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Packaged and Current Accounts - UK - June 2012

INTRODUCTION
Abbreviations
EXECUTIVE SUMMARY
The market
48 million current account holders
Figure 1: Number of active current account holders and number of current accounts, 2012
Online banking is most frequently used channel
8 in 10 own a standard current account
Figure 2: Type of current account held – main account only, 2011
Market factors
Economic environment and changing population altering the competitive landscape
The validity of the free-if-in-credit model has come under debate
More restrictions being placed on the use of basic accounts
Ongoing efforts to stoke competition in the market
Companies, brands and innovation
87% of Britons’ main current accounts held with the top five providers
Figure 3: Share of main current account holder customer base, by banking group, April 2012
Lloyds Banking Group brands provide a third of packaged accounts
Figure 4: Share of main packaged account holder customer base, by banking group, April 2012
No brand has achieved significant levels of trust or differentiation
Figure 5: Attitudes towards and usage of brands in the current account sector, January and March 2012
The evolving competitive landscape
Who’s innovating?
The consumer
Important factors when choosing a current account
Figure 6: Important Factors when choosing a current account, April 2012
Use of current account benefits
Account usage and the top providers
Attitudes toward current accounts
What we think
ISSUES IN THE MARKET
How much of a threat are non-traditional current account providers?
Why aren’t more consumers upgrading to packaged accounts?
Is mobile banking important to consumers?
Is the branch network still relevant?
How can providers ensure they attract younger age groups?
FUTURE OPPORTUNITIES
Supporting the youth with practical incentives
Taking online banking to the next level
A golden opportunity
INTERNAL MARKET ENVIRONMENT
Key points
The concept of free-if-in-credit banking is under threat…
…but free banking will not go down easy
Banks putting more restrictions on the use of basic accounts
On-going efforts to stoke competition in the market
FSA keeping vigilant about current account mis-selling
Despite low interest rates, overdraft rates have continued to move up
Figure 7: Official monthly bank and building society overdraft interest rate, UK Inter-bank, three-month rate, and official bank rate**, April 2007-April 2012
BROADER MARKET ENVIRONMENT
Key points
Squeeze on household incomes yet to dissipate
Figure 8: Monthly change in RPI and average weekly earnings, January 2008-April 2012
Rate of unemployment hovering above 8%
Figure 9: UK unemployment rate, seasonally adjusted, January 2008-January 2012
Uncertainty preventing consumer confidence from rebounding
Figure 10: UK consumer confidence, March 1997-March 2012
Changing population dynamics unfavourable to new business growth
Figure 11: Size of the UK population, by age, 2001-20
Seeking alternative routes to growing new business
COMPETITIVE LANDSCAPE
Key points
The evolving competitive environment
Competition for 623 Lloyds branches
 NEW AND POTENTIAL ENTRANTS
Metro Bank
M&S Bank
Virgin Money
Tesco Bank
NBNK
SWOT ANALYSIS
Figure 12: UK current account market – SWOT analysis, 2012
WHO’S INNOVATING?
Key points
123 current account from Santander
Barclays launches a DIY current account
Pingit from Barclays
Cash withdrawals now possible via RBS and NatWest mobile apps
MARKET SIZE
Key points
A well-established and slow moving market
Figure 13: Number of active current account holders and number of current accounts, 2009-12
Free-if-in-credit account has a stronghold on the market
Figure 14: Type of current account held – main account only, 2011
Just 16% own a packaged or premium account
MARKET SHARE
Key points
Barclays and NatWest close in on Lloyds TSB
Figure 15: Main current account provider, by individual brand, April 2012
The ‘big five’ provide 87% of Britons’ main current accounts
Figure 16: Share of main current account holder customer base, by banking group, April 2012
One in three packaged accounts provided by LBG
Figure 17: Share of main packaged account holder customer base, by banking group, April 2012
COMPANIES AND PRODUCTS
 KEY PLAYERS
Barclays
Figure 18: Barclays’ current account range, June 2012
Figure 19: Range of packs available for the Barclays bank account, June 2012
Figure 20: Range of packs available for the Barclays Premier current account, June 2012
Figure 21: Barclays’ current account range continued, June 2012
Figure 22: Key financial data for Barclays Plc (UK Retail Banking Division), 2010-11
HSBC/First Direct
Figure 23: HSBC’s current account range, April 2012
Figure 24: First Direct’s current account range, April 2012
Figure 25: Key financial data for HSBC (UK Retail Banking division), 2010-11
Lloyds Banking Group
Figure 26: Lloyds TSB current account range, April 2012
Figure 27: Halifax/Bank of Scotland current account range, April 2012
Figure 28: Key financial data for Lloyds Banking Group (Retail Division), 2010-11
Nationwide
Figure 29: Nationwide’s current account range, April 2012
Figure 30: Key financial data for Nationwide, 2010-11
RBS/Natwest
Figure 31: RBS’ current account range, April 2012
Figure 32: NatWest’s current account range, April 2012
Figure 33: Key financial data for RBS Group (UK Retail Banking Division), 2009-11
Santander
Figure 34: Santander current account range, April 2012
Figure 35: Key financial data for Santander UK (Retail Banking Division), 2009-11
BRAND COMMUNICATION AND PROMOTION
Key points
Total adspend up by 6% in the year to April 2012
