Table of Contents
Issues in the Market
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- Key points
- Product definitions
- Scope of this report
Insights and Opportunities
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- Pick ‘n’ mix packaged accounts
- Life after the test case
- Making packaged accounts more appealing to women
- Is there room for a new type of current account?
- Offering incentives to transfer additional products
Market in Brief
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- The long-term market has grown alongside the population
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- Figure 1: Estimated number of current accounts in the UK, 2002-07
- Overdraft fees are high on the agenda…
- …with other developments also influencing the market
- The continued rise of online banking
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- Figure 2: The number of personal customers registered for telephone and Internet banking, and the number of transactions, 2002-06
- RBS is closing the gap on Lloyds TSB
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- Figure 3: Current account market share, March 2006-August 2007
- A mature market serving many niche segments…
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- Figure 4: Current accounts distribution, by provider, April 2008
- …with plenty of innovation within the marketplace
- Cross-selling remains pivotal
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- Figure 5: Cross-holding of other products with main current account provider, April 2008
Fast Forward Trends
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- Enhancing Customer Loyalty
- Trend 1: Decline of Deference
- Loyalty ties with cross-selling
- Reputation is key
- Trend 2: Brand Experience
- Bringing the ‘retail’ into ‘retail banking’
- Extending this to online banking
Internal Market Environment
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- Key points
- The debate over unarranged overdraft fees
- The verdict is in from the High Court test case
- Refunds of overdraft charges to date
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- Figure 6: Unarranged overdraft fees refunded by the big five high street banks, 2007
- The new and improved Banking Code
- Increased switcher mentality?
- Cross-selling remains key…
- …particularly for savings accounts and credit cards
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- Figure 7: Cross-holding of other products with main current account provider, April 2008
- Accessibility and visibility are key
Broader Market Environment
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- Key points
- The impact of the credit crunch
- Consumer confidence has plummeted
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- Figure 8: Consumer confidence, by sector, Q3/Q4 2002-Q1/Q2 2008
- A slight rise in financially active consumers
- PDI is forecast to grow
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- Figure 9: PDI, consumer expenditure and savings, 2003-13
- Growing Internet penetration
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- Figure 10: British Internet penetration at home/work/study or elsewhere, 2001-07
Competitive Context
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- Key points
- Is the mattress the real competitor?
- Basic bank accounts
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- Figure 11: Number of basic bank accounts in operation in the UK, 2003-07
SWOT Analysis
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- Figure 12: Current account market SWOT analysis
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Who’s Innovating?
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- Key points
- Growing focus on niche groups like migrant workers…
- …and the Islamic community
- Young people also hold potential…
- …as do older consumers
- Increasing online security
- The launch of mobile phone banking…
- …and mobile vehicle banking
- And don’t forget the green thing
Trade Perspective
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- The not-so-popular subject of unarranged overdraft fees
- The blurred area of premium and packaged accounts
- The use of switching incentives
- The growth of packaged accounts…
- …and an increased switching mentality
- Tied product propositions look set to grow
- The impact of the credit crunch
- Future trends and prospects
Market Size and Forecast
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- Key points
- Multiple current account ownership is declining…
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- Figure 13: Number of current accounts held by individuals and estimated total number of current accounts in the UK, Jan 2006-Sep 2007
- …causing the total number of accounts to drop in 2007
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- Figure 14: Estimated number of current accounts in the UK, 2002-07
- Individual bank account numbers have increased steadily…
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- Figure 15: Number of individual bank accounts (MBBG only), 2001-06
- …as have deposits into individual bank accounts
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- Figure 16: Deposits into individual bank accounts (MBBG only), 2001-06
- Overdraft usage has continued to increase
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- Figure 17: Overdraft advances to individuals and individual trusts (MBBG only), 2001-06
- Market forecast
- Scenario A: optimistic forecast
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- Figure 18: Number of current accounts in the UK: Scenario A – optimistic forecast, 2003-13
- Scenario B: pessimistic forecast
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- Figure 19: Number of current accounts in the UK: Scenario B – pessimistic forecast, 2003-13
- Overall forecast of current account market size
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- Figure 20: Forecast scenarios for the estimated number of current accounts in the UK, 2003-13
- Factors used in this forecast
Market Segmentation
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- Key points
- A very diverse market that is highly segmented
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- Figure 21: Current accounts distribution, by provider, April 2008
- Differences between various types of current accounts
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- Figure 22: Distinguishing features of various types of current accounts, May 2008
- Packaged accounts have become a key area of focus…
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- Figure 23: Type of (main) current account held by consumers, April 2008
- …which is likely to continue in the future
Market Share
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- Key points
- RBS has closed the gap on Lloyds TSB
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- Figure 24: Current account market share, March 2006-August 2007
- A different perspective on market share
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- Figure 25: Market share, by main financial services provider, 2007 and 2008
Companies and Products
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- Key points
- Switching incentives are rife
- Some have already changed their overdraft charging structure
- The impact of the OFT investigation into overdraft charges
- Scenario 1: The end of free banking in the UK
- Scenario 2: Migrating people to fee-charging packaged accounts
- Scenario 3: Reducing credit interest rates/increasing account fees and charges
- Competitive developments within the marketplace
- Other peripheral market developments
Brand Communication and Promotion
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- Key points
- Current accounts are a surprisingly low area of adspend…
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- Figure 26: Financial services advertising expenditure, by category, 2003-07
- …but student and packaged account advertising has grown
