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Current Accounts - UK - July 2017

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Number of current accounts rises by 2.1%
Figure 1: Estimated number of current accounts, 2014-17
Latest switching figures suggest a slowdown
Figure 2: Number of switches per month since launch of CASS, September 2013-May 2017
‘Making banks work harder for you’
Companies and brands
Lloyds Banking Group has largest share of the market
Figure 3: Current account providers (banking groups), by share of main and other current account market, May 2017
Challengers lead the way in increasing transparency around overdrafts
Advertising spend falls by 35%
Figure 4: Total above-the line, online display and direct mail advertising expenditure on current accounts and other related money-transmission services, 2012/13-2016/17
Nationwide continues to be seen as most trusted brand
Figure 5: Attitudes towards and usage of selected brands, May 2017
The consumer
Most hold a standard current account
Figure 6: Type of current account held, May 2017
Fee changes most likely to prompt people to review their arrangements
Figure 7: Prompts to review current account arrangements, May 2017
One in four uses their overdraft regularly
Figure 8: Agreement with the statement ‘I use a current account overdraft regularly (ie each month)’, May 2017
Convenience drives cross-selling among current account holders
Figure 9: Attitudes towards your main current account provider, May 2017
Main banking relationships likely to remain intact with Open Banking
Figure 10: Willingness towards sharing financial data with different providers, May 2017
What we think
ISSUES AND INSIGHTS
Changes to current account terms prompt people to review their arrangements
The facts
The implications
Consumers most likely to share data with their main bank
The facts
The implications
Open Banking will put pressure on providers to offer competitive overdraft charges
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Number of current accounts rises by 2.1%
Online banking is the most frequently used banking channel
Latest switching figures suggest a slowdown
‘Making banks work harder for you’
MARKET SIZE
Current account market grows with population
Figure 11: Estimated number of current accounts, 2014-17
CHANNELS TO MARKET
Online banking is the most frequently used banking channel
Figure 12: Use of different retail banking channels, July 2016
Branches remain important despite declining regular use
Online banking has increased customer engagement
Figure 13: Number of customer instructions for personal banking, 2001-16
MARKET DRIVERS
UK population continues to rise
Figure 14: United Kingdom population mid-year estimate, 2008-16
Latest switching figures suggest a slowdown
Figure 15: Number of switches per month since launch of CASS, September 2013-May 2017
Overdraft rates continue to rise despite base rate remaining at record low
Figure 16: Monthly interest rate of UK monetary financial institutions sterling overdraft for households – Not seasonally adjusted, January 2012-April 2017
Current account complaints fall by 35%
Figure 17: Number of new complaints about current accounts to the FOS, 2013/14-2016/17
REGULATORY AND LEGISLATIVE CHANGES
‘Making banks work harder for you’
Open Banking
Service quality statistics
Account-related ‘prompts’
Unarranged overdraft charges
CMA measures build on PSD2
Payment Account Regulations take effect
Bacs Direct Debit consultation
New package account rules raise standards
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Lloyds Banking Group has largest share of the market
Challengers lead the way in increasing transparency around overdrafts
Advertising spend falls by 35%
Nationwide continues to be seen as the most trusted brand
MARKET SHARE
Lloyds Banking Group has largest share of the market
Figure 18: Current account providers (banking groups), by share of main and other current account market, May 2017
Barclays is the biggest individual provider
Figure 19: Current account providers, by share of main and other current account market, May 2017
Santander sees switching numbers drop significantly
Figure 20: Net gains of full account switches completed using CASS between 2015 and 2016.
COMPETITIVE STRATEGIES
Competitive context
Responding to regulatory changes
Increasing transparency around overdrafts…
…with entrants taking a different approach
Reacting to the market environment
Cutting rewards and benefits...
