Table of Contents
Issues in the Market
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- Key issues
- Market definitions
- Abbreviations
Future Opportunities
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- Moving new brands into the market
- Winning the ‘main’ share of the customer’s wallet…
- …and harnessing the power of social media
- The future is mobile
Market in Brief
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- Size of the personal current account market
- Influencing factors and trading environment
- Regulatory and political developments
- Leading providers
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- Figure 1: Share of ‘main’ customers, by largest banking groups, 2010
- Cross-selling activity and recent product development
- Distribution trends
- Advertising activity
- The key findings of Mintel’s consumer research
- The most common and most used packaged account benefits
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- Figure 2: Ownership and use of benefits – fee-charging packaged account customers only, March 2010
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- Figure 3: Interest in and willingness to pay for packaged account benefits, March 2010
- Assessing newcomer threat
- Most persuasive switching factors
Internal Market Environment
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- Key points
- Overdraft rates rise despite a low base rate
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- Figure 7: Monthly overdraft interest rate versus official bank rate, January 2005-March 2010
- Cost of card fraud falls, but online banking losses rise
- Regulation round-up
- Future banking reform
Broader Market Environment
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- Key points
- Summary of the economic backdrop: Uncertainty reigns
- The downturn has created fresh challenges
- Rising cost of bad debt
- Interest rates will inevitably rise
- Confidence remains fragile
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- Figure 4: GfK Consumer Confidence Barometer – UK, January 1988-April 2010
- Consumer spending fell in 2009
- The overall population continues to grow
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- Figure 5: Size of the UK population, by age, 2001-20
- Nearly 70% of British adults now have broadband access
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- Figure 6: Broadband and internet penetration – GB, 2004-09
Competitive Context
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- Key points
- Savings accounts are the most commonly cross-sold product
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- Figure 8: Proportion of peoople who hold additional products with their current account provider, September 2009
- Credit cards and loans also record fairly high cross-sell conversion rates
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- Figure 9: Current account cross-selling conversion rates, by product type, September 2009
- Nationwide reigns supreme in the savings arena
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- Figure 10: Proportion of people who hold additional products with their current account provider, by brand, September 2009
- Plastic card usage
- Prepaid cards may compete, but they also complement existing portfolios
- Main target markets
- Closed versus open loop
- Product outlook
Market SWOT Analysis
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- Figure 11: UK current account market – SWOT analysis, 2010
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Who’s Innovating?
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- Key points
- Round-up of recent product developments
- Halifax extends its ‘Rewards’ programme
- Santander adds to its ‘Zero’ range with a new current account
- Alliance & Leicester lures switchers with a cash reward
- HSBC enhances its current account range
- Nationwide offers “more” to its main FlexAccount customers
Market Size
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- Key points
- Product availability
- The size of the market continues to grow steadily
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- Figure 12: Number of current account holders and number of current accounts, 2007-09
- The ‘free banking’ model dominates
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- Figure 13: Proportional distribution of personal current accounts, by type – established banks only, 2006
- There are some eight million basic bank accounts
- Current accounts provide an important revenue stream for retail banks…
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- Figure 14: Proportional distribution of retail banking revenue, by product area, 2006
- …with the greatest share of income coming from net credit interest
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- Figure 15: Breakdown of personal current account revenue, by main income stream, 2006
Market Share
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- Key points
- Lloyds TSB has the largest share of ‘main’ current account customers
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- Figure 16: Main current account provider, by individual brand, 2009 and 2010
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- Figure 17: Main current account provider, by type of account, March 2010
- Top five banking groups control over four fifths of the market
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- Figure 18: Share of main current account holder customer base, by banking group (top seven only), March 2010
- Barclays claims second place in the packaged account market
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- Figure 19: Share of main packaged account holder customer base, by banking group (top six only), March 2010
New Challenger Brands
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- Key points
- Crisis has transformed the banking landscape
- RBS and Lloyds set to divest assets and give up share
- New entrants emerge to crack the current oligopoly
- Home and Savings Bank
- Metro Bank
- Post Office
- Triodos
- Tesco Bank
- Virgin Money
- Walton & Co
- Are non-traditional financial providers better at customer service?
