Table of Contents
Executive Summary
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- COVID-19 has had a positive impact on the retail savings market
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- Figure 1: Short, medium and long-term impact of COVID-19 on the UK deposit and savings account market, March 2021
- The market
- Household savings ratio soared to 16.3% in 2020…
- … as spending constraints led to an 11% rise in retail savings
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- Figure 2: Forecast of total household deposit balances, 2015-25 (prepared on 12 April 2021])
- Current accounts and NS&I saw the greatest inflows in deposits
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- Figure 3: Household deposit balances, by product type, 2016-20
- Record low savings rates
- Companies and brands
- LBG and NS&I lead the way by value of customer deposits
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- Figure 4: Total retail deposits for the largest 10 providers, shown on a group basis – UK, 2019-20
- NS&I’s new green bond will fuel interest in eco-friendly savings
- New digital brands compete in an increasingly crowded space
- The consumer
- Two thirds of adults have at least £1,000 in savings
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- Figure 5: Value of cash savings, February 2021
- Many more savers have seen their savings grow over the past year than fall
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- Figure 6: Change in value of savings compared to 12 months ago, February 2021
- 57% of savers are keeping at least some of their ‘savings’ in a current account
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- Figure 7: Type of account held for savings, February 2021
- Big banks dominate in the savings arena
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- Figure 8: Company hold savings account(s) with, February 2021
- Seven in 10 savers are putting away money regularly
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- Figure 9: Agreement with statements regarding saving behaviour, February 2021
- 31% of savers are happy with the interest they are earning on their savings
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- Figure 10: Agreement with statements regarding saving interest rates, February 2021
- 36% of savers are using a savings app or online tool
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- Figure 11: Usage of and interest in savings apps, February 2021
- 59% are planning to add to their savings over the coming year
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- Figure 12: Saving intentions over the coming year, February 2021
- Around two fifths of savers are planning to move their savings
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- Figure 13: Intentions regarding switching/transferring savings over the coming year, February 2021
Issues and Insights
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- Savers are dissatisfied with low rates, but apathy is maintaining the status quo
- Despite growth in deposit balances, many people remain cautious about their finances
- Combined easy access and time account propositions could improve take-up of the latter
The Market – Key Takeaways
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- Spending restrictions boost household savings
- Current accounts have seen the greatest inflows
- Low savings rates reduce appetite for time deposits…
- … and drive interest in equity investment
Market Size and Forecast
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- The pandemic has exerted a positive influence over the savings market
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- Figure 14: Short, medium and long-term impact of COVID-19 on the UK deposit and savings account market, March 2021
- Household savings grew in real terms by 10% in 2020
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- Figure 15: Household deposit balances (non-seasonally adjusted), at current and constant prices, 2015-20
- Cautious consumers will keep saving levels high in 2021, despite an increase in spending
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- Figure 16: Forecast of total household deposit balances, 2015-25 (prepared on 12 April 2021)
- Figure 17: Forecast of total household deposit balances, 2015-25 (prepared on 12 April 2021)
- Market drivers and assumptions
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- Figure 18: Key drivers affecting Mintel’s market forecast, 2015-25 (prepared on 31 March 2021)
- Conditions are very different from the last recession
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- Figure 19: Household deposit balances (non-seasonally adjusted), 2006-11
- Forecast methodology
Market Segmentation
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- Time deposits decreased by 6% in 2020…
- …while consumer apathy resulted in a 25% increase in non-interest-bearing deposits
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- Figure 20: Household deposit balances, by product type, 2016-20
- Interest-bearing sight accounts represent 50% of total household deposits
- Cash ISA balances barely grew in 2020…
- …while NS&I deposits were up by 18%
Market Drivers
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- Saving levels to remain high, despite increased spending in 2021
- Spending plans are likely to centre on the home
- Savings ratio in 2020 is the highest on record
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- Figure 21: Gross household savings and saving ratio, seasonally adjusted and at current prices, 2011-20
- Threat of negative interest rates recedes
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- Figure 22: Annual percentage changes in CPI and RPI and Official Bank Rate – quarterly basis, 2010-20
- Stock markets buoyed by positive vaccine news
- Fixed-rate products still offer better returns, on average, but only just
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- Figure 23: Average monthly quoted household deposit and cash ISA interest rates, February 2012-February 2021
Companies and Brands – Key Takeaways
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- Not all of the largest deposit takers managed double-digit growth
- Current account providers and NS&I have benefitted the most from the surge in household savings
- Providers focus on improving digital channels and functionality
- The digital space is becoming increasingly crowded
- Green savings to get a boost by new NS&I bond launch
Market Share
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- Certain brands attract greater inflows of deposits than others
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- Figure 24: Total retail deposits for the largest 10 providers, shown on a group basis – UK, 2019-20
- LBG retains the largest share of retail deposits in the UK…
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- Figure 25: Retail deposit balances – LBG, 2019-20
- …but second-placed, NS&I grew balances by the greatest margin in 2020
- Nationwide’s performance in 2020 was below par…
- …hence, it’s upping the ante in 2021
- Current accounts have been the main recipients of higher balances
