Consumers and Retail Banking - UK - October 2012

INTRODUCTION
Note on consumer research
Abbreviations
EXECUTIVE SUMMARY
Product ownership and cross-selling
Savings accounts and credit cards top the list of cross-sales
Figure 1: Product holding and cross-sales, main current account provider and other providers, August 2012
Market factors
A challenging backdrop
Companies and brands
A concentrated market
Figure 2: Main current account provider, by major banking groups, August 2012
Trust is low across the market
Figure 3: Attitudes towards and usage of brands in the retail banking sector, July 2012
The consumer
Most customers are happy with their bank
Figure 4: Satisfaction with existing banking provider, August 2012
Three quarters of account holders are not looking to switch providers
Figure 5: Appetite for switching retail banking providers, August 2012
Two thirds will only consider using a brand with a proven record in financial services
Figure 6: Agreement with attitudinal statements about retail banking providers, August 2012
In-branch services used by 90% of current account customers
Figure 7: Usage of retail banking channels, August 2012
Staff are the most important aspect of branch-based banking
Figure 8: Assessment of importance of in-branch products and services, August 2012
What we think
ISSUES IN THE MARKET
Will the implementation of a current account switching service change the retail banking landscape?
Why are consumers so reluctant to switch current account providers?
Is customer satisfaction influenced by the banking channels used?
Is there consumer appetite for new retail banking brands and services?
Does the bank branch have a future?
TREND APPLICATION
Separating and extending branch services
Helping customers to save time
Mobile banking needs to deliver practical benefits
RETAIL BANKING ENVIRONMENT
Key points
A difficult year
LIBOR-rigging scandal creates negative headlines
RBS IT failure undermines confidence
Costs of PPI mis-selling continue to mount
Interest rate swaps mis-selling add to bank compensation costs
ICB proposals should shake up the banking sector
Ring-fencing retail banking operations
Higher capital requirements
Increasing competition in retail banking
Drive to increase competition
Payments Council to introduce account switching service in 2013
End of free banking?
New rules for packaged current accounts
Banks review advice propositions
RETAIL BANKING PROVIDERS – CURRENT ACCOUNT SHARE
Key points
Lloyds TSB and Barclays top current accounts market share
Figure 9: Main current account provider, August 2012
Figure 10: Main current account provider, by major banking groups, August 2012
Changing landscape of the retail banking market
New entrants to the market
COMPANY PROFILES
Barclays
Figure 11: Key financial data for Barclays Plc (& UK Retail Banking Division), 2010 and 2011
Figure 12: Key data for Barclays PLC (UK Retail and Business Banking Division) 2010 and 2011
RBS
Figure 13: Key financial data from half-year results for RBS (UK Retail), 2011 and 2012
Figure 14: Key financial data for RBS Group (UK Retail Banking Division), 2010 and 2011
Figure 15: Key retail banking data for RBS Group (UK Retail Banking Division), 2010 and 2011
HSBC
Figure 16: Key financial data for HSBC (UK Retail Banking division), 2011 and 2012
Figure 17: Key financial data for HSBC (UK Retail Banking division), 2010 and 2011
Figure 18: Key retail banking data for HSBC (UK Retail Banking division), 2010 and 2011
Nationwide
Figure 19: Key financial data of Nationwide, 2011 and 2012
Figure 20: Key retail banking data, 2011 and 2012
Santander
Figure 21: Key financial data for Santander UK (half-year results), 2011 and 2012
Figure 22: Key financial data for Santander UK (Retail Banking Division), 2010 and 2011
Figure 23: Key retail banking data, interim results, 2011 and 2012
Figure 24: Key retail banking data, 2011 and 2012
Lloyds Banking Group
Figure 25: Key financial data for Lloyds Banking Group (half-year results), 2011 and 2012
Figure 26: Key financial data of Lloyds Banking Group (Retail Banking Division), 2010 and 2011
Figure 27: Key data of Lloyds Banking Group (Retail Banking Division), 2011 and 2012
Figure 28: Key data of Lloyds Banking Group (Retail Banking Division), 2010 and 2011
The Co-operative Bank
