The current account market is the cornerstone of the UK retail banking sector. As the most widely owned and regularly used financial product, current accounts enable providers to establish a valuable and often profitable relationship with consumers. However, over the recent past the sector has experienced a series of challenges relating to charging structures for unarranged overdrafts. This has resulted in an OFT investigation into the fairness of these charges and a high-profile High Court test case over the issue. In a market that already suffers from a lack of trust, headlines created by the issue of overdraft charges and bank bailouts only serve to undermine consumer confidence further.

However, over the last year the market has witnessed considerable innovation, despite the economic downturn and banking crisis. This has been largely driven by providers seeking to address concerns regarding overdraft structures and transparency. Increased innovation should help to improve consumer engagement in a sector that has historically suffered from a high level of inertia in terms of switching activity. Changes to the existing current account model may also help to bridge the transition towards a new type of current account, which will become increasingly important if the OFT investigation is successful in imposing a cap on unarranged overdraft charges.

This report examines the dynamics of the overall UK current account market, principally focusing on standard current accounts, but also including some detail on packaged and premium accounts. Other current account sectors such as student/graduate, migrant worker and basic bank accounts are considered in the report, albeit from a high-level perspective.

The report includes analysis of the size of the current account market, key players and recent innovations and developments. It also examines channel usage, advertising of current accounts and broader economic and demographic influences on the market. Mintel has also commissioned exclusive research into the ownership of current account products, account providers, switching activity and attitudes towards packaged and premium accounts.

Key issues in the market

The implications and challenges created by the ongoing OFT investigation into unarranged overdraft fees.

Recent innovations in the market that seek to provide a more transparent charging structure for overdrafts.

The impact of the economic downturn and financial crisis.

The development and expansion of packaged current accounts.

Consumer attitudes towards product switching.

Developments in technology and their impact on channel usage.

Increased competition to the established current account providers, by the sector’s challenger brands and potential new entrants.