Companies and Products
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- Barclays
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- Figure 20: Barclays’ current account range, May 2010
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- Figure 21: Segmentation of Barclays' adspend, year ending January 2010
- Co-operative Financial Services
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- Figure 22: The Co-operative Bank’s current account range, May 2010
- Figure 23: smile’s current account range, May 2010
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- Figure 24: Segmentation of CFS’ adspend, year ending January 2010
- HSBC
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- Figure 25: HSBC’s current account range, May 2010
- Figure 26: First Direct’s current account range, May 2010
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- Figure 27: Segmentation of HSBC's adspend, year ending January 2010
- Figure 28: Segmentation of First Direct's adspend, year ending January 2010
- Lloyds Banking Group
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- Figure 29: Lloyds TSB’s current account range, May 2010
- Figure 30: Halifax’s/Bank of Scotland’s current account range, May 2010
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- Figure 31: Segmentation of Lloyds TSB’s adspend, year ending January 2010
- Figure 32: Segmentation of Halifax’s adspend, year ending January 2010
- Figure 33: Segmentation of Bank of Scotland’s adspend, year ending January 2010
- Nationwide Building Society
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- Figure 34: Nationwide’s current account range, May 2010
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- Figure 35: Segmentation of Nationwide Building Society’s adspend, year ending January 2010
- National Australia Bank
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- Figure 36: Clydesdale’s and Yorkshire Bank’s current account range, May 2010
- RBS/NatWest
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- Figure 37: RBS’ current account range, May 2010
- Figure 38: NatWest’s current account range, May 2010
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- Figure 39: Segmentation of NatWest’s adspend, year ending January 2010
- Figure 40: Segmentation of RBS’ adspend, year ending January 2010
- Grupo Santander
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- Figure 41: Santander’s current account range, May 2010
- Figure 42: A&L’s current account range, May 2010
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- Figure 43: Segmentation of Santander’s adspend, year ending January 2010
- Figure 44: Segmentation of Alliance & Leicester’s adspend, year ending January 2010
Brand Elements
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- Key points
- Brand map
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- Figure 45: Attitudes towards and usage of current account brands, April 2010
- Brand qualities of current account brands
- Lloyds and Barclays lead on authority, but lack warmth
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- Figure 46: Personalities of various current account brands, April 2010
- Experience of current account brands
- Halifax nearing Lloyds
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- Figure 47: Consumer usage of various current account brands, April 2010
- Brand consideration for current account brands
- Nationwide and Santander most considered
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- Figure 48: Consideration of various current account brands, April 2010
- Brand satisfaction for current account brands
- Smaller brands most excellent, Nationwide top performer
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- Figure 49: Satisfaction with various current account brands, April 2010
- Brand commitment to current account brands
- Inertia drives loyalty to Lloyds
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- Figure 50: Commitment to various current account brands, April 2010
- Brand intentions for current account brands
- Nationwide and Santander have best retention
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- Figure 51: Future usage intentions for various current account brands, April 2010
- Brand recommendation for current account brands
- Nationwide and Santander most recommended
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- Figure 52: Recommendation of various current account brands, April 2010
- NatWest
- What the consumer thinks
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- Figure 53: Attitudes towards the NatWest brand, April 2010
- Santander
- What the consumer thinks
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- Figure 54: Attitudes towards the Santander brand, April 2010
- Barclays
- What the consumer thinks
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- Figure 55: Attitudes towards the Barclays brand, April 2010
- Lloyds TSB
- What the consumer thinks
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- Figure 56: Attitudes towards the Lloyds TSB brand, April 2010
- Nationwide
- What the consumer thinks
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- Figure 57: Attitudes towards the Nationwide brand, April 2010
Brand Communication and Promotion
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- Key points
- Current account adspend is cut by more than a fifth
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- Figure 58: Advertising expenditure on current accounts and related services, by sub-product category, 2006-10
- TV and press account for the largest share of adspend
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- Figure 59: Share of advertising expenditure on current accounts and related services, by media type, 2008-10
- Three challenger banks feature in the top five advertiser rankings
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- Figure 60: Top ten advertisers of current accounts and related services, 2008-10
- Halifax spends the most on promoting its current account range
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- Figure 61: Top five advertisers of ordinary current accounts, 2008-10
- A&L and HSBC focus their efforts on the packaged account market
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- Figure 62: Top five advertisers of packaged/premium accounts, 2008-10
Channels to Market
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- Key points
- A branch network helps to grow and retain share
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- Figure 63: Number of branches belonging to the largest current account providers (shown on group basis), year-end 2009
- ATM withdrawals continue to rise
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- Figure 64: Number of ATMs belonging to the largest current account providers (shown on group basis), 2008
- More people switch from telephone to online banking
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- Figure 65: Number of registered telephone and online banking customers and number of transactions (MBBGs only), 2002 and 2008
- Faster Payments driving growth in automated payments
- Mobile phone banking technology continues to develop…
- …and, while take-up is currently small, there is huge potential
The Consumer – Ownership and Usage Trends
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- Key points
- Current account penetration has remained broadly stable over the past four years
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- Figure 66: Current account ownership, 2006-09
- Two fifths of the current account customer base have a joint account
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- Figure 67: Breakdown of current account holders, 2009
- Around one in six customers have a premium or packaged account
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- Figure 68: Type of current account held – main account only, 2009
- Three in four customers have held their main account for over five years
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- Figure 69: Length of time held main current account, 2009
- Branch-based providers dominate the market
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- Figure 70: Type of provider – main current account only, 2009
- Nearly two thirds of current account holders have access to an authorised overdraft
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- Figure 71: Facilities available – main current account only, 2009
- Almost four fifths pay bills by direct debit
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- Figure 72: Type of transaction used – main current account only, 2009
- When choosing a current account, people are most likely to consider a company’s reputation, interest rates and locality
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- Figure 73: Most important factors when choosing a current account, 2009
The Consumer – Fee-based Packaged Accounts
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- Key points
- About Mintel’s consumer survey
- One in six have a fee-charging packaged account
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- Figure 74: Ownership of fee-based packaged and free/ordinary current accounts, March 2010
- Packaged accounts appeal to a broad socio-economic spectrum
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- Figure 75: Type of current account held, by gender and socio-economic group, March 2010
- 25-34-year-olds are a key target group
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- Figure 76: Type of current account held, by age, March 2010
The Consumer – Popularity of Packaged Account Benefits
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- Key points
- Motor breakdown cover and travel insurance are the most common features of a packaged account costing over £10 a month
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- Figure 77: Benefits have access to, by type of account, March 2010
- Overdraft anomaly?
