Table of Contents
Executive Summary
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- The market
- COVID-19 will boost household deposits in 2020
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- Figure 1: Forecast of household savings and deposits (adjusted for COVID-19), 2014-24
- Fastest growth in NS&I and non-interest-bearing deposits
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- Figure 2: Household retail savings balances, by main product type, 2019
- Interest rates on instant access accounts rose slightly in 2019
- Consumer confidence collapses as COVID-19 takes hold
- FCA proposes the introduction of a single rate of interest
- Impact of COVID-19 on deposit and savings accounts
- COVID-19 takes consumers to a whole new level of uncertainty
- Many households will save inadvertently
- Fall in the base rate limits savings choice
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- Figure 3: Expected impact of COVID-19 on deposit and savings accounts, short, medium and long-term, [2 June 2020]
- Companies and brands
- NS&I enjoys strongest growth
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- Figure 4: Customer deposits of the leading retail savings providers, 2018-19
- Changes to address COVID-19
- Adspend jumps 45%
- The consumer
- Over half of savers hold multiple accounts
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- Figure 5: Ownership of cash savings products, February 2020
- Nationwide leads for instant access accounts
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- Figure 6: Provider of instant access savings and cash ISAs, February 2020
- Two thirds are actively saving
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- Figure 7: Monthly savings amount, February 2020
- 38% have increased the value of savings in the past year
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- Figure 8: Past and future changes to savings, February 2020
- The trade-off between growth and access
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- Figure 9: Important factors in choosing a savings provider, February 2020
- A third have opened a new savings account in the last year
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- Figure 10: Saving behaviours, February 2020
- Those with smaller savings pots prioritise access
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- Figure 11: Preferred savings rate, February 2020
- What we think
The Impact of COVID-19 on Deposit and Savings Accounts
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- Short, medium and long-term impact on the industry
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- Figure 12: Expected impact of COVID-19 on deposit and savings accounts, short, medium and long-term, [2 June 2020]
- Opportunities and Threats
- Reaching out to ‘accidental savers’
- Low rates make it tough to persuade savers to switch
- An opportunity for saving platforms to gain traction
- Trust will be more important
- Tapping into enhanced community spirit with ethical savings
- Impact on the market
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- Figure 13: Pre- and Post-COVID-19 forecasts of household savings and deposits, 2014-24
- Shifts in consumer behaviour
- Finances held up well…
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- Figure 14: The financial well-being index, January 2015-May 2020
- … but confidence has fallen sharply
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- Figure 15: The financial confidence index, January 2015-May 2020
- People are worried about the impact on their lifestyles
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- Figure 16: People’s level of concerns about how the outbreak might affect their lifestyle, 28th February – 28th May
- Fears over the future impact will drive up saving
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- Figure 17: Consumers’ view of the impact of COVID-19 on various aspects of the economy, 30 April-7 May 2020
- Lockdown limits opportunities to spend and drives accidental saving
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- Figure 18: Changes and expected changes to spending as a result of COVID-19, April 2020
- Impact on key consumer segments
- Low income households take the hardest hit
- Worries at higher income households will drive saving behaviours
- Two thirds of Baby Boomers are negative about the impact of COVID-19 on savings
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- Figure 19: The impact of COVID-19 on my savings and investments, by generation, 30 April-7 May 2020
- How a COVID-19 recession will reshape the market
- Caution creates a saving mentality
- A risk-averse response will demand assurances around trust
- Stock market volatility will push people towards cash savings
- Access will become more important
- What Can We Learn from Previous Slowdowns?
- Any uplift in savings is likely to be temporary
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- Figure 20: Household savings ratio, Q1 2006-Q4 2019
- Consumers became more demanding
- COVID-19: Market context
Issues and Insights
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- Saving in the age of COVID-19
- The facts
- The implications
- Rock bottom rates demands creativity to attract new savers
- The facts
- The implications
- The ethical savings opportunity
- The facts
- The implications
The Market – What You Need to Know
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- Household deposits increase in 2019
- Fastest growth in NS&I and non-interest-bearing deposits
- Interest rates on instant access accounts rise slightly in 2019
- Consumer confidence collapses as COVID-19 takes hold
- FCA proposes the introduction of a single rate of interest
Market Size and Forecast
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- Household savings increase in response to uncertainty
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- Figure 21: Total household savings and deposits, 2015-19
- COVID-19 will increase deposits and savings
- Consumers who can will save over the medium term
- Normal savings habits will return in the long term
- Pre-COVID-19 forecast: household savings growth was expected to slow
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- Figure 22: Forecast of household savings and deposits (adjusted for COVID-19), 2014-24
- Figure 23: Pre COVID-19 forecast for household savings and deposits, 2014-24
- Forecast methodology
Market Segmentation
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- Premium bond changes drives growth at NS&I
- Rise in non-interest-bearing deposits
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- Figure 24: Household retail savings balances, by main product type, 2015-19
Market Drivers
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- Interest rates fall in 2020
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- Figure 25: Interest rates on consumer savings products, January 2012-March 2020
- Savings are most likely to be held alongside a main bank account
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- Figure 26: Other banking products held with main bank, July 2019
- Average real wages are on the rise
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- Figure 27: Annual growth in average weekly earnings versus prices, January 2016-February 2020
- Savings ratio recovers slightly in 2019
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- Figure 28: Household savings ratio, Q1 2008-Q4 2019
Consumer Environment
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- Saving activity picked up in early 2019
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- Figure 29: Trends in saving behaviour, three-month rolling average, January 2017-March 2020
- Importance of saving peaked around EU withdrawal dates