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- Figure 26: Retail deposit balances – Santander, 2019-20
Competitive Strategy and Launch Activity
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- Lack of real product innovation
- Digital drive continues
- Yorkshire Building Society on a ‘digital transformation journey’
- TSB Bank’s new Spend & Save proposition
- Digital banks face growing competitive pressure
- Zopa enters savings market
- JPMorgan Chase to follow Goldman Sachs in launching a digital bank
- Going green
- Other recent product launches
- NatWest’s Digital Regular Saver
- Atom’s Instant Saver
- Revolut’s USD saving account
- Chip’s easy access account
- Raisin UK adds easy access accounts to its savings platform
- Virgin Money and Principality target first-time buyers
Advertising and Marketing Activity
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- Savings market continues to attract low levels of adspend
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- Figure 27: Above-the-line, online display and direct mail advertising expenditure on savings products, by type of product, 2018-20
- Nationwide was again the highest spending advertiser in 2020, despite cutting adspend by a third
- Recent entrants, Marcus and Ford Money make the top 10
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- Figure 28: Top 10 advertisers of above-the-line, online display and direct mail advertising on savings products, 2019-20
- Ad Intel coverage
The Consumer – Key Takeaways
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- Many more savers have seen savings grow than fall over the past year
- 57% of savers are holding their savings in a current account
- Scope for challenger brands to target savers with smaller balances
- Disenchantment with savings rates could see more transfer to equities
Impact of COVID-19 on Saving Behaviour
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- Just over half of all savers say their ability to save has changed as a result of the pandemic
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- Figure 29: Impact of pandemic on ability to save, by gender and age, February 2021
- Many more have seen their savings increase than decrease over the past year…
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- Figure 30: Change in value of savings compared to 12 months ago, by gender and age, February 2021
- …although wealthier households are more likely to have benefited
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- Figure 31: Change in value of savings compared to 12 months ago, by value of cash savings, February 2021
- As outgoings have reduced, many are prompted to add to their savings
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- Figure 32: How consumers have been affected or changed their behaviour as a result of the outbreak, by gender and age, February 2021
- Having a savings buffer signals financial success for many UK adults
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- Figure 33: Own definition of financial success, by gender and age, February 2021
- Over-55s are less eager to try out new technology
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- Figure 34: Agreement with statement “I like to be amongst the first to try technologies”, by age, February 2021
- Many people are concerned about the security of their personal data
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- Figure 35: Agreement with statement “It is important to know that companies protect my personal information”, by age, February 2021
Amount of Savings and Type of Accounts Held
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- Two thirds of UK adults have at least £1,000 in savings
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- Figure 36: Value of cash savings, by gender and age, February 2021
- Significant gender savings gap among under-55s
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- Figure 37: Value of cash savings, by combined gender and age, February 2021
- The average saver uses 2.4 different account types
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- Figure 38: Type of account held for savings, February 2021
- NS&I’s Premium Bonds remain popular despite reduced chances of winning
- Those with the largest savings balances show strong preference for fixed-term bonds
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- Figure 39: Type of account held for savings, by value of cash savings, February 2021
Where Accounts Are Held
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- 86% of savers hold their savings with one of the top six banking groups
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- Figure 40: Company hold savings account(s) with, by product type, February 2021
- Challenger brands are better at attracting savers with higher balances
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- Figure 41: Company hold savings account(s) with, by total value of cash savings, February 2021
Attitudes and Behaviours of Savers
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- Nine in 10 savers try to maintain a certain level of savings
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- Figure 42: Agreement with statements regarding saving behaviour, February 2021
- Roughly four in five will use savings to fund major purchases
- Under-45s more likely to save for a specific reason
- 60% of savers are keeping most or all of their savings with one provider
- Two in three savers are dissatisfied with the interest they are earning
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- Figure 43: Agreement with statements regarding saving interest rates, February 2021
Take-up of Savings Apps
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- Just over a third of savers are using a saving/banking app or online tool
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- Figure 44: Usage of and interest in savings apps, February 2021
- 52% of adults are interested in a savings alert service
Intentions to Save and Switch
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- More than a quarter of savers are planning to dip into their savings over the coming year…
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- Figure 45: Saving intentions over the coming year, February 2021
- …of which, nearly half are planning to make a major purchase
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- Figure 46: Expectations among those planning to dip into their savings, February 2021
- Three in five people with balances of £50,000+ are planning to move at least some of their savings
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- Figure 47: Intentions regarding switching/transferring savings over the coming year, by value of savings, February 2021
Appendix – Data Sources and Abbreviations
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- Abbreviations
- Consumer research methodology
- Other sources
Appendix – Market Size and Forecast
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- Total market forecast – best- and worst-case scenarios
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- Figure 48: Forecast of household deposit balances – Best- and worst-case scenarios, 2020-25
- Forecast methodology
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