Figure 29: Key financial data of The Co-operative Bank (retail banking division), 2010 and 2011
BRAND COMMUNICATION AND PROMOTION
Key points
Total adspend down by 9.7% in the year to May 2012
Figure 30: Total advertising expenditure, 2010-12
NAB brands increase adspend following launch of new products
Adspend dominated by big name providers
Mobile banking developments boost adspend
TV and press are the most used advertising channels
Figure 31: Total advertising expenditure, by media type, 2010-12
BRAND RESEARCH
Brand map
Figure 32: Attitudes towards and usage of brands in the retail banking sector, July 2012
Correspondence analysis
Brand attitudes
Figure 33: Attitudes, by retail banking brand, July 2012
Brand personality
Figure 34: Retail banking brand personality – macro image, July 2012
Figure 35: Retail banking brand personality – micro image, July 2012
Brand experience
Figure 36: Retail banking brand usage, July 2012
Figure 37: Satisfaction with various retail banking brands, July 2012
Figure 38: Consideration of retail banking brands, July 2012
Figure 39: Consumer perceptions of current retail banking brand performance, July 2012
Figure 40: Retail banking brand recommendation – Net Promoter Score, July 2012
Brand index
Figure 41: Retail banking brand index, July 2012
Figure 42: Retail banking brand index vs. recommendation, July 2012
Target group analysis
Figure 43: Target groups, July 2012
Figure 44: Retail banking brand usage, by target groups, July 2012
Group One – Conformists
Group Two – Simply the Best
Group Three – Shelf Stalkers
Group Four – Habitual Shoppers
Group Five – Individualists
CONSUMER FINANCIAL SITUATION
Key points
Most consumers are managing to get by financially
Figure 45: Trends in consumer sentiment, current financial situation, February 2009-August 2012
Fewer people have seen their financial position worsen in the last 12 months…
Figure 46: Trends in consumer sentiment, financial position compared to a year ago, August 2011-August 2012
…although only a fifth are positive about their finances over the next 12 months
Figure 47: Trends in consumer sentiment, financial confidence for the next 12 months, February 2009-August 2012
Consumers still making purchases and adding to their savings
Figure 48: Trends in spending over last three months and planned spend over the next three months, June-August 2012
PRODUCT OWNERSHIP AND CROSS-SELLING
Key points
Savings products and credit cards top list of current account cross-sales
Figure 49: Product holding and cross-sales, August 2012
Convenience is not always enough
Cross-sale opportunities vary between products
A fifth have four or more products with their main banking provider
Figure 50: Repertoire of financial products held with main current account provider and other providers, August 2012
Figure 51: Product holding and cross-sales, by repertoire of product holding and cross-sales, August 2012
Cross-sale consistency across retail banking brands
Figure 52: Repertoire of product holding and cross-sales, by main current account provider, August 2012
SATISFACTION WITH BANKING PROVIDERS
Key points
Most customers are happy with their main retail banking provider
Figure 53: Satisfaction with existing banking provider, August 2012
Even banking failures do not appear to have major impact on satisfaction
Figure 54: Satisfaction with existing banking provider, by next most popular main current account provider, August 2012
Mutuals have a clear edge in customer satisfaction
Figure 55: Satisfaction with existing banking provider, by most popular main current account provider, August 2012
Over-65s are the most contented current account customers
Figure 56: Satisfaction with existing banking provider, by gender and age, August 2012
Customers with at least one additional product are more satisfied
Figure 57: Satisfaction with existing banking provider, by repertoire of product holding and cross-sales, August 2012
APPETITE AND MOTIVATION FOR SWITCHING BANKING PROVIDERS
Key points
Providers under pressure to increase current account switching activity…
…although appetite for account switching remains subdued
Figure 58: Appetite for switching retail banking providers, August 2012
Non-switchers are quite happy with their existing provider