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- Figure 30: Trends in importance of saving disposable income, rolling three-month average, January 2018-April 2020
Regulatory and Legislative Changes
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- Bank of England cuts base rate to 0.1%
- Government COVID-19 support for households
- FCA proposes the introduction of a single rate of interest
- Help to Buy ISAs scheme closed
Companies and Brands – What You Need to Know
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- NS&I enjoys strongest growth
- Changes to address COVID-19
- Adspend jumps 45%
Market Share
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- Leading retail banks see share of deposits fall
- NS&I enjoys strongest growth
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- Figure 31: Customer deposits and market share of the leading retail banks, 2018-19
- Big six dominate easy access and regular savers
- Those willing to lock money away look elsewhere for the best rates
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- Figure 32: Savings product provider used, by product type, February 2020
Competitive Strategies
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- Banks nudging us to save more
- Switching to prizes to encourage new savers
- Saga partners with Goldman Sachs
- New market entrants
- Revolut launches savings for premium account holders
- JP Morgan looks to launch a savings product into the UK
- Zopa tests new savings products
- Savings to bridge the generational gap
- Making saving more accessible
- Changes to address COVID-19
Advertising and Marketing Activity
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- Adspend jumps 45%
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- Figure 33: Above-the-line, online display and direct mail advertising expenditure on cash savings products, 2015/16-2019/20
- Nationwide dominates adspend
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- Figure 34: Payday = Saveday by Nationwide, March 2020
- NS&I rises to second
- Goldman Sachs adspend halves in second year
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- Figure 35: Leading spenders on above-the-line, online display and direct mail advertising expenditure on cash savings products, 2019/20
- Huge variation in spending by channel
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- Figure 36: Above-the-line, online display and direct mail advertising expenditure on cash savings products, by advertiser and media type, 2019/20
- Pushing different products throughout the year
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- Figure 37: Share of the total above-the-line, online display and direct mail advertising expenditure on cash savings products, by product, March 2019-Feburary 2020
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Over half of savers hold multiple accounts
- Nationwide leads for instant access accounts
- Two thirds are actively saving
- 38% have increased the value of savings in the past year
- The trade-off between interest rate and access
- A third have opened a new savings account in the last year
- Those with less saved prioritise access
Ownership of Cash Savings Products
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- Instant access accounts are most popular
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- Figure 38: Ownership of cash savings products, February 2020
- LISAs appeal to more affluent households than Help to Buy ISAs
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- Figure 39: Savings product ownership, by age and socio-economic group, February 2020
- Over half have multiple savings accounts
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- Figure 40: Repertoire analysis of savings accounts, by age group, February 2020
Savings Providers
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- Nationwide leads for instant access accounts
- Lloyds Banking Group accounts for the most overall
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- Figure 41: Provider of instant access savings and cash ISAs, February 2020
- HSBC/First Direct regular savings accounts prove popular
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- Figure 42: Provider of instant access savings and cash ISAs, February 2020
- Smaller banks prove popular for fixed rate savings
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- Figure 43: Provider of notice accounts and fixed rate savings/bonds, February 2020
Saving Habits
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- Two thirds are actively saving
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- Figure 44: Saving habits, by age group, February 2020
- Correlation between saving and household income
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- Figure 45: Monthly savings amount, by household income, February 2020
Changes to Savings
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- 38% increased savings in the past year
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- Figure 46: Past and future changes to savings, February 2020
- A quarter of 55-64 year olds have depleted their savings
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- Figure 47: Changes to savings over the past year, by age, February 2020
- A quarter of low-income households expect savings to fall
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- Figure 48: Expected future changes to savings over the next year, by household income, February 2020
Important Factors in Choosing a Savings Provider
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- Ease of access is almost as important as the interest rate
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- Figure 49: Important factors in choosing a savings provider, February 2020
- Interest rate and reputation rise in importance with the value of savings
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- Figure 50: Important factors in choosing a savings provider, by value of savings and investments, February 2020
- The ethical savings opportunity
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- Figure 51: Selected factors in choosing a savings provider, by age group, February 2020
Saving Behaviours
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- Use of Direct Debits tied to affluence
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- Figure 52: Saving behaviours, February 2020
- Round-up features appeal to younger people
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- Figure 53: Use of ‘round-up’ feature to save, by age group, February 2020
- Millennial parents put something away for Christmas
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- Figure 54: Deposit and Savings Accounts – CHAID – Tree output, March 2020
Preferred Savings Rates
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- Access versus interest
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- Figure 55: Preferred savings rate, February 2020
- Prize draws and bonuses are more popular with young consumers
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- Figure 56: Preferred savings rate, by age, February 2020
- Those with less saved prioritise access
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- Figure 57: Preferred savings rate, by value of savings or investments, February 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Pre-COVID-19
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- Figure 58: Pre-COVID-19 best- and worst-case scenarios for total household deposits and savings, 2019-24
- Post-COVID-19
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- Figure 59: Post-COVID-19 best- and worst-case scenarios for total household deposits and savings, 2019-24
- Forecast methodology
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