Table of Contents
Introduction and Abbreviations
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- Targeted products have increased the appeal of current accounts
- Providers have promoted switching offers heavily
- Report contents
- Global information and research
- Methodology
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Service should be a key matter for marketeers
- Intensify marketing activity which encourages switching
- Younger people are most receptive to offers
Executive Summary
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- External factors drive the current account market
- Branch networks are still in the front line of distribution
- The number of current accounts held rose by 30.5% between 1998 and 2006
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- Figure 1: Estimated number of current accounts, 1998-2006
- Lloyds TSB was the largest current account provider
- Products should be refreshed regularly to be competitive in this market
- ATMs have adapted to meet user needs
- The growth of Internet and telephone banking
- 43% of respondents used the Internet for financial transactions
- Commercial television carried marketing messages to the wider market
- Consumer research
- More than a third of consumers had switched their current account
Market Factors
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- Population growth fuels demand for current accounts
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- Figure 2: UK population, by age group, 1996-2011
- The workforce will increase by 2 million between 2006 and 2011
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- Figure 3: Workforce position, 2002-11
- There will be growth of 39.2% in the value of consumer savings between 2006 and 2011
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- Figure 4: PDI, consumer expenditure and savings, 2002-11
- Take-up of new basic bank accounts is on a downward trend
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- Figure 5: Total number of basic bank accounts opened, net of closures, April 2003-December 2005
- The Banking Code is strengthened
- EU financial services regulation
- OFT ruling on late credit card payment charges may impact current accounts
- The cheque clearing process is being scrutinised
The Branch Network
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- The branch is popular but…
- …the number of branches was in steady decline
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- Figure 6: Number of bank, building society and Post Office branches, 1999-2004
- Proportionally MBBG branch closures have been relatively low
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- Figure 7: Banks and building societies, branch number and percentage change, 1999 and 2004
- Keen advertisers gained market share
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- Figure 8: Estimated number of current account holders per branch, largest banks (by branch number), May 2006
Market Size
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- Money held in personal bank accounts reached £431 billion in 2004
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- Figure 9: Value of personal bank accounts (MBBG only), 2000-04
- The number of Internet-accessible personal bank accounts has risen rapidly over the last few years
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- Figure 10: Number of personal bank accounts (MBBG only), 2000-04
- The number of current accounts has grown by an estimated 1.8% between 2005 and 2006
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- Figure 11: Number of current accounts, 1998-2006
- Dormant bank account funds will now be reinvested
- The value of overdrafts steadied in 2004
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- Figure 12: Overdraft advances (MBBG only), 1998-2004
- The total number of plastic cards in issue rose by 41 million between 2000 and 2004
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- Figure 13: Number of cards in issue, by card type, 2000 and 2004
- More spent via debit cards than cash in 2005
- ATM services have adapted to market requirements
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- Figure 14: Number of ATMs (MBBG only), 1998-2004
Key Players
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- Conversion and consolidation have led to changes in banking services
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- Figure 15: Timeline of selected banking and building society events, April 1997-November 2004
- The creation of sub-brands
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- Figure 16: Selected current account parent and subsidiary brands (MBBG only), May 2006
- RBS Group is the top current account provider in 2006
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- Figure 17: Market shares of current account providers, 2003 and 2006
- Company profiles
- Lloyds TSB
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- Figure 18: Lloyds TSB company profile, 2002-04
- The Royal Bank of Scotland and NatWest
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- Figure 19: The Royal Bank of Scotland/NatWest company profile, 2002-04
- Barclays
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- Figure 20: Barclays company profile, 2002-04
- HSBC
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- Figure 21: HSBC company profile, 2002-04
- HBOS
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- Figure 22: HBOS company profile, 2002-04
Product Development
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- The offer of free banking through standard current accounts draws in consumers
- 11+ accounts grow more sophisticated
- Discovering niche sectors in this market
- The main feature of student accounts is an interest-free overdraft
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- Figure 23: Selected student account terms, April 2006
- Premium accounts appeal to more affluent individuals
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- Figure 24: Premium and packaged bank accounts, November 2005
Distribution
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- The number of cash withdrawals increased by 7.1% between 2003 and 2004
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- Figure 25: Number of bank cash dispensers/ATMs and cash withdrawals, 2003 and 2004
- Internet banking grew at a relatively fast rate between 2000 and 2004
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- Figure 26: Personal bank accounts accessible via telephone and/or via computer (MBBG only), 2000-04
- Financially confident individuals use telephone and Internet banking
- There were 2 billion personal banking transactions through the Internet in 2004
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- Figure 27: Number of telephone and computer transactions (MBBG only), by transaction type, 2003 and 2004
- Internet standing order and direct debit enquiries rose by 69% between 2003 and 2004
- Mobile telephone banking
Advertising and Promotion
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- Current account advertising is a relatively low priority for providers
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- Figure 28: Advertising expenditure on financial services, by category, March 2005-February 2006
- Television advertising was slightly more popular among FSPs
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- Figure 29: Advertising expenditure on current accounts, by media outlet, March 2005-February 2006
- First Direct was the largest advertiser between March 2005 and February 2006
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- Figure 30: Largest individual current account advertising expenditure, March 2005-February 2006
- Sweetening the application process – quirky marketing
Consumer Financial Activity
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- Relationship with the main financial services providers
- Overall financial activity levels will fall slightly
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- Figure 31: Savings, investment, borrowing and debt repayment – consumers’ expected activity, December 2004-March 2006
- C2s will display higher than average financial activity levels
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- Figure 32: Expected financial activity, by socio-demographic and income groups, March 2006 and average for the last 17 quarters
- ISA season will be fruitful for providers
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- Figure 33: Leading financial activities planned in the next six months, March 2005-March 2006
- Slower activity ahead for the property market
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- Figure 34: Intended mortgage and property purchase activity, March 2004-March 2006