…but challengers buck the trend
Switching deals remain prominent among challengers
The competitive environment
Partnering with fintechs
Demand for personalisation drives niche market propositions
Ethical banking
Students remain a key target market
Money management
Open Banking clouds the future for Atom Bank
Recent and pending launches
ADVERTISING AND MARKETING ACTIVITY
Spend falls by 35%
Figure 21: Total above-the-line, online display and direct mail advertising expenditure on current accounts and other related money-transmission services, 2012/13-2016/17
Nationwide maintains spending levels despite widespread cuts
Figure 22: Top ten advertisers of current accounts and related money-transmission services, 2014/15-2016/17
Added-value accounts see biggest fall in advertising
Figure 23: Advertising expenditure on current accounts and other related money-transmission services, 2014/15-2016/17
TV advertising accounts for three fifths of all spend
Figure 24: Share of advertising expenditure on current accounts and related money-transmission services, by media type, 2016/17 (12 months to 30 April)
Nielsen Ad Intel coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 25: Attitudes towards and usage of selected banking brands, May 2017
Key brand metrics
Figure 26: Key metrics for selected banking brands, May 2017
Brand attitudes: Metro Bank seen as offering something different
Figure 27: Attitudes, by brand, May 2017
Brand personality: Co-op struggling despite ethical association
Figure 28: Brand personality – Macro image, May 2017
HSBC seen as irresponsible and only caring about profits
Figure 29: Brand personality – Micro image, May 2017
Brand analysis
High-street banks are seen as accessible and reassuring
Nationwide wins on service
Metro Bank and First Direct stand out as being progressive
Tesco brand bounces back from cyber attack
Co-operative bank is becoming tired
THE CONSUMER – WHAT YOU NEED TO KNOW
Most hold a standard current account
Fee changes most likely to prompt people to review their arrangements
One in four uses their overdraft regularly
Main banking relationships likely to remain intact with Open Banking
CURRENT ACCOUNT OWNERSHIP
Majority own a single current account
Figure 30: Number of current accounts owned, 2013-17
A quarter have a joint account
Figure 31: Current accounts held jointly with someone else, May 2017
OWNERSHIP BY TYPE OF CURRENT ACCOUNT
Most hold a standard current account
Figure 32: Type of current account held, May 2017
Reward accounts grow in popularity
Equal split between packaged and reward accounts
Figure 33: Types of fee-paying/paid for account, May 2017
PROMPTS TO REVIEW CURRENT ACCOUNT ARRANGEMENTS
Loyalty means people are likely to forgive account changes
Figure 34: Prompts to review current account arrangements, May 2017
Fee changes most likely to prompt people to review their arrangements
Less sensitivity to changes in rewards or discounts
Multiple account holders more sensitive to changes
Figure 35: Prompts to review current account arrangements, by number of current accounts, May 2017
Young men are prime targets for current account advertising
Figure 36: Prompts to review current account arrangements – ‘Seeing an advert for a more competitive product’, by age and gender, May 2017
Nearly a third would be prompted by three or more reasons
Figure 37: Repertoire of prompts to review current account arrangements, May 2017
USE OF AND ATTITUDES TOWARDS OVERDRAFTS
One in four uses their overdraft regularly
Figure 38: Agreement with the statement ‘I use a current account overdraft regularly (ie each month)’, May 2017
Overdraft usage varies by provider
Figure 39: Agreement with the statement ‘I use a current account overdraft regularly (ie each month)’, by main current account provider, May 2017
71% know their current account overdraft charges
Four in five users think competitive charges are important
Figure 40: Usage and attitudes towards current accounts, May 2017
ATTITUDES TOWARDS MAIN BANKING RELATIONSHIP
Convenience drives cross-selling among current account holders
Figure 41: Attitudes towards your main current account provider, May 2017
Two-thirds trust their bank over others
Difficulty finding suitable products mean people turn to their bank
Figure 42: Agreement with the statement – ‘I find it difficult to work out which banking products are most suitable for my needs’, by age, May 2017
Younger parents more likely to go straight to their main bank
Figure 43: Attitudes towards current accounts – CHAID – Tree output, May 2017
Nationwide and HSBC customers are most likely to turn to their bank as first port of call
Figure 44: Attitudes towards your main current account provider – All answering ‘Yes’, by main current account provider, May 2017
ATTITUDES TOWARDS DATA-SHARING
Three in four are happy to share their data with their main bank…
… but one in five is concerned
Figure 45: Willingness towards sharing financial data with different providers, May 2017
New banks less trusted than other banks
PCWs best placed for data-sharing
Millennials equally likely to share with a tech firm as a new bank
Figure 46: Willingness towards sharing financial data with different providers, May 2017
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID Methodology

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