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- Figure 27: Current account (and related) advertsising expenditure, by sub-category, 2003-07
- Lloyds TSB leads the pack on current account advertising
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- Figure 28: Current/packaged account advertising expenditure, by provider, 2003-07
- A varied media mix for current account advertising
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- Figure 29: Current/packaged account advertising expenditure, by media type, 2003-07
Brand Elements
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- Brand map
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- Figure 30: Attitudes and usage of current account brands, May 2008
- Alliance & Leicester
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 31: Attitudes towards the Alliance & Leicester brand, May 2008
- Barclays
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 32: Attitudes towards the Barclays brand, May 2008
- Cahoot
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 33: Attitudes towards the Cahoot brand, May 2008
- The Co-operative Bank
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 34: Attitudes towards The Co-operative Bank brand, May 2008
- Coutts
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 35: Attitudes towards the Coutts brand, May 2008
- First Direct
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 36: Attitudes towards the First Direct brand, May 2008
- Lloyds TSB
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 37: Attitudes towards the Lloyds TSB brand, May 2008
- Smile
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 38: Attitudes towards the Smile brand, May 2008
- Brand qualities of current account brands
- Lloyds TSB and Barclays have the strongest characters
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- Figure 39: personalities of various current account brands, May 2008
- Brand experience of current account brands
- Many consumers have never heard of Coutts, Smile or Cahoot
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- Figure 40: Consumer epxerience of various current account brands, May 2008
- Brand intentions of current account brands
- The Co-operative Bank has the highest level of consideration
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- Figure 41: Consideration of various current account brands, May 2008
- Brand momentum of current account brands
- First Direct and Lloyds TSB are most thought to be gaining most ground
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- Figure 42: Momentum of various current account brands, May 2008
- Brand motivation of current account brands
- Lloyds TSB and Barclays are most synonymous with bank accounts
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- Figure 43: Motivation towards various current account brands, May 2008
- Brand satisfaction of current account brands
- Barclays has most excellent satisfaction from customers
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- Figure 44: Satisfaction towards various current account brands, May 2008
- Brand commitment to current account brands
- First Direct has highest recommendation and overall most positive endorsement.
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- Figure 45: Commitment to various current account brands, May 2008
- Round-up
Channels to Market
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- Key points
- Online banking is more popular than telephone banking
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- Figure 46: Use of online banking, telephone banking and branches, April 2008
- BBA data confirm a boom in online banking
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- Figure 47: The number of personal customers registered for telephone and Internet banking, and the number of transactions, 2002-06
- Banks are downsizing branch networks
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- Figure 48: Branch numbers, 2002-06 (end-December figures)
- ATM access and usage has grown
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- Figure 49: Number of ATMs and cash withdrawls (MBBG only), 2002-06
- Access to fee-free cash machines is a prominent issue
- ATM functionality has increased
The Consumer: Product Ownership
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- Key points
- Current accounts have very high penetration
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- Figure 50: Ownership of various financial products and services, April 2008
- One in eight have a premium or packaged current account
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- Figure 51: Type of (main) current account held by consumers, April 2008
- Only 13% of 18-24s have a young person’s or student account
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- Figure 52: Type of (main) current account held by consumers, by gender, age, socio-economic group and marital status, April 2008
- Packaged and premium accounts popular with ABs
- Savings accounts are easily cross-sold
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- Figure 53: Cross-holding of other products with main current account provider, April 2008
- Room for improvement?
- A fifth have four or more products with their current account provider
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- Figure 54: Number of products held with main current account provider, April 2008
- Cross-holdings of high-value customers
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- Figure 55: Cross-holdings of high-value customers (defined as those who hold four or more additional products with their main current account provider), April 2008
- Cross-holdings of customers with fewer with-brand products
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- Figure 56: Cross-holdings of all current account customers, by total number of additional products held with main current account provider, April 2008
- ABs are likely to have more cross-holdings
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- Figure 57: Total number of additional products held with main current account provider, by socio-economic group, April 2008
- Multiple account ownership is common
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- Figure 58: Current account ownership, Oct 2006-Sep 2007
- A relatively small market for new sales
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- Figure 59: Current account openings, Oct 2006-Sep 2007
- Interest rates and reputation are important considerations
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- Figure 60: Important factors when choosing a current account provider, Oct 2006-Sep 2007
The Consumer: Switching Behaviour and Packaged Accounts
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- Key points
- Poor customer service is the top switching incentive…
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- Figure 61: Factors encouraging consumers to switch their current account, April 2008
- …with cash incentives to switch also proving effective…
- …although another third of consumers would not be persuaded
- Women less inclined to switch
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- Figure 62: Factors encouraging consumers to switch their current account, by gender, age, socio-economic group, lifestage, gross annual household income and household tenure, April 2008
- Elderly customers are more loyal
- Interest rate-sensitivity declines with age
- Wealthy individuals want service, the poor don’t really care
- Customers with many cross-holdings are more sensitive to service
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- Figure 63: Factors encouraging consumers to switch their current account, by the number of other products held with their main current account provider, April 2008
- Customers with large cross-holdings are less inclined to switch
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- Figure 64: Attitudes towards switching, by the number of additional products held with main current account provider, April 2008
- Packaged accounts or a packaged rip-off?
