Table of Contents
Issues in the Market
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- Main findings of the research
- Abbreviations
Future Opportunities
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- Take the worry out of savings
- A tough year – but also opportunities
- Providers should heavily promote regular savings schemes
- Accessibility issues are set to become increasingly important
- Innovative interest-rate solutions will be vital
Market in Brief
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- Economic downturn will impact on consumers’ savings habits
- Retail savings balances totalled £1.1 billion at the end of 2008
- Lloyds Banking Group is the dominant force in the savings market
- Trade perspective: Low rates create the principal challenge
- Mintel’s research findings: Product ownership
- Mintel’s research findings: Favoured account providers
- Mintel’s research findings: Attitudes towards saving
Internal Market Environment
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- Key points
- Base rates have been reduced to an historically low level
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- Figure 1: Bank of England base rate, end of quarter, Q1 1972-Q1 2009
- Savings rates have tumbled in the last few months
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- Figure 2: Average quoted deposit interest rates at banks and building societies, January 2004-February 2009
- The low-interest-rate environment creates a number of challenges
- Wholesale market turmoil has driven up demand for retail funds
- The banking crisis will continue to impact on consumer sentiment
- Raising the protection limits will have eased consumer fears
Broader Market Environment
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- Key points
- The economic downturn will impact on consumers’ ability to save
- Debt repayment will increasingly become a priority
- Precautionary saving may stimulate the savings habit
- The savings ratio has actually increased in recent quarters
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- Figure 3: Household savings ratio, seasonally adjusted, Q1 2004-Q4 2008
- Rising ISA allowances will provide a boost to the savings market
- Population trends will impact on demand for savings accounts
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- Figure 4: UK population, by age bracket, 1992-2016
Competitive Context
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- Key points
- Deposit accounts compete with investments and everyday spending
- Stockmarket decline has hit equity-based investments
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- Figure 5: FTSE 100 Index, end of month, January 1994-March 2009
- Property market downturn makes housing a less attractive option
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- Figure 6: Average UK house price, seasonally adjusted, January 2006-March 2009
Strengths and Weaknesses in the Market
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- Figure 7: Strengths and weaknesses in the deposit-based savings account market
- Strengths
- Weaknesses
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Who’s Innovating?
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- Key points
- Maximising rates of interest will be the key focus of innovation
Trade Perspective
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- The low-interest-rate environment represents the key challenge
- Precautionary saving could stimulate some growth in balances
- Innovation will focus on maximising the interest savers can earn
- Increasing popularity of the internet looks set to continue
- Increased market concentration could reduce competitive forces
Market Size and Forecast
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- Key points
- Retail savings balances totalled £1.1 billion at the end of 2008
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- Figure 8: Retail savings balances outstanding, 2004-09
- A number of factors will constrain future growth in balances…
- …but a rise in precautionary saving could stimulate the market
- The value of deposits in time accounts has grown in recent years
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- Figure 9: Number and value of individual interest-bearing sight and time accounts (MBBG only), 