Table of Contents
Issues in the Market
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- Abbreviations
Insights and Opportunities
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- Transparency with charges
- Once a customer, always a customer
- Offer a competitive rate of interest
- Focus on insurance
- Keeping costs under control
Market in Brief
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- Demand for current accounts is expected to remain strong over the coming years
- People are going online more regularly to manage their account
- Approximately one in ten adults do not have a current account
- The number of current accounts is estimated to have surpassed 74 million in 2006
- The big five continue to reign supreme
- First Direct is the leading advertiser of current accounts
- As branch networks shrink, remote banking grows in popularity
- Poor service will send customers packing
Fast Forward Trends
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- Trend 1: Express Yourself
- Definition
- Context
- Market touch points/implications
- Trend 2: Back to my roots
- Definition
- Context
- Market touch points/implications
Broader Market Environment
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- Key points
- A growing population will fuel demand for current accounts
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- Figure 1: UK population, by age group, 1992-2012
- Another 320,000 people are expected to enter the workforce by 2012
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- Figure 2: UK workforce and employment, by gender, 2002-12
- Savings activity is expected to increase gradually in the coming years
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- Figure 3: PDI, consumer expenditure, savings and the savings ratio, 1992-2012
- Interest rates are at their highest level since 2001
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- Figure 4: The Bank of England’s base rate, February 2003-May 2007
- At least 61% of adults have access to the Internet
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- Figure 5: British Internet penetration at home/work/place of study or elsewhere, by socio-economic group, 2001-06
- Over a fifth of Internet users have recently browsed current accounts online
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- Figure 6: Websites browsed and purchased from, by type of financial product, 2002-06
Internal Market Environment
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- Key points
- Fees account for a growing proportion of bank income
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- Figure 7: Sources of bank income, net interest and non-net interest, 2000-05
- Overdraft fee investigation prompts consumer movement to reclaim ‘unlawful’ charges…
- …and a new investigation will examine the entire structure of personal banking…
- … which may result in the end of ‘free’ banking
- Banks are under pressure to accelerate the cheque clearing process
Competitive Context
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- Key points
- What alternatives?
- Basic bank accounts: a stepping stone to current accounts
- Over 153,000 basic bank accounts were opened in the last quarter of 2006
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- Figure 8: Total number of basic bank accounts opened, net of closures, April 2003-December 2006
Strengths and Weaknesses
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- Would you like motor insurance with that?
- Sources of revenue are running dry
Who’s Innovating?
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- Key points
- Making Internet banking more secure
- Tailoring products for specific segments
- Charging for banking services
- Helping customers to save
Trade Perspective
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- Branch banking versus remote banking
- Brand weight
- Increasing churn
- Unfair fees?
- Challenges and the future
- The green agenda?
Market Size and Forecast
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- Key points
- Over £461 billion is held in personal bank accounts
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- Figure 9: Value of personal bank accounts (MBBG only), 2000-05
- Why not earn interest?
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- Figure 10: Number of personal bank accounts (MBBG only), 2000-05
- Multi-account ownership has helped to drive up account numbers
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- Figure 11: Number of current accounts, 1998-2006
- Borrowing on overdraft is rapidly gaining popularity
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- Figure 12: Number of overdraft advances (MBBG only), 1998-2005
- The number of debit cards in circulation has grown by over a third
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- Figure 13: Number of cards in issue, 2000-05
- Forecast
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- Figure 14: Forecast of the value of personal bank accounts (MBBG only), 2006-12
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- Figure 15: Forecast of the number of current accounts, 2006-12
- Factors used in the forecast
Market Share
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- Key points
- Smaller banks have not managed to increase their share
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- Figure 16: Volume share of current account market, 2003-07
- Poaching tactics
Companies and Products
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- Competitive rates are available to those who look for them
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- Figure 17: Examples of leading interest-bearing current accounts, 2007
- Too many types of account?
