Table of Contents
Executive Summary
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- Impact of COVID-19 on current accounts
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- Figure 1: Short, medium and long term impact of COVID-19 on current accounts, 19 October 2020
- The market
- There are an estimated 75 million accounts in the UK
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- Figure 2: Estimated number of current accounts, 2017-20
- Current account deposits spiked under lockdown restrictions …
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- Figure 3: Monthly changes in non-interest bearing sight deposits, January 2019-August 2020
- … but switching activity fell sharply
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- Figure 4: Number of switches per month using the CASS, January 2016-August 2020
- Companies and brands
- Barclays is the biggest current account provider among the online population
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- Figure 5: Current account providers, main and other current accounts, August 2020
- A sharp drop in advertising outlay
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- Figure 6: Total above-the line, online display and direct mail advertising expenditure on current accounts, 2015/16-2019/20
- The consumer
- 40% of consumers have more than one current account
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- Figure 7: Current account ownership, August 2020
- 17% of over-18s pay for their current account
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- Figure 8: Type of current account held, August 2020
- Product choice is driven by cost but additional benefits are also big considerations
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- Figure 9: Important factors when choosing a current account, August 2020
- Consumers are satisfied with banks’ COVID-19 support
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- Figure 10: Satisfaction with main current account providers’ support for customers impacted by COVID-19, August 2020
- Overdraft use is more likely to have increased than declined in the last year
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- Figure 11: Changes in overdraft use over the last year, August 2020
- Support for free banking is universal
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- Figure 12: Attitudes towards current accounts, August 2020
Issues and Insights
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- Current accounts will be disrupted, not damaged by COVID-19
- Monetising relationships remains a difficult task
The Market – Key Takeaways
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- COVID-19 has brought short-term benefits but concerns for the future
- Multiple account ownership is driving up account numbers
- Overdraft rate rises will dampen appetite to borrow
Market Size
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- COVID-19 has increased pressures but current accounts are insulated from the worst effects
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- Figure 13: Short, medium and long term impact of COVID-19 on current accounts, 19 October 2020
- There are an estimated 75 million accounts in the UK
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- Figure 14: Estimated number of current accounts, 2017-20
Market Drivers
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- Rising unemployment will weaken current account health
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- Figure 15: Average annual unemployment rate, 2015-24 (OBR central scenario)
- COVID-19 prompted a rush of current account savings …
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- Figure 16: Monthly changes in non-interest bearing sight deposits, January 2019-August 2020
- … and a dramatic dip in switching activity
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- Figure 17: Number of switches per month using the CASS, January 2016-August 2020
- A record low base rate
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- Figure 18: Bank of England base rate, end of month, January 2015-September 2020
- The cost of overdraft borrowing has rocketed
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- Figure 19: Monthly interest rate of UK monetary financial institutions Sterling overdraft for households, January 2016-September 2020
Regulatory and Legislative Changes
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- Relaxed overdraft rules were key to COVID-19 support …
- … but new regulation means the cost of arranged facilities has soared
- EEA-based Brits face account closures
- Millions redistributed from dormant accounts to support COVID crisis
Companies and Brands – Key Takeaways
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- COVID-19 slashed competition but prompted innovation
- Reassurance and sensitivity are the key marketing messages
- Monzo and Starling reach challenger status
Market Share
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- Barclays is the biggest current account provider among the online population
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- Figure 20: Current account providers, main and other current accounts, August 2020
- Mobile-only banks are growing, but still mostly for secondary accounts
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- Figure 21: Ownership of Monzo current accounts (main and other account), by age, August 2020
- HSBC attracted the most switchers in Q1 2020
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- Figure 22: Net gains and losses of full account switches using CASS, selected brands, Q1 2020
- Monzo and Starling have become established favourites for switchers
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- Figure 23: Net gains of full account switches using CASS, Monzo and Starling, Q2 2018-Q1 2020
Competitive Strategies
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- Switching incentives return as banks bounce back from COVID-19
- New products and features in FinTechs’ drive to grow revenues
- Digital innovation continues to be a major focus
- Linked cards launched to support shielding customers
- Barclays reaches Open Banking milestone with third-party payments
- Starling goes back to the future with web portal for online banking
- Current account perks have been cut
Advertising and Marketing Activity
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- A sharp drop in advertising outlay …
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- Figure 24: Total above-the line, online display and direct mail advertising expenditure on current accounts, 2015/16-2019/20
- … driven by the impact of COVID-19
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- Figure 25: Total above-the line, online display and direct mail advertising expenditure on current accounts, September 2019-October 2020
- Challengers rank high for current account adspend
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- Figure 26: Top 10 advertisers of above-the line, online display and direct mail advertising expenditure on current accounts, 2017/18-2019/20
- Major brands have focused on reassurance and showing their human side
- Nielsen Ad Intel coverage
The Consumer – Key Takeaways
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- Providers have passed the COVID-19 test so far
- There are opportunities to grow the packaged account segment …
- … but support for free banking is universal
Impact of COVID-19 on Consumer Behaviour
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- Worsening household finances will put pressure on account balances …
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- Figure 27: Changes in household finances, January 2015-September 2020
- … but financial wellbeing has held up well so far
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- Figure 28: The financial wellbeing index, January 2015-September 2020
- The COVID-19 boost to savings was not entirely intentional
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- Figure 29: Actual and planned saving activity, January 2019-September 2020
Current Account Ownership
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- Almost all internet users have a current account
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- Figure 30: Current account ownership, August 2020
- Multiple account ownership is a growing trend
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- Figure 31: Current account ownership, 2016-20
- Almost a third hold a joint account
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- Figure 32: Join account ownership, August 2020
Current Account Types
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- 17% of over-18s pay for their current account
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- Figure 33: Type of current account held, August 2020
- Big scope for growth of premium accounts among younger groups
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- Figure 34: Ownership of selected types of current accounts, by age, August 2020
Important Factors when Choosing a Current Account
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- Low fees and charges are the biggest considerations
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- Figure 35: Important factors when choosing a current account, August 2020
- A third of standard account holders consider additional benefits
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- Figure 36: Important factors when choosing a current account, by type of current account held, August 2020
- Older consumers are more interested in banking channels
- Ethical and eco issues remain niche factors
Satisfaction with Providers’ Response to COVID-19
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- Consumers are satisfied with banks’ COVID-19 support …
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- Figure 37: Satisfaction with main current account providers’ support for customers impacted by COVID-19, August 2020
- … but vulnerable consumers are less positive
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- Figure 38: Satisfaction with main current account providers’ support for customers impacted by COVID-19, by current financial situation, August 2020
Overdraft Access and Use
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- Just one in five say they use an overdraft facility
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- Figure 39: Access to and use of overdraft facilities, August 2020
- Student account holders are most likely to use overdrafts regularly
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- Figure 40: Access to and use of overdraft facilities, by type of current account held, August 2020
- Overdraft use is more likely to have increased than declined in the last year
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- Figure 41: Changes in overdraft use over the last year, August 2020
Attitudes towards Current Accounts
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- Consumers trust their main bank
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- Figure 42: Attitudes towards current accounts, August 2020
- Support for free banking is universal
- Current account providers can be community pillars …
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- Figure 43: Agreement with the statement “I think current account providers should do more to support their local communities” – CHAID – Tree output, August 2020
- … and are the first stop for many when looking for other products
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- Figure 44: Agreement with selected attitudes towards current accounts, by age, August 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID methodology
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- Figure 45: Current Accounts – CHAID – Table output, August 2020
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