Table of Contents
Issues in the Market
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- Report coverage
- Market definitions
- Abbreviations
Insights and Opportunities
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- Saving gift cards
- Link products to saving objectives
- Brand power
- Customer retention – a key battleground
- Providing a ‘safe haven’ for savings
- Budgeting advice could be successful long-term strategy
Market in Brief
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- Current economic uncertainties are positive for savings market
- Northern Rock – A crisis of confidence
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- Figure 1: Agreement with the statement ‘The Northern Rock crisis hasn't made any difference in my attitude towards saving’, November 2007
- Key consumer research findings - 33% have opened a new account in last two years
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- Figure 2: Agreement with the statement ‘I have opened a new savings account within the last couple of years’, November 2007
- 31.5 million people own a safe haven savings product
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- Figure 3: Number of savers, by type of account, November 2007
- 67.3 million savings accounts held with MBBG and building societies
- NS&I performs strongly
- Halifax remain the leading provider
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- Figure 4: Volume share of the savings account market by type of provider, November 2007
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- Figure 5: Number of personal customers registered to access their accounts via the telephone or online, 2001-06
Fast Forward Trends
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- Trend: The Iceman Cometh…
- What’s it about?
- What it means
- What next?
- Trend: Playfulness
- What’s it about?
- What it means
- What next?
- What is Fast Forward Trends?
Broader Market Environment
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- Key Points
- Level of savings expected to grow
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- Figure 6: Trends in pdi, consumer expenditure, and savings, 2002-12
- Steady increase in the amount of savings per capita
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- Figure 7: Average savings per UK adult aged 16+ at current prices, 1991-2012
- Five Bank of England rate rises and one cut…
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- Figure 8: Bank of England base rate and RPI, November 1990-October 2007
- …but inflation continues to rise
- Backlash for providers not passing on rate rises
- Strong FTSE performance undermined by weakening investor sentiment
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- Figure 9: FTSE 100 and FTSE all-share indices – daily movements, May 1997-September 2007
- Credit crunch provides boost for savings rates
- Property remains an attractive investment
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- Figure 10: Average mix-adjusted house prices in the UK and savings ratio, 1989-2007
- FTB deposits drive savings activity
- Consumer debt reduces capacity to save
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- Figure 11: Amount outstanding on secured loans on dwellings and consumer credit, 1997-2006
- Key target group for savings set to increase
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- Figure 12: Size of UK population, by age group, 1999-2011
- Number of ABC1s also set to increase
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- Figure 13: Distribution of the adult population aged 15+, by socio-economic group, 1993-2012
Internal Market Environment
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- Key Points
- Consumer climate favours savings rather than spending
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- Figure 14: UK spending and savings climate, 12 months moving average- Indexed, July 2002-July 2007
- 37% of people intend to place cash on deposit
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- Figure 15: Intended cash-based deposit based activities, Q3 2002-Q3 2007
- A third of people intend to save in an ISA
- ISAs to be simplified and extended
- Northern Rock – A crisis of confidence
- Crisis highlights deficiencies with FSCS
- Northern Rock withdrawals force review of FSCS
- Review of the Banking Code
- Improving financial capability- positive for savings market
- Savings Gateway Scheme
- CAB to promote savings and investments nationally
- Cash reunited – highlighting dormant accounts
Competitive Context
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- Key Points
- Changing attitudes towards finances
- Growing preference for property
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- Figure 16: Number and value of buy-to-let sales, 1999-2006
- Increase in cost of borrowing affects ability to save
- Equity returns improve attractiveness of collective investments
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- Figure 17: Retail sales of unit trusts and OEICs by IMA members, 1996-2006
- A-Day boosts sale of pensions
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- Figure 18: Individual pension sales, 2001-06
- High-rate current accounts compete with savings accounts
- Stashing cash at home
Strengths and Weaknesses in the Market
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- Strengths in the market
- Economic conditions
- Flight to safety
- Lower operating costs equal higher interest rates
- Improving financial capability
- Weaknesses in the market
- Competitor products
- Relatively high product penetration – increased customer churn
- Loss-leading products – risk to long-term reputation
- Nervous savers following instability and uncertainty in the market
Who’s Innovating?
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- Key Points
- Innovation in the savings market
- Lloyds TSB encourages customers to ‘save the change’
- Nationwide launches simplified Regular Savings product
- NS&I extends its availability on the high street
- Halifax savings go carbon neutral
- Collapse of Farepak encourages Christmas savings products
Trade Perspective
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- The fallout from Northern Rock
- Savers may be encouraged to split funds between providers
- Changing distribution channels
- Are price-comparison sites positive for the market?