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- Figure 18: Bank accounts offered by Halifax, 2007
- Banks target specific consumer groups through sub-brands
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- Figure 19: Selected current account parent and subsidiary brands (MBBG only), May 2007
- Company profiles
- Lloyds TSB
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- Figure 20: Lloyds TSB company profile, 2002-05
- RBS Group
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- Figure 21: The Royal Bank of Scotland/NatWest company profile, 2002-05
- Barclays
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- Figure 22: Barclays company profile, 2002-05
- HSBC
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- Figure 23: HSBC company profile, 2002-05
- HBOS
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- Figure 24: HBOS company profile, 2002-05
Brand Elements
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- Figure 25: Current Accounts brand map, 2007
- NatWest
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- Figure 26: Words associated with NatWest brand, May 2007
- Brand qualities
- Time to find another way?
- Halifax
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- Figure 27: Words associated with Halifax brand, May 2007
- Brand qualities
- Higher Xtra from Halifax banking
- Nationwide
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- Figure 28: Words associated with Nationwide brand, May 2007
- Brand qualities
- Proud to be different – and with good reason
- Barclays
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- Figure 29: Words associated with Barclays brand, May 2007
- Brand qualities
- Eagles are the least of Barclays’ problems
- First Direct
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- Figure 30: Words associated with First Direct brand, May 2007
- Brand qualities
- Has ending free banking been an expensive move?
- Usage of brands
- Lloyds TSB lead the way – but Halifax on the way up
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- Figure 31: Consumer usage of various Current Account brands, May 2007
- Attitudes towards brands
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- Figure 32: Attitudes towards Current Account brands, May 2007
- Brand satisfaction and performance
- Nationwide – building on its customer service
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- Figure 33: Customer ratings of Current Account brands, May 2007
- Brand commitment
- Nationwide mortgage holders are keen to recommend the brand
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- Figure 34: Degree of customer commitment to Current Account brands, May 2007
- Challenging the old guard
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Brand Communication and Promotion
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- Key points
- Over £28 million was spent advertising current accounts in 2006/07
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- Figure 35: Advertising expenditure on financial services, by sector, 2006/07
- First Direct is one of the leading current account advertisers
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- Figure 36: Top ten current account advertisers, 2002/03-2006/07
- A significant proportion of current account adspend went to TV adverts
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- Figure 37: Advertising expenditure on current accounts, by media type, 2006/07
Channels to Market
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- Key points
- The branch network continues to shrink
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- Figure 38: Number of branches, by bank, 1999-2005
- Backlash against branch closures and bans
- But is a branch renaissance on the cards?
- The number of fee-charging ATMs continues to surge
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- Figure 39: Number of ATMs, 2000-05
- ATM cash withdrawals are on the rise
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- Figure 40: Number of bank cash dispensers/ATMs and cash withdrawals, 2003-05
- ATMs allow customers to do more than withdraw money
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- Figure 41: Proportion of ATMs with additional facilities, banks and building societies only, 2005
- Are consumers logging in more regularly to check their account?
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- Figure 42: The number of personal customers registered for telephone and Internet banking and the number of transactions, 2001-05
- Telephone banking: popular with banks, not so popular with customers
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- Figure 43: Number of transactions by telephone, 2001-05
- The number of telephone banking transactions has begun to stagnate
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- Figure 44: Number of telephone and Internet banking transactions, 2001-05
- Balance information queries were the most common type of online transaction in 2005
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- Figure 45: The number of transactions by computer, 2001-05
Consumer Financial Activity
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- About the Financial Activity Bulletin
- Expected activity picks up
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- Figure 46: Expected financial activity – savings, investment, borrowing and debt repayment, December 2005-March 2007
- Much greater emphasis on saving than spending
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- Figure 47: UK savings and spending indices, January 2001-March 2007
- Activity remains subdued across most demographic segments
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- Figure 48: Expected financial activity over the next six months, by socio-demographic and income groups, March 2007
- Placing a cash deposit and saving in an ISA are the top activities
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- Figure 49: Top five financial activities planned in the next six months, March 2006-March 2007
- Identifying the main financial services providers
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- Figure 50: Saving, investment and lending: market sizes by expected customer demand and brand leaders, March 2007
- Nationwide tops the activity chart
