Table of Contents
Executive Summary
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- Impact of COVID-19 on savings and investments
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- Figure 1: Short, medium and long-term impact of COVID-19 on savings and investments, January 2021
- The market
- The pandemic drives a significant increase in saving…
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- Figure 2: Household deposits, 2009-20
- …but growth will slow as restrictions are lifted
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- Figure 3: Market forecast of household deposits, 2015-25
- The savings ratio rocketed in Q2
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- Figure 4: Household savings ratio at current prices, Q1 2015-Q3 2020
- Those on high or middle incomes have fared well
- The proportion of people with a significant savings pot grows
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- Figure 5: Value of savings and investments, 2017-20
- The consumer
- Restricted-access accounts heavily skewed towards over-55s
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- Figure 6: Savings product ownership, November 2020
- Use of current accounts suggests temporary savings
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- Figure 7: Savings activity over the last 12 months, November 2020
- 60% of savers have met or exceeded their savings goals
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- Figure 8: Savings expectations over the last 12 months, November 2020
- Savings priorities remained broadly unchanged
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- Figure 9: Savings priorities, 2019 and 2020
- 30% have opened a new savings account in the last 12 months…
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- Figure 10: Savings account opening activity, November 2020
- … with the low rate environment acting as the main barrier
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- Figure 11: Reasons for not opening a savings account in the last two years, November 2020
- Savers seek convenience and easy access
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- Figure 12: Important factors when choosing a savings account, November 2020
- Close to half would be interested in using a savings marketplace
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- Figure 13: Attitudes towards savings accounts, November 2020
Issues and Insights
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- A significant proportion of COVID-19 saving is likely to be spent when restrictions are lifted
- Less experienced savers need help to maximise the value of their savings
- Helping people to rebuild their finances will require a different approach
The Market – Key Takeaways
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- Household saving reaches an unprecedented level…
- …while the proportion of people with a significant savings pot grows
- Plans to protect loyal savers are shelved
Market Size and Forecast
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- COVID-19 pandemic has boosted household savings
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- Figure 14: Short, medium and long-term impact of COVID-19 on savings and investments, January 2021
- A huge increase in saving in 2020
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- Figure 15: Household deposits, 2009-20
- Savings growth is expected to slow from 2021 onwards
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- Figure 16: Market forecast of household deposits, 2015-25
- Figure 17: Market forecast of household deposits, 2020-25
- Market drivers and assumptions
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- Figure 18: Key drivers affecting Mintel’s market forecast, 2015-25 prepared in January 2021
- Learnings from the last recession
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- Figure 19: Household deposits, 2005-10
- Forecast methodology
Market Segmentation
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- Cash ISA growth expected to outpace stocks and shares in 2019/20
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- Figure 20: Number of cash and stocks and shares ISAs and amounts subscribed, 2013/14-2019/20
- Non-interest-bearing deposits account for the majority of increased savings
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- Figure 21: Outstanding balances on household deposits, by account type, 2015-20
The Savings Environment
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- Saving reaches unprecedented levels…
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- Figure 22: Household savings ratio at current prices, Q1 2015-Q3 2020
- …but a large split exists between those well off and those struggling financially
- More people have built a significant savings pot in 2020
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- Figure 23: Value of savings and investments, 2017-20
- GDP is expected to return to growth in 2021
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- Figure 24: Annual GDP, 2015-25 (central forecast)
- A fall in unemployment may lead to people cutting costs
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- Figure 25: Annual unemployment rate, 2015-25
- Interest rates fall to historic lows
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- Figure 26: Consumer deposits quoted interest rates to households, October 2012-October 2020
The Regulatory Environment
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- Plans to tackle loyalty penalty on hold as rates plummet
- Government responds to COVID-19 crisis by improving access to LISAs
The Consumer – Key Takeaways
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- Savings will provide a boost to spending once COVID-19 restrictions are lifted
- Scope to increase ownership of restricted-access accounts
- Savings priorities remain broadly unchanged
- Re-engaging consumers in a low rate environment
Impact of COVID-19 on Consumer Behaviour
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- A third say that they are financially worse off
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- Figure 27: Change in financial situation since the COVID-19 outbreak, November 2020
- Consumers are more used to the impact of the virus on their lives
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- Figure 28: Level of concern about COVID-19 affecting lifestyle, 26 March-16 December 2020
- Incentives to save increased at the start of January
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- Figure 29: Trend in extra money saved, January 2020-January 2021
Savings Product Ownership
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- Easy-access accounts dominate the savings market
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- Figure 30: Savings product ownership, November 2020
- Scope to increase ownership of restricted-access accounts
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- Figure 31: Savings product ownership, by value of savings and investments, November 2020
Accounts Used for Saving in the Last Year
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- Current accounts led the way for saving in 2020…
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- Figure 32: Savings activity over the last 12 months, November 2020
- …particularly among those who have seen their financial position improve
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- Figure 33: Savings activity over the last 12 months, by change in financial situation since the COVID-19 outbreak, November 2020
Saving Over the Last Year
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- 60% met or exceeded their savings goals in the last year…
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- Figure 34: Savings expectations over the last 12 months, November 2020
- …providers have an opportunity to help lower-value savers make up for lost time
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- Figure 35: Savings expectations over the last 12 months, by value of savings and investments, November 2020
Savings Priorities
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- Savings priorities remain broadly unchanged
- Holidays are less of a driver of saving…
- …but saving for home improvements gains ground
- Emergencies and unexpected events remain the key priority
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- Figure 36: Savings priorities, 2019 and 2020
- People who have saved more than expected are more likely to be saving for future holidays
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- Figure 37: Savings priorities, by savings expectations, November 2020
Savings Account Opening Activity
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- 30% have opened a new account in the last year
- Boosted savings have driven new account openings
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- Figure 38: Savings account opening activity, November 2020
- The low rate environment is disincentivising switching…
- …but younger savers are more put off by the perceived hassle
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- Figure 39: Reasons for not opening a savings account in the last two years, November 2020
- Helping people to make the most of their savings
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- Figure 40: People who have not opened a savings account with a new provider in the last two years because they do not have enough saved to make it worthwhile, by value of savings and investments, November 2020
Important Factors when Choosing a Savings Account
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- Adding value and convenience to savings accounts is key in low rate environment
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- Figure 41: Important factors when choosing a savings account, November 2020
- A competitive rate, easy access and good online functionality will appeal to 80% of savers
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- Figure 42: TURF Analysis – Consumers and Saving, November 2020
Attitudes towards Savings Accounts
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- An emphasis on rewarding loyalty would be well received
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- Figure 43: Attitudes towards savings accounts, November 2020
- Modest savers are interested in exclusive rewards
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- Figure 44: Response to the statement ‘The offer of exclusive rewards would make me willing to open a 0% interest rate account’, by value of savings and investments, November 2020
- Recent switchers are most likely to use a savings marketplace
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- Figure 45: Response to the statement ‘I would use a savings marketplace (ie a savings platform where you can transfer money between different providers to access better rates/products)’, by savings account opening activity, November 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- Methodology
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- Figure 46: TURF Analysis – Consumers and Saving, November 2020
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