- New entrants to the market
- Retaining and attracting customers in the long-term
Market Size and Forecast
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- Key Points
- Some 31.5 million people own a safe haven savings product
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- Figure 19: Number of savers, by type of account, November 2007
- UK banks account for almost 70% of individual deposits
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- Figure 20: Individual trusts’ private sector holdings of sterling assets, 2001-06
- Non-MBBG banks account for growing proportion of the market
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- Figure 21: Individual trusts’ private sector holdings of sterling assets, 2001-06
- Strong growth in the number of time accounts
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- Figure 22: Number and value of individual interest-bearing sight accounts and individual interest-bearing time accounts (MGGB only), 2001-05
- Rate of growth in average account balances reflect changing trends
- Customers hold 44.4 million savings accounts with MBBG
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- Figure 23: Number of current and savings accounts held (MBBG only), 2001-06
- Value of deposits in building societies grow sharply
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- Figure 24: Number and value of building society accounts, 2001-06
- Northern Rock crisis leads to surge in amount building society deposits
- ISA sales continue to grow, but average subscriptions fall
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- Figure 25: Number of new mini cash ISAs and amounts subscribed during the year, 1999/2000-2006/07
- Good environment for future market
- More cautious consumer makes impact
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- Figure 26: Trends & forecast for sight & Interest accounts, 2001-12
- Increases in amounts saved fuel future market
- Non- and basic savers more susceptible to bad news
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- Figure 27: Impact of news stories
- Socio-demographics considerations used in forecast
NS&I Performance
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- Key Points
- NS&I investments total £78.9 billion in 2006/07
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- Figure 28: Amounts invested in NS&I annually and total funds held, 2001/02-2006/07
- NS&I improvements heavily dependent on improved distribution
- Premium Bonds’ 50th anniversary boosts sales
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- Figure 29: Funds invested annually into different NS&I products, 2001/02-2006/07
- Basic savings account continues to decline in popularity
- Total funds held increase by 7.5% in 2006/07
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- Figure 30: Amount of funds hekd in NS&I accounts, 2001/02-2006/07
- Northern Rock crisis prompts ‘flight to safety’
- Back to reality after birthday celebrations
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- Figure 31: Trends & forecast of total NS& I funds invested & held, 2002-12
- Other safe haven products will provide stiff competition
- Older profile will begin to tell
Market Share
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- Key Points
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- Figure 32: Estimated volume share of savings acount market, November 2007
- Nearly seven out of ten savers has an account with a bank
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- Figure 33: Volume share of the savings account market by type of provider, November 2007
- Impact of Northern Rock crisis
Companies and Products
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- Evolution of the savings market
- Market developments in 2007
- Barclays/Woolwich
- Citigroup/Egg
- Nationwide/Portman
- Building societies consolidate through mergers
- Overseas banks maintain pressure over rates
- Product development focuses on segmentation…
- ...and increasing current account penetration
- Company profiles
- National Savings & Investments
- Halifax
- Lloyds TSB
- Barclays
- Nationwide
Brand Communication and Promotion
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- Key Points
- Adspend on savings products totalled £33.7 million in 2006/07
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- Figure 34: Total adverstising expenditure on savings products 2002/03-2006/07
- ING Direct and Lloyds TSB top adspend in 2006/07
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- Figure 35: Top 15 adverstisers of savings accounts, 2006/07
- Most providers reduce adspend on savings products in 2006/07
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- Figure 36: Top 10 advertisers of savings accounts between 2002/03 and 2006/07
- 48% spent on press adspend in 2006/07
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- Figure 37: Advertising expenditure for savings producs, by media type, 2006/07
Channels to Market
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- Key Points
- Online accounts continue to grow in popularity
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- Figure 38: Number of personal customers registered to access their accounts via the telephone or online, 2001-06
- Increase in telephone transactions buoyed by balance enquiries
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- Figure 39: Number of transactions via telephone, by type of query, 2001-06
- Online transactions increase by 913% since 2001
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- Figure 40: Number of transactions via computer, by type of query, 2001-06
- Number of branches declines by 14% since 2001
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- Figure 41: Number of branches, by different provider categories, 2001-06
- Branch is still preferred retail banking channel
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- Figure 42: Channel usage by current account holders, August 2007
- Customer profile differs by channel
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- Figure 43: Key demographic findings relating to channel preference, August 2007
- Advocating a multi-channel approach
- Impact of aggregator sites
Product Penetration and Account Ownership
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- Key Points
- Survey background
- Two-thirds of consumers have safe haven savings products
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- Figure 44: Ownership of savings and investment products, November 2007
- Providers likely to concentrate on retention and switching
- Half of the adult population has an instant access savings account