Figure 36: Advertising expenditure on current accounts and related services, by product sub-category, 2010-12
Adspend highly concentrated among a handful of big name advertisers
Figure 37: Top ten advertisers of current accounts and related services, 2010-12
TV and press top advertising medium used
Figure 38: Share of advertising expenditure on current accounts and related services, by media type, 2012
Ordinary current account adspend dominated by Santander and Halifax
Figure 39: Top ten advertisers of ordinary current accounts, 2010-12
Barclays the main advertiser of packaged accounts
Figure 40: Top five advertisers of packaged/premium accounts, 2010-12
Current account ads found to be breaching FSA standards in 2011
Note about NMR data
BRAND RESEARCH
Brand map
Figure 41: Attitudes towards and usage of brands in the current account sector, January and March 2012
Correspondence analysis
Brand attitudes
Figure 42: Attitudes towards brands in the current account sector, January and March 2012
Brand personality
Figure 43: Brand personality for providers in the current account market– macro image, January and March 2012
Figure 44: Brand personality for providers in the current account market– micro image, January and March 2012
Brand experience
Figure 45: Brand usage for providers in the current account market, January and March 2012
Figure 46: Satisfaction with  brands in the current account market, January and March 2012
Figure 47: Consideration of brands in the current account market, January and March 2012
Figure 48: Consumer perceptions of current account brand performance, January and March 2012
Figure 49: Current account brand recommendation – Net Promoter Score, January and March 2012
Brand index
Figure 50: Current account brand index, January and March 2012
Figure 51: Current accounts brand index vs. recommendation, January and March 2012
Target group analysis
Figure 52: Target groups, January and March 2012
Figure 53: Current account brand usage, by target groups, January and March 2012
Group One – Conformists
Group Two – Simply the Best
Group Three – Shelf Stalkers
Group Four – Habitual Shoppers
Group Five – Individualists
CHANNELS TO MARKET
Key points
The multi-channel approach to account distribution and administration
Branch network is still highly relevant
Figure 54: Number of branches belonging to the largest current account providers (shown on group basis), year-end 201
ATM network helps to reinforce the brand
Figure 55: Number of ATMs belonging to the largest current account providers (shown on group basis), 2010
A third of Britons use online banking at least once a week
Figure 56: Channels and frequency used to access banking services, 2011
Use of online banking focused on simple daily account management
Figure 57: Methods used to access banking services, 2007-11
Use of mobile banking on the rise
Figure 58: Use of mobile banking services, 2010 and 2011
CURRENT AND PACKAGED ACCOUNT OWNERSHIP
Key points
Large majority of adults own standard current accounts
Figure 59: Type of current account held – main account only, 2011
The consumer resistance to upgrading
Emphasising the value proposition in challenging economic times
Just over two fifths have two or more accounts
Figure 60: Trends in current account ownership, 2007-11
Fee-based packaged account ownership in detail
Figure 61: Ownership of fee-based packaged and free/ordinary current accounts, April 2012
25 to 44-year-olds the most likely to own a packaged account
Figure 62: Type of current account held, by gender and age, April 2012
Packaged account ownership positively correlated with affluence
Figure 63: Type of current account held, by socio-economic group, April 2012
Figure 64: Type of current account held, by gross annual household income, April 2012
IMPORTANT FACTORS WHEN CHOOSING A CURRENT ACCOUNT
Key points
Quality of online banking service is now a key selling point…
Figure 65: Important Factors when choosing a current account, April 2012
… but the branch is still relevant
Most consumers take three or more factors into consideration
Figure 66: Repertoire of important factors when choosing a current account, April 2012
Packaged account holders expect to receive great deals
Figure 67: Important factors when choosing a current account, by type of account owned, April 2012
The influence of gender and age
Figure 68: Important Factors when choosing a current account, by gender and age, April 2012
Incentivising youngsters to spread the word
Affluent less concerned about branch proximity
Figure 69: Important factors when choosing a current account, by socio-economic group, April 2012
Figure 70: Important factors when choosing a current account, by gross annual household income, April 2012
USE OF CURRENT ACCOUNT BENEFITS
Key points
Access to account benefits by type of account owned
Figure 71: access to account benefits, by type of current account, April 2012
Packaged account benefit usage rates
Figure 72: Ownership and use of benefits – fee-charging packaged account customers only, April 2012
Positive correlation between use of benefits and cost of account
Figure 73: Benefits actually used, by type of current account, April 2012
Relevance of certain benefits varies with age
Figure 74: Account benefits actually used, by gender and age, April 2012
Impact of affluence is less significant
Figure 75: Account benefits actually used, by socio-economic group, April 2012
Figure 76: Account benefits actually used, by gross annual household income, April 2012
TOP PROVIDERS AND ACCOUNT USAGE
Key points
Lloyds TSB customers have access to the most benefits
Figure 77: Access to current account benefits, by most popular main current account provider, April 2012