- Lloyds TSB sees its position weaken slightly
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- Figure 35: Leading main financial services providers, market shares, March 2005-March 2006
- RBS features strongly in the savings/deposits sector
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- Figure 36: Saving, investment and lending market sizes, by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), March 2006
- Bank of Scotland and RBS have the most active customer bases
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- Figure 37: Activity levels of main financial services providers’ customer bases, March 2006
- HSBC and Halifax customers are looking to borrow more
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- Figure 38: Activity intentions and current household financial situation, by MFSP, March 2006
The Consumer
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- Current account penetration stood at 87% in March 2006
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- Figure 39: Financial product ownership, March 2006
- An opportunity to showcase new and additional services
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- Figure 40: Financial product ownership, by gender, age, socio-economic group, working status and ACORN category, March 2006
- Implications
- Continue to offer Internet access
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- Figure 41: Financial product ownership, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2006
- Implications
- NatWest significantly increased penetration of its current accounts in 2006
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- Figure 42: Current account provider, consumer research comparison, 2005 and 2006
- Certain brands appeal more to younger people
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- Figure 43: Current account provider, by gender, age, socio-economic group, marital status and lifestage, March 2006
- Implications
- Halifax may be viewed as having traditional values by people living in Yorkshire
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- Figure 44: Current account provider, by working status, gross annual household income, TV region and age/socio-economic group, March 2006
- Implications
- Broadsheets can be used to advertise subscription accounts
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- Figure 45: Current account provider, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2006
- Implications
- The arrangement of a current account tends to signify the beginning of a long-term relationship
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- Figure 46: Tendency to switch provider, March 2006
- Long-term versus short-term benefits
- Do the right thing
- Singles are able to change provider more easily
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- Figure 47: Tendency to switch provider, by gender, age, socio-economic group and lifestage, March 2006
- Implications
- Waitrose customers are decent targets for current account providers
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- Figure 48: Tendency to switch provider, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2006
- Implications
- Recently Abbey has experienced success in attracting individuals away from their incumbent provider
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- Figure 49: Current account ownership, by account last switched, March 2006
Consumer Attitudes and Targeting Opportunities
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- Person-to-person interaction builds trust
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- Figure 50: Channel used to arrange current account, March 2006
- Telephone services offer a midway point
- Traditional services are still in demand
- More senior people use electronic channels
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- Figure 51: Channel used to arrange current account, by gender, age, socio-economic group, marital status and lifestage, March 2006
- Implications and opportunities
- The ABC1 retired Special Group favoured using the telephone to organise a new current account
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- Figure 52: Channel used to arrange current account, by Mintel’s Special Groups, working status, gross annual household income and tenure, March 2006
- Implications and opportunities
- London dwellers had a penchant to arrange their account via the telephone
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- Figure 53: Channel used to arrange current account, by TV region, ACORN category and age/socio-economic group, March 2006
- Implications and opportunities
- Corresponding brand values may be highlighted
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- Figure 54: Channel used to arrange current account, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2006
- Implications and opportunities
- Lloyds TSB customers were most likely to arrange a current account in-branch
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- Figure 55: Channel used to arrange current account, by current account provider, March 2006
- Poor service is most likely to prompt customers to leave
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- Figure 56: Justification to switch current account provider, March 2006
- Younger people were most likely to regard their credit interest rate as important
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- Figure 57: Justification to switch current account provider, by gender, age and socio-economic group, March 2006
- Implications and opportunities
- Cash incentives are popular among current account providers
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- Figure 58: Justification to switch current account provider, by marital status, lifestage and age/socio-economic group, March 2006
- Implications and opportunities
- Mortgagors might switch for the promise of a better service
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- Figure 59: Justification to switch current account provider, by working status, gross annual household income and tenure, March 2006
- Implications and opportunities
- Those in the Urban Prosperity ACORN category were more likely to switch provider for a cash incentive
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- Figure 60: Justification to switch current account provider, by TV region and ACORN category, March 2006
- Implications and opportunities
- Internet users were found to be encouraged by a high interest rate
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- Figure 61: Justification to switch current account, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2006
- Implications and opportunities
- The issue of penalty fees may be used to entice those who arrange their current account via the telephone
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- Figure 62: Justification to switch current account, by channel used to arrange current account, March 2006
- HSBC customers are most likely to switch if they are dissatisfied with a service
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- Figure 63: Justification to switch current account, by current account provider, , March 2006
- Consumer typologies
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- Figure 64: Consumer typologies, current accounts, March 2006
- Not Open to Offers
- Service Orientated
- Open to Change
- Younger people are most Open to Change
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- Figure 65: Consumer typologies, current accounts, by gender, age, socio-economic group, lifestage, working status, ACORN group, tenure and new technology users, March 2006
- Implications and opportunities
Industry Views
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- Current account advertising expenditure will increase by 6-10% for the next year
- The OFT ruling on credit card delinquency fees is an issue
The Future
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- Individualism will contribute to growth of the current account market
- This market will continue to grow in value and volume
- The offer of a cash incentive will cease
- Bring service back to the marketing mix
- Pensions business
- The task of acquiring switchers will grow more testing
Forecast
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- Figure 66: Forecast of the value of personal bank accounts (MBBG only), 2005-11
- There will be steady growth in the number of current accounts in force
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- Figure 67: Forecast of the number of current accounts, 2006-11
- Factors used in this forecast
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