Table of Contents
Issues in the Market
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- Abbreviations
Insights and Opportunities
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- Steal custom away through the offer of short-term higher-rate savings
- Consumers might now turn to investing in stocks and shares
- Tradition could assist in retaining customers
- Encourage consumers to save now to support a more active life
- More affluent consumers are the main targets
Market in Brief
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- Around 25 million adults hold a deposit or savings account
- Halifax is the largest provider
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- Figure 1: Savings account providers, estimated volume market share, October 2006
- Rising interest rates might impact saving
- Cash is a more appealing venture for consumers
- Pensions and repayment of loans might impact the level of saving
- Increased use of technology has shaped product design
- Television advertising accounts for half of promotional spend
- Non-branch banking increases
- There is a strong desire among consumers to save
- Target groups vary among providers
- Provide the incentive to save
Fast Forward Trends
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- Trend 1: I want it all. And I want it now
- Definition
- Context
- Market touchpoints/implications
- Trend 2: Agelessness
- Definition
- Context
- Market touchpoints/implications
- Trend 3: CornerShop Bank
- Definition
- Context
- Market touchpoints/implications
Broader Market Environment
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- Key points summary:
- Consumers will hold an increasing amount of funds for discretionary use
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- Figure 2: PDI, consumer expenditure, savings and savings ratio, 2001-11
- Tracker products extend saving choices
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- Figure 3: BoE base rates, January 1992-January 2007
- The stock market has shown steady growth since 2003
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- Figure 4: FTSE 100 and FTSE All Share indices, January 1996-December 2006
- Property is perceived as a good investment among consumers
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- Figure 5: Mix-adjusted house prices, 1970-2006
- Appealing to a more mature market
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- Figure 6: Population projections, 2006-25
Internal Market Environment
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- Key points summary:
- Cash finds favour with consumers
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- Figure 7: Number and value of ISAs subscribed, 2001/02-2005/06
- The heaviest interest rates are the preserve of the Internet
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- Figure 8: Selected instant access (easy access) savings accounts, by AER, December 2006
- Customer acquisition through loss-leading rates
- ISAs are given legs
- ISA choice will be simplified for consumers
- Review of the Banking Code
Competitive Context
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- Key points summary:
- Liquid funds
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- Figure 9: Selection of potential demands on funds intended for savings, 2006
- Pressure from pensions
- Repayments to creditors
- Premium bonds are an affordable option
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- Figure 10: Amounts invested in premium bonds, savings certificates, income bonds and pensioners' guaranteed bonds, 2001-06
- ISAs and savings accounts compete head to head
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- Figure 11: Number of cash mini ISAs and amounts subscribed during year, 2001/02-05/06
Strengths and Weaknesses in the Market
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- Competing on headline rates has its risks
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- Figure 12: Strengths and weaknesses for the deposit and savings account market, January 2007
Who’s Innovating?
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- Banks offer top rates for a limited period
- Product labelling by age is fashionable
- The Post Office has launched its first own-brand savings account
- NS&I launches its Direct ISA
- Let your bank keep an eye on the pennies
Trade Perspective
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- The Internet offers the heaviest rates
- There has been some migration away from notice accounts
- The balance needs to swing from borrowing towards saving
Market Size and Forecast
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- Key points summary:
- MBBG account for the largest amount of cash-based assets
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- Figure 13: Individual trusts’ private sector holding of Sterling assets, 2001-05
- Growth in sight accounts is driving the market
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- Figure 14: Number and value of individual interest-bearing sight accounts and individual interest-bearing time accounts (MBBG only), 2001-05
- Arrangement of second accounts has buoyed the market
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- Figure 15: Number of current and savings accounts held (MBBG only), 2001-05
- The market for building society accounts has grown
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- Figure 16: Number and value of building society accounts, 2001-05
- NS&I offers an additional route to saving
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- Figure 17: Number and value of NS&I EASAs, 2003/04-2005/06
- The savings market is large and mature
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- Figure 18: Number of savers, by type of account, October 2006
- 10% of savers hold three or more savings accounts
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- Figure 19: Number of savings accounts held by savers, October 2006
- The savings market is projected to grow
- The number of MBBG sight accounts will grow
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- Figure 20: Forecast of MBBG sight accounts, by volume and value, 2001-11
- Figure 21: Forecast of MBBG time accounts, by volume and value, 2001-11
- Building societies will gain from an increase in consumer saving
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- Figure 22: Forecast of building society accounts, by volume and value, 2001-11
- Factors used in this forecast
Market Share
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- Key points summary:
- Traditional providers reign supreme
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- Figure 23: Top savings account providers, by estimated volume market share, October 2006
- Halifax is the largest savings account provider
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- Figure 24: Estimated market share for the savings account market, October 2006