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- Figure 51: Activity levels of main financial services providers’ customer bases, March 2007
The Consumer – Product Penetration
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- Key points
- Survey background
- Latest survey suggests increased take-up of current accounts
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- Figure 52: Ownership of current accounts – summary of results, 2006 and 2007
- The big five dominate
- The cross-selling advantage…
- … but there are alternative approaches
- Lloyds TSB has the largest share of customers
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- Figure 53: Main current account provider (re-based), 2006 and 2007
- To pay or not to pay – the First Direct way
- Loss of some customers
- Others could follow suit
- NatWest and RBS have the greatest success attracting ABs
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- Figure 54: Customer profile of the top seven current account providers, by gender, age and socio-economic group, March 2007
- Implication and opportunity
- Targeting the youth market
- Implication and opportunity
- Abbey and HBOS appeal to families
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- Figure 55: Customer profile of the top seven current account providers, by marital status, lifestage, Mintel’s Special Groups and tenure, March 2007
- Implication and opportunity
- HSBC’s customer base is biased towards the higher income groups…
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- Figure 56: Customer profile of the top seven current account providers, by working status, gross annual household income, region and ACORN category, March 2007
- Implication and opportunity
- …and records the highest Internet penetration
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- Figure 57: Customer profile of the top seven current account providers, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, March 2007
- Implication and opportunity
- Relationships with retailers
- The merits of a multi-brand approach
The Consumer – Switching Behaviour
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- Key points
- Assessing customer churn
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- Figure 58: Current account switching activity, 2006 and 2007
- Implication
- Lloyds TSB and Barclays grab the largest share of recent ‘switchers’
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- Figure 59: Current account provider, by switching activity, March 2007
- Various strategies used to acquire new customers
- Barclays targets regular savers
- The under-35s are most likely to switch
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- Figure 60: Current account switching activity, by gender, age, socio-economic group, gross annual household income and region, March 2007
- Implication and opportunity
- Internet users are also more prone to switching
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- Figure 61: Current account switching activity, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, March 2007
- Implication and opportunity
The Consumer – Channel Preference
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- Key points:
- Most switchers visited a branch to open their new account…
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- Figure 62: Channel used to arrange new current account, 2006 and 2007
- Implication and opportunity
- …but the Internet is growing in importance
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- Figure 63: Channel used to arrange new current account, by how long ago switched, March 2007
- A fifth of those using ‘ non-branch’ channels joined First Direct
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- Figure 64: Provider switched to, by channel used to arrange new current account, March 2007
- Of the big five, Barclays is best at capturing online switchers
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- Figure 65: Channel used to arrange new current account, by existing provider (top five only), March 2007
- Women are less likely than men to open a current account online
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- Figure 66: Channel used to arrange new current account, by gender, age, socio-economic group, March 2007
- Implication and opportunity
- Online switchers are more likely to live in London or the South
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- Figure 67: Channel used to arrange new current account, by region, March 2007
- Implication and opportunity
The Consumer – Targeting Opportunities
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- Key points
- Poor service is most likely to prompt people to switch
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- Figure 68: Reasons would consider switching, by existing current account provider, March 2007
- Implication and opportunity
- Cluster analysis
- Switching clusters
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- Figure 69: Current account customer base – cluster segmentation, March 2007
- Strong Switching Potential
- Motivated by Poor Service
- Motivated for Other (Specific) Reason
- Non-movers
- Cluster composition
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- Figure 70: Reasons would consider switching, by cluster, March 2007
- Many who’ve switched before would switch again
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- Figure 71: Past switching activity, by clusters, March 2007
- Men and ABC1s have Strong Switching Potential
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- Figure 72: Cluster profiles, by gender, age, socio-economic group, marital status, lifestage and Mintel’s Special Groups, March 2007
- Retirees are the most loyal customers
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- Figure 73: Cluster profiles, by tenure, working status, gross annual household income, region and ACORN category, March 2007
- Internet users represent hot prospects
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- Figure 74: Cluster profiles, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, March 2007
- HSBC and HBOS customers are most service-oriented
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- Figure 75: Cluster segmentation, by current account provider, March 2007
- Further analysis
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