumers who have opened new current accounts, by demographics, RoI, 2010
Figure 108: Most important factors when choosing a bank for a current account, by demographics, RoI, 2010
Figure 109: Most important factors when choosing a bank for a current account (continued), by demographics, RoI, 2010