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- Figure 45: Ownership of savings and investment products, November 2007
- Age influences the likelihood to save
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- Figure 46: Ownership of various types off savings account, by gender, age, lifestage, and working status, November 2007
- Young adults represent largest untapped group
- Savers over 45 demand a greater range of products
- Affluence determines the ability to save
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- Figure 47: Ownership of various types of savings account, by soco-economic group, gross annual household income, household tenure and marital status, November 2007
- Only 5% of ABs holds no savings or investment products
- Savings Gateway Scheme to increase product ownership among DEs
- Internet users are more likely than average to own a savings account
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- Figure 48: Ownership of various types of savings account, by newspaper readership, technology users, Internet usage aand TV region, November 2007
- Demand for Internet savings is increasing
- Profile of saver sophistication
- Around a third of savers are classed as basic or slightly advanced
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- Figure 49: Profile of saver sophistication based on product ownership, by gender, age, socio-economic group, lifestage, marital status and gross annual household income, November 2007
- Product ownership increases with sophistication
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- Figure 50: Profile of saver sophistication by the number of products held, November 2007
Savings Account Providers and Customer Profiles
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- Key Points
- One in five savers has an account with Halifax
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- Figure 51: Top savings account providers, November 2007
- Typical saver profiles differ between top providers
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- Figure 52: profile overview and key demographic findings of savers of top savings institutions, November 2007
- Around six in ten hold a savings account at a traditional bank
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- Figure 53: Savings providers, by category, November 2007
- Building societies and former building societies attract affluent savers
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- Figure 54: Key demographic findings of savers for different provider categories, November 2007
- Notice accounts and cash ISAs most likely to be held at building societies
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- Figure 55: Type of savings account, by different categories of savings provider, November 2007
Consumer Attitudes Towards Saving
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- Key Points
- Half of adults opt for safe haven accounts in face of bad press
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- Figure 56: Agreement with the statement ‘Bad press about financial issues tends to make me go for safer accounts’, November 2007
- Savers are sensitive to media reports
- Age is key determinant of likelihood to react to negative financial media
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- Figure 57: Key demographic findings to the statement ‘Bad press about financial issues tends to make me go for safer accounts’, November 2007
- Risk takers are the least affected by bad press
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- Figure 58: Agreement with the statement ‘Bad press about financial issues tends to make me go for safer accounts’ by type of savings/investment products held, November 2007
- Premium Bond holders are the most concerned about bad press
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- Figure 59: Agreement with the statement ‘Bad press about financial issues tends to make me go for safer accounts’ by type of savings account held, November 2007
- Most sensitive savers use NS&I and most confident use non-traditional providers
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- Figure 60: Agreement with the statement ‘Bad press about financial issues tends to make me go for safer accounts’, by the category of savings provider, November 2007
- 25% of adults reassess attitude towards saving after the Northern Rock crisis
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- Figure 61: Agreement with the statement ‘The Northern Rock crisis hasn't made any difference in my attitude towards saving’, November 2007
- Broadsheet readers less impacted by the Northern Rock crisis
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- Figure 62: Key demographic findings to the statement ‘The Northern Rock crisis hasn't made any difference in my attitude towards saving’, November 2007
- People with equity-based products are less likely to be concerned
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- Figure 63: Agreement with the statement ‘The Northern Rock crisis hasn't made any difference in my attitude towards saving’ by type of savings/investment products held, November 2007
- Chosen savings institution reflects attitude towards uncertainty
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- Figure 64: Agreement with the statement ‘The Northern Rock crisis hasn't made any difference in my attitude towards saving’ by category of savings provider November 2007
- 33% of adults have opened a new savings account in the last two years
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- Figure 65: Agreement with the statement ‘I have opened a new savings account within the last couple of years’, November 2007
- 46% of savers have opened a new account in the last two year
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- Figure 66: Agreement with the statement ‘I have opened a new savings account within the last couple of years’ by savers, November 2007
- A flurry of account opening activity
- Young and affluent most likely to have opened a new savings account
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- Figure 67: Key demographic findings to the statement, ‘I have opened a new savings account within the last couple of years’, November 2007
- Sophisticated savers are more likely to have opened new account
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- Figure 68: Agreement with the statement ‘I have opened a new savings account within the last couple of years’, by type of savings/investment products held, November 2007
- Savers at former building societies least likely to have opened a new account