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- Figure 65: Consumer attitudes towards packaged and premium current accounts, April 2008
- Most that have a packaged account don’t use many of the benefits
- Men are more resistant to packaged accounts
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- Figure 66: Consumer attitudes towards packaged and premium current accounts, by gender, age, socio-economic group, marital status, working status, gross annual household income, and ACORN group April 2008
- Older consumers are least resistant to fee-paying accounts
- Are packaged accounts more suited to affluent individuals?
- Customers with more cross-holdings may be an easier upsell
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- Figure 67: Consumer attitudes towards packaged and premium current accounts, by the number of additional products held with their main current account provider, April 2008
- Better interest rates and interest-free overdraft are appealing
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- Figure 68: Appeal of value-added benfits included within packaged and premium current accounts, April 2008
- Men are more influenced by better interest rates
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- Figure 69: Appeal of value-added benfits included within packaged and premium current accounts, by gender, age, socio-economic group, lifestage and newspaper readership, April 2008
- Younger people like the idea of an interest-free overdraft
- ABs find better rates on other financial products more appealing
- Popular tabloid readers like the idea of an interest-free overdraft
- Additional observations
- Customers with larger cross-holdings find packaged account benefits more appealing
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- Figure 70: Appeal of value-added benfits included within packaged and premium current accounts, by number of additional products held with main current account provider, April 2008
The Consumer: Attitudinal and Packaged Account Supporter Groups
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- Key points
- Attitudinal groups – methodology
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- Figure 71: Attitudinal groups identified, April 2008
- Characteristics of the attitudinal groups
- Happy Loyals
- Service Demanders
- Rate Tarts
- Switching Considerers
- Potential Switchers
- Detailed demographics of the attitudinal groups
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- Figure 72: Attitudinal groups, by gender, age, socio-economic group, lifestage, working status and gross annual household income, April 2008
- Happy Loyals have little interest in packaged accounts…
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- Figure 73: Attitudes towards packaged and premium current accounts, by attitudinal group, April 2008
- …with two fifths saying they would never subscribe to one
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- Figure 74: Appeal of value-added benfits included within packaged and premium current accounts, by attitudinal group, April 2008
- Packaged account supporter groups – methodology
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- Figure 75: Number of net positive/negative views held about packaged and premium current accounts, April 2008
- Attackers of packaged accounts may have had bad past experiences
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- Figure 76: Attitudes towards packaged and premium current accounts, by packaged account supporter groups, April 2008
- Advocates of packaged accounts tend to be Service Demanders
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- Figure 77: Attitudinal groups crossed with packaged account supporter groups, April 2008
- Critics and Attackers of packaged accounts have few cross-holdings
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- Figure 78: Packaged account supporter groups, by the number of additional products held with their main current account provider, April 2008
Appendix – The Consumer: Product Ownership
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- Figure 79: Type of current account held by consumers, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008
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- Figure 80: Total number of additional products held with main current account provider, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, media usage and supermarket usage, April 2008
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Appendix – The Consumer: Switching Behaviour and Packaged Accounts
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- Figure 81: Factors encouraging consumers to switch their current account, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, Table 1 of 2
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- Figure 82: Factors encouraging consumers to switch their current account, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, Table 2 of 2
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- Figure 83: Consumer attitudes towards packaged and premium current accounts, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008
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- Figure 84: Appeal of value-added benfits included within packaged and premium current accounts, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, Table 1 of 2
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- Figure 85: Appeal of value-added benfits included within packaged and premium current accounts, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, Table 2 of 2
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Appendix – The Consumer: Attitudinal and Packaged Account Supporter Groups
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- Figure 86: Attitudes towards switching, by attitudinal group, April 2008
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- Figure 87: Factors encouraging consumers to switch their current account, by attitudinal group, April 2008
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- Figure 88: Ownership of various financial products and services, by attitudinal group, April 2008
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- Figure 89: Ownership of various financial products and services, by attitudinal group (percentage point difference against total sample), April 2008
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- Figure 90: Attitudinal groups, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, media usage and supermarket usage, April 2008
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