Figure 59: Satisfaction with existing banking provider, by appetite for switching retail banking providers, August, 2012
Half of potential switchers are happy with existing arrangements
Cross-selling does little to cement a more loyal relationship
Figure 60: Appetite for switching retail banking providers, by repertoire of product holding and cross-sales, August 2012
Santander customers are more likely to be open to switching
Figure 61: Appetite for switching retail banking providers, by most popular main current account providers, August 2012
Figure 62: Appetite for switching retail banking providers, by mutual and non-mutual retail banking organisations, August 2012
Better deals are the main motivation for switching
Figure 63: Reasons for switching retail banking providers, August 2012
RBS customers are more likely to switch due to failure of banking service
Figure 64: Reasons for switching retail banking providers among those who would consider switching, by current account providers, August 2012
ATTITUDES TOWARDS RETAIL BANKING PROVIDERS
Key points
Banks are seen as profit-driven and lacking in differentiation
Figure 65: Attitudes towards retail banking providers, August 2012
Consumers need convincing to use new retail banking providers
Branches remain crucial to attracting new customers
In-store branches are more likely to appeal to younger adults
Figure 66: Agreement with statement ‘I like the idea of being able to access banking services at shops/stores that I use regularly’, by age, August 2012
Content customers are more likely to look for an established brand
Figure 67: Attitudes towards retail banking providers, by satisfaction with existing banking provider, August 2012
Likely switchers are looking for reassurances
Figure 68: Attitudes towards retail banking providers, by appetite for switching retail banking providers, August 2012
USAGE OF RETAIL BANKING CHANNELS
Key points
Online banking drives frequent customer contact
Figure 69: Frequency of usage of retail banking channels, August 2012
Younger adults access banking services more frequently
Mobile banking users are more likely to consider switching
Figure 70: Appetite for switching retail banking providers, by usage of retail banking channels, August 2012
Mobile banking users are more open to new retail banking concepts
Figure 71: Attitudes towards retail banking providers, by usage of retail banking channels, August 2012
Figure 72: Satisfaction with existing banking provider, by usage of banking channels, August 2012
SATISFACTION WITH RETAIL BANKING CHANNELS
Key points
Users are more positive about online banking experience
Figure 73: Satisfaction with retail banking channels, August 2012
Channel variety allows users to select channels that suit
In-branch services contribute to higher levels of customer satisfaction
Figure 74: Key driver analysis of current account holders’ satisfaction with banking providers with satisfaction with main banking channels, August 2012
Figure 75: Key driver analysis of current account holders’ satisfaction with banking providers with satisfaction with main banking channels, August 2012
Key driver methodology
Nationwide stands out in offering a strong in-branch advice service
Figure 76: Correspondence analysis – satisfaction with retail banking channels at main current account providers, August 2012
Methodology
THE ROLE OF THE BRANCH – THE CONSUMER PERSPECTIVE
Key points
Debate over the future of branch-based banking
Staff are the most important aspect of branch-based banking
Figure 77: Importance of in-branch products and services, August 2012
Short queues are lower down the list of priorities
Branch appearance is a consideration, but not a priority
Mobile banking users are more likely to value little extras
Figure 78: Importance of in-branch products and services, by usage of retail banking channels, August 2012
NatWest and HSBC customers are more likely to appreciate extended opening hours
Figure 79: Importance of in-branch products and services, by most popular main current account provider, August 2012
Multi-product holders are more likely to look for a comfortable setting
Figure 80: Importance of in-branch products and services, by most number of products held with main banking provider, August 2012
APPENDIX – RETAIL BANKING PROVIDERS