- Card protection and travel insurance are the most ‘valued’ benefits
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- Figure 78: Benefits actually used, by type account, March 2010
- Scope to make better use of preferential rates and retail vouchers
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- Figure 79: Ownership and use of benefits – fee-charging packaged account customers only, March 2010
- Customers are keen on identity theft and card protection, but most wouldn’t pay extra for them
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- Figure 80: Interest in and willingness to pay for packaged account benefits, March 2010
- Those aged 25-34 show the greatest willingness to pay extra for value-added benefits
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- Figure 81: Willingness to pay for packaged account benefits, by age, March 2010
The Consumer – Attitudes Towards Potential Challengers
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- Key points
- Tesco and Virgin could pose a real threat to incumbent providers
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- Figure 82: Awareness of potential new entrants and willingness to switch to them (selected brands only), March 2010
- Brand rankings vary among the different age groups
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- Figure 83: Willingness to switch to selected brands, by age, March 2010
- Men are more prepared to switch than women
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- Figure 84: Willingness to switch to selected brands, by gender and socio-economic group, March 2010
- Tesco Bank is the top choice for those on low-to-mid incomes
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- Figure 85: Willingness to switch to selected brands, by household income, March 2010
- Virgin Money could poach a fair slice of existing fee-paying customers
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- Figure 86: Willingness to switch to selected brands, by type of account held, March 2010
The Consumer – Targeting Opportunities
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- Key points
- One in two people might be persuaded to switch if offered a cash incentive
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- Figure 87: Most persuasive factors that would prompt switching to a new bank, March 2010
- Switching motivations vary with age
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- Figure 88: Most persuasive factors that would prompt switching to a new bank, by age, March 2010
- Over a third of fee-paying customers could be persuaded to switch for a low overdraft fee
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- Figure 89: Most persuasive factors that would prompt switching to a new bank, by type of account held, March 2010
The Consumer – Competitor Analysis
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- Key points
- Barclays and Lloyds TSB lead the fee-based packaged market
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- Figure 90: Type of current account held, by main account provider (top seven only), March 2010
- Over half of A&L’s and Barclays’ customers have access to an interest-free overdraft
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- Figure 91: Benefits have access to, by main current account provider (top eight only), March 2010
- HSBC has greatest success at selling ‘preferential rates’
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- Figure 92: Benefits actually used, by main current account provider (top eight only), March 2010
- Willingness to pay for benefits by customers of the Lloyds Banking Group
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- Figure 93: Interest in and willingness to pay for packaged account benefits – Lloyds TSB Group customers only, March 2010
- Willingness to pay for benefits by customers of RBS Group
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- Figure 94: Interest in and willingness to pay for packaged account benefits – RBS Group customers only, March 2010
- Willingness to pay for benefits by customers of HSBC and First Direct
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- Figure 95: Interest in and willingness to pay for packaged account benefits – HSBC Group customers only, March 2010
- Willingness to pay for benefits by customers of Barclays
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- Figure 96: Interest in and willingness to pay for packaged account benefits – Barclays customers only, March 2010
- Willingness to pay for benefits by customers of Santander Group
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- Figure 97: Interest in and willingness to pay for packaged account benefits – Santander Group customers only, March 2010
- Willingness to pay for benefits by customers of Nationwide
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- Figure 98: Interest in and willingness to pay for packaged account benefits – Nationwide customers only, March 2010
- Santander has the least to fear from any new entrants that emerge
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- Figure 99: Willingness to switch to the listed brands, by main current provider, March 2010
- A&L’s customers are the most prepared to switch for a cash reward
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- Figure 100: Persuasive factors that would prompt switching to a new bank, by main current provider, March 2010
- Further analysis
Appendix – Segmentation of Current Account Customers
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- Figure 101: Type of current account held, by full demographics, March 2010
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Appendix – Profile of Packaged Account Customers
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- Figure 102: Demographic profile of fee-based packaged account customers, March 2010
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