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- Figure 69: Agreement with the statement ‘I have opened a new savings account within the last couple of years’, by category of savings provider, November 2007
- HSBC and Nationwide customers most likely to have opened a new account
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- Figure 70: Agreement with the statement ‘I have opened a new savings account within the last couple of years’, by top savings provider, November 2007
- 31% of savers look for the best available interest rate
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- Figure 71: Consumer attitudes and behaviours towards savings products, November 2007
- Implications and opportunities
- Lack of money limits savings for younger consumers
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- Figure 72: Consumer attitudes and behaviours towards savings products, by gender, age, lifestage, and working status, November 2007
- Savings objectives could provide incentive to save
- Third age savers look for best interest rates and well-know providers
- Cash ISAs preferred over other savings by the affluent
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- Figure 73: Consumer attitudes and behaviours towards savings products, by socio-economic group, gross annual household income, household tenure and marital status, November 2007
- Maximising ISA cross-sale opportunities
- Internet users are more likely to be rate-driven
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- Figure 74: Consumer attitudes and behaviours towards savings products, by newspaper readership, techology users, Internet usage, and TV region, November 2007
- Online savings capability increasing in importance
- Demand for best rates differs between provider categories
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- Figure 75: Consumer attitudes and behaviours towards savings products, by category of savings provider
Saving and Investment Targeting Opportunities
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- Key Points
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- Figure 76: Savings and Investment product target groups, November 2007
- Good Intenders (14% of adults aged 18+ with a savings or investment product)
- Strugglers (22% of adults aged 18+ with a savings or investment product)
- Branded (20% of adults aged 18+ with a savings or investment product)
- Money makers (7% of adults aged 18+ with a savings or investment product)
- No interest (37% of adults aged 18+ with a savings or investment product)
- Almost half of strugglers have one savings product
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- Figure 77: Savings and Investment product target groups, by number of products held, November 2007
- Cash ISAs most important to Branded
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- Figure 78: Savings and Investment product target groups, by types of products held, November 2007
Appendix- Account Ownership- Detailed Demographics
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- Figure 79: Top savings account providers, by gender, age, lifestage, working status, November 2007
- Figure 80: Top savings account providers, by socio-economic group, gross annual household income, household tenure, marital status, November 2007
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- Figure 81: Top savings account providers, by newspaper readership, technology users, Internet usage, TV region and supermarket usage, November 2007
- Figure 82: Savings providers by category, by gender, age, lifetstage and working status, November 2007
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- Figure 83: Savings providers by category, by socio-economic group, gross annual household income, marital status, household tenure, November 2007
- Figure 84: Savings providers by category, by newspaper readership, technology users, Internet usage, TV region, and supermarket usage, November 2007
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Appendix - Attitudes Towards Savings - Detailed Demographics
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- Figure 85: Agreement with the statement ‘Bad press about financial issues tends to make me go for safer accounts’, by gender, age, lifestage, and working status, November 2007
- Figure 86: Agreement with the statement ‘Bad press about financial issues tends to make me go for safer accounts’, by socio-economic group, gross annual household income, household tenure and marital status, November 2007
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- Figure 87: Agreement with the statement ‘Bad press about financial issues tends to make me go for safer accounts’, by newspaper readership, technology users, Internet usage, and TV region, November 2007
- Figure 88: Agreement with the statement ‘The Northern Rock crisis hasn't made any difference in my attitude towards saving’, by gender, age, lifestage, and working status, November 2007
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- Figure 89: Agreement with the statement ‘The Northern Rock crisis hasn't made any difference in my attitude towards saving’, by socio-economic group, gross annual household income, household tenure and marital status, November 2007
- Figure 90: Agreement with the statement ‘The Northern Rock crisis hasn't made any difference in my attitude towards saving’, by newspaper readership, technology users, Internet usage, and TV region, November 2007
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- Figure 91: Agreement with the statement ‘I have opened a new savings account within the last couple of years’, by gender, age, lifestage and working status, November 2007
- Figure 92: Agreement with the statement ‘I have opened a new savings account within the last couple of years’, by socio-economic group, gross annual houswhold income, household tenure and marital status, November 2007
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- Figure 93: Agreement with the statement ‘I have opened a new savings account within the last couple of years’, by newspaper readership, technology users, Internet usage, TV region and supermarket used November 2007
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Appendix - Saving and Investment Targeting Opportunities - Detailed Demographics
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- Figure 94: Savings and Investment product target groups, by gender, age, socio-economic group, lifestage, marital status and gross annual household income, November 2007
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