Benefit usage rates highest among Lloyds TSB and Barclays customers
Figure 78: Benefits actually used, by main current account provider (top seven only), April 2012
Top providers and important factors when choosing an account
Figure 79: Important factors when choosing a current account, by main current account provider (top seven only), April 2012
Nationwide customers most satisfied with their current account
Halifax customers most likely to feel loyalty is being rewarded
Figure 80: Agreement with statements about current accounts, by main current account provider (top seven only), April 2012
ATTITUDES TOWARDS CURRENT ACCOUNTS
Key points
Most are happy with existing account despite many feeling unrewarded
Figure 81: Agreement with statements about current accounts, April 2012
Packaged accounts give providers more opportunity to reward loyalty
Figure 82: Agreement with statements about current accounts, by type of account, April 2012
The young and affluent are most positive about their accounts
Two thirds would switch if their bank started to charge a monthly fee
Figure 83: Agreement with statements about current accounts, April 2012
Attitudes toward alternative providers of current accounts
Figure 84: Agreement with statements about current accounts, April 2012
Figure 85: Agreement with statements about current accounts, by type of account, April 2012
Affluent young men most open to branchless banking
Banks should remain wary of the threat from non-traditional providers
TARGETING OPPORTUNITIES
Key points
 KEY TARGET GROUPS
Figure 86: Key current and packaged account target groups, April 2012
Feel undervalued
Passively loyal
Branch access
Happy but demanding
Passively loyal the most likely to own a packaged account…
Figure 87: Current and packaged account target groups, by type of account, April 2012
… and the most likely to use its benefits
Figure 88: Current and packaged account target groups, by use of current account benefits, April 2012
The importance of keeping things fresh
Target groups and what they look for in an account provider
Figure 89: Current and packaged account target groups, by important factors when choosing a current account, April 2012
Target groups and the major providers
Figure 90: Current and packaged account target groups, by main current account provider, April 2012
APPENDIX – BRAND RESEARCH
Figure 91: Brand usage, March 2012
Figure 92: Brand usage, January 2012
Figure 93: Brand commitment, January and March 2012
Figure 94: Brand momentum, January and March 2012
Figure 95: Brand diversity, January and March 2012
Figure 96: Brand satisfaction, January and March 2012
Figure 97: Brand recommendation, January and March 2012
Figure 98: Brand attitude, January and March 2012
Figure 99: Brand image – macro image, May 2012
Figure 100: Brand image – micro image, January and March 2012
Figure 101: Profile of target group, by demographic, January and March 2012
Figure 102: Psychographic segmentation, by target groups, January and March 2012
Figure 103: Brand usage, by target groups, January 2012
Figure 104: Brand usage, by target group, March 2012
Brand index
Figure 105: Brand index, January 2012
Figure 106: Brand index, March 2012
APPENDIX – MARKET SHARE
Figure 107: Type of current account held, by main account provider (top seven only), April 2012
Figure 108: Most popular main current account provider, by demographics, April 2012
Figure 109: Next most popular main current account provider, by demographics, April 2012
APPENDIX – CURRENT AND PACKAGED ACCOUNT OWNERSHIP
Figure 110: Ownership of fee-based packaged and free/ordinary current accounts, by demographics, April 2012
APPENDIX – IMPORTANT FACTORS WHEN CHOOSING A CURRENT ACCOUNT
Figure 111: Most popular factors when choosing a current account, by demographics, April 2012
Figure 112: Next most popular factors when choosing a current account, by demographics, April 2012
Figure 113: Repertoire of important factors when choosing a current account, by demographics, April 2012
APPENDIX – USE OF CURRENT ACCOUNT BENEFITS
Figure 114: Use of current account features, by demographics, April 2012
Figure 115: Use of current account insurance and warranty cover, by demographics, continued, April 2012
Figure 116: Use of current account security/protection features, by demographics,continued, April 2012
Figure 117: Use of other current account benefits, by demographics, continued, April 2012
Figure 118: Repertoire of use of current account benefits, by demographics, April 2012
APPENDIX – ATTITUDES TOWARDS CURRENT ACCOUNTS
Figure 119: Agreement with statements about current accounts, by type of account, April 2012
Figure 120: Agreement with statements about current accounts, by main current account provider, April 2012
Figure 121: Important factors when choosing a current account, agreement with statements about current accounts, April 2012
Figure 122: Agreement with statements ‘I’d be happy to hold my current account with a bank with no high street branches’ and ‘All banks are pretty much the same as each other’, by demographics, April 2012
Figure 123: Agreement with statements ‘I’m happy with my existing current account’ and ‘I feel that my bank rewards my loyalty’, by demographics, April 2012
Figure 124: Agreement with statements ‘Non-traditional firms such as supermarkets would do a better job at running current accounts than banks’ and ‘I would switch current accounts if my bank introduced a monthly fee’, by demographics, April 2012
APPENDIX – TARGETING OPPORTUNITIES
Figure 125: Key current and packaged account target groups, April 2012
Figure 126: Target groups, by demographics, April 2012

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