Figure 81: Most popular main current account provider, by demographics, August 2012
Figure 82: Next most popular main current account provider, by demographics, August 2012
APPENDIX – BRAND RESEARCH
Brand usage
Figure 83: Brand usage, July 2012
Brand commitment
Figure 84: Brand commitment, July 2012
Brand momentum
Figure 85: Brand momentum, July 2012
Brand diversity
Figure 86: Brand diversity, July 2012
Brand satisfaction
Figure 87: Brand satisfaction, July 2012
Brand recommendation
Figure 88: Brand recommendation, July 2012
Brand attitude
Figure 89: Brand attitude, July 2012
Brand image
Figure 90: Brand image – Macro image, July 2012
Figure 91: Brand image – Micro image, July 2012
Target groups
Figure 92: Profile of target groups, by demographics, July 2012
Figure 93: Psychographic segmentation, by target groups, July 2012
Figure 94: Brand usage, by target groups, July 2012
 BRAND INDEX
Figure 95: Brand index, July 2012
APPENDIX – PRODUCT OWNERSHIP AND CROSS-SELLING
Figure 96: Product holding and cross-sales with main current account provider, by main current account provider, August 2012
Figure 97: Most popular own/arranged this product with my (main) current account provider, by demographics, August 2012
Figure 98: Next most popular own/arranged this product with my (main) current account provider, by demographics, August 2012
Figure 99: Most popular own/arranged this product with another provider, by demographics, August 2012
Figure 100: Next most popular own/arranged this product with another provider, by demographics, August 2012
Figure 101: Repertoire of product holding and cross-sales, by demographics, August 2012
APPENDIX – SATISFACTION WITH BANKING PROVIDERS
Figure 102: Satisfaction with existing banking provider, by demographics, August 2012
Figure 103: Satisfaction with existing banking provider (continued), by demographics, August 2012
APPENDIX – APPETITE AND MOTIVATION FOR SWITCHING BANKING PROVIDERS
Figure 104: Appetite for switching retail banking providers, by demographics, August 2012
Figure 105: Appetite for switching retail banking providers (continued), by demographics, August 2012
Figure 106: Reasons for switching retail banking providers, by demographics, August 2012
APPENDIX – ATTITUDES TOWARDS RETAIL BANKING PROVIDERS
Figure 107: Agreement with the statements ‘Most high street banks are pretty much the same as each other’ and ‘Banks are more concerned about their profits than their customers’, by demographics, August 2012
Figure 108: Agreement with the statements ‘I would only use a bank which has branches that are near to where I live or work’ and ‘I like the idea of being able to access banking services at shops/stores that I use regularly’, by demographics, August 2012
Figure 109: Agreement with the statements ‘I would only consider using a bank which has a proven track record in financial services’ and ‘I would be happy to use a new banking brand’, by demographics, August 2012
APPENDIX – USAGE OF RETAIL BANKING CHANNELS
Figure 110: Usage of in branch – counter services, by demographics, August 2012
Figure 111: Usage of in branch – advice services, by demographics, August 2012
Figure 112: Usage of online banking services, by demographics, August 2012
Figure 113: Usage of telephone banking services, by demographics, August 2012
Figure 114: Usage of mobile banking services, by demographics, August 2012
APPENDIX – THE ROLE OF THE BRANCH – THE CONSUMER PERSPECTIVE
Figure 115: Importance of short queues, by demographics, August 2012
Figure 116: Importance of private areas for meetings/discussions with staff, by demographics, August 2012
Figure 117: Importance of knowledgeable staff, by demographics, August 2012
Figure 118: Importance of friendly and helpful staff, by demographics, August 2012
Figure 119: Importance of comfortable seating area, by demographics, August 2012
Figure 120: Importance of quick deposit facilities, by demographics, August 2012
Figure 121: Importance of internet access (in branch), by demographics, August 2012
Figure 122: Importance of clean and bright décor, by demographics, August 2012
Figure 123: Importance of tea/coffee facilities, by demographics, August 2012
Figure 124: Importance of coin-counting machines, by demographics, August 2012
Figure 125: Importance of extended opening hours, by demographics, August 2012