- Icesave is the latest entrant
- Demutualised societies accounted for 31% of market share
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- Figure 25: Volume share of the savings account market, by type of provider, October 2006
Companies and Products
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- Key points summary:
- Regulation introduced in the mid-1980s has shaped this market
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- Figure 26: Timeline of building society demutualisations, 1989-2000
- Halifax
- Lloyds TSB
- Nationwide
- Abbey
- HSBC
- New entrants and overseas providers
- Icesave (Landsbanki Islands hf)
- ICICI Bank
Brand Elements
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- Halifax
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- Figure 27: Words associated with Halifax by past, current and potential DSA users, January 2007
- Brand qualities
- Recommendations and opportunities
- Lloyds TSB
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- Figure 28: Words associated with Lloyds TSB by past, current and potential DSA users, January 2007
- Brand qualities
- Recommendations and opportunities
- HSBC
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- Figure 29: Words associated with HSBC by past, current and potential DSA users, January 2007
- Brand qualities
- Recommendations and opportunities
- Abbey
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- Figure 30: Words associated with Abbey by past, current and potential DSA users, January 2007
- Brand qualities
- Recommendations and opportunities
- Nationwide BS
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- Figure 31: Words associated with Nationwide BS by past, current and potential DSA users, January 2007
- Brand qualities
- Recommendations and opportunities
- NatWest
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- Figure 32: Words associated with NatWest by past, current and potential DSA users, January 2007
- Brand qualities
- Recommendations and opportunities
- Barclays
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- Figure 33: Words associated with Barclays by past, current and potential DSA users, January 2007
- Brand qualities
- Recommendations and opportunities
- ING Direct
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- Figure 34: Words associated with ING Direct by past, current and potential DSA users, January 2007
- Brand qualities
- Recommendations and opportunities
- Usage of DSA brands
- Halifax and Nationwide are the market leaders
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- Figure 35: Consumer usage of deposit and savings accounts, January 2007
- Attitudes towards DSA brands
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- Figure 36: Attitudes towards DSA brands, January 2007
- ING scores highly
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- Figure 37: Customer rating of experience of DSA brands, January 2007
- Brand commitment
- Nationwide customers are committed to the cause
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- Figure 38: Degree of customer commitment to DSA brands, January 2007
Brand Communication and Promotion
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- Key points summary:
- Savings account advertising expenditure has grown relatively quickly
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- Figure 39: Advertising expenditure on financial services, by sector, 2001/02-2005/06
- Television is the largest advertising outlet for savings accounts
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- Figure 40: Advertising expenditure on savings accounts, by outlet, October 2005-September 2006
- Terms and conditions may be used to increase account take-up
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- Figure 41: Top advertisers for savings accounts, October 2001-September 2006
Channels to Market
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- Key points summary:
- 42 million people are registered for telephone accounts
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- Figure 42: Number of personal customers registered to access their accounts via computer or via telephone, 2001-05
- The number of foreign currency transactions has grown rapidly
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- Figure 43: Number of transactions via computer, by type of query, 2001-05
- The Internet carries roughly four times the number of transactions compared with telephones
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- Figure 44: Number of transactions via telephone, by type of query, 2001-05
Consumer Financial Activity
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- A quiet Christmas and New Year for providers
- Activity levels look set to drop sharply
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- Figure 45: Savings, investment, borrowing and debt repayment – consumers’ expected activity, June 2005-September 2006
- UK savings and spending climate
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- Figure 46: UK savings and spending climate – indexed, January 2001-October 2006
- Subdued picture across all sub-groups
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- Figure 47: Expected financial activity, by socio-demographic and income groups, September 2006 and average for the last 19 quarters
- Only ISA and life business will hold up
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- Figure 48: Leading financial activities planned in the next six months, September 2005-September 2006
- Property intentions may be hit by the rate rise
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- Figure 49: Intended mortgage and property purchase activity, September 2004-September 2006
- Identifying main financial services providers
- Bank of Scotland and Halifax customers will be the busiest
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- Figure 50: Activity levels of main financial services providers’ customer bases, September 2006
- NatWest and Barclays customers are looking to repay debt
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- Figure 51: Activity intentions and current household financial situation, by MFSP, September 2006
Consumer – Savings Account Penetration
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- Key points summary:
- Current accounts are the most widely held financial product
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- Figure 52: Financial product ownership, October 2006
- ABs were most likely to hold any savings product
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- Figure 53: Savings product ownership, by gender, age and socio-economic group, October 2006
- Implications and opportunities
- ABC1 over-55s were most likely to hold at least one savings product
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- Figure 54: Savings product ownership, by marital status, lifestage, age/socio-economic group and working status, October 2006
- Implications and opportunities
- People living in the South favour deposit and savings accounts
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- Figure 55: Savings product ownership, by gross annual household income, tenure, region and ACORN category, October 2006
- Implications and opportunities
- Broadsheets are a decent advertising outlet
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- Figure 56: Savings product ownership, by technology users, newspaper readership, commercial TV viewing and supermarket usage, October 2006
- Implications and opportunities
- Individual instant access accounts are held by 60% of the market
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- Figure 57: Type of savings account held, October 2006
- Young adults favour instant access accounts
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- Figure 58: Type of savings acccount held, by gender, age and socio-economic group, October 2006
- Implications and opportunities
- Joint accounts appeal to married people
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- Figure 59: Type of savings acccount held, by marital status, lifestage and age/socio-economic group, October 2006
- Implications and opportunities
- Some consumers cannot afford to commit their money
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- Figure 60: Type of savings acccount held, by working status, gross annual household income, tenure and ACORN category, October 2006
- Implications and opportunities
- Offer a popular incentive to encourage saving in children’s accounts
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- Figure 61: Type of savings acccount held, by technology users, newspaper readership, commercial TV viewing and supermarket usage, October 2006
- Implications and opportunities
The Consumer – Favoured Account Providers
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- Key points summary:
- Halifax is the top savings account provider
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- Figure 62: Top savings account providers, October 2006
- ABs favoured Halifax
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- Figure 63: Top savings account providers, by gender, age, socio-economic group, lifestage and age/socio-economic group, October 2006
- Waitrose shoppers favoured Nationwide
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- Figure 64: Top savings account providers, by technology users, newspaper readership, commercial TV viewing and supermarket usage, October 2006
- Implications and opportunities
- Individual instant access account holders are most likely to be found at Nationwide
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- Figure 65: Account type versus provider, October 2006
- Partners are most likely to own a joint savings account
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- Figure 66: Statements regarding savings accounts, by savings account type, October 2006
The Consumer – General Attitudes towards Saving and Management of Accounts
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- Key points summary:
- Nearly a third of consumers agree that interest rates are the most important element
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- Figure 67: Agreement with attitudinal statements regarding savings accounts, October 2006
- Affluent consumers favour high rates
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- Figure 68: Agreement with statements regarding savings accounts, by gender, age, socio-economic group and marital status, October 2006
- Implications and opportunities
- C2DE 18-34s find it difficult to save
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- Figure 69: Agreement with statements regarding savings accounts, by lifestage, age/socio-economic group, working status and gross annual household income, October 2006
- Implications and opportunities
- Interactive saving
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- Figure 70: Agreement with statements regarding savings accounts, by technology users, newspaper readership, commercial TV viewing and supermarket usage, October 2006
- Implications and opportunities
- Access to a local branch on Saturdays might be important for some
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- Figure 71: Statements regarding savings accounts, by savings account providers, October 2006
- Savers value convenience
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- Figure 72: Statements about savings account management, October 2006
- C2s were most likely to be loyal savings account customers
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- Figure 73: Statements about savings account management, by gender, age, socio-economic group and marital status, October 2006
- Implications and opportunities
- More affluent consumers favour managing their savings over the Internet
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- Figure 74: Statements about savings account management, by lifestage, age/socio-economic group, working status and gross annual household income, October 2006
- Implications and opportunities
- Reward loyalty to others
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- Figure 75: Statements about savings account management, by technology users, newspaper readership, commercial TV viewing and supermarket usage, October 2006
- Implications and opportunities
- Loyalty is strongest amongst Lloyds TSB, NatWest and Abbey
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- Figure 76: Statements about savings account management, by savings account providers, October 2006
- Consumer Typologies
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- Figure 77: Deposit and savings accounts typologies, October 2006
- Plan to Save
- Restricted Funds
- Active Savers
- Hot Prospects
- Target higher earners with the offer of an exclusive savings account
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- Figure 78: Deposit and savings account typologies, by gender, age, socio-economic group, lifestage and gross annual household income, October 2006
- Implications and opportunities
- Adopt the position of others to increase appeal
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- Figure 79: Deposit and savings account typologies, by technology users, newspaper readership, commercial TV viewing and supermarket usage, October 2006
- Implications and opportunities
- Higher earners are key targets
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- Figure 80: CHAID analysis on type of savings product held, October 2006
- ABs are the main target group
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- Figure 81: CHAID analysis on savings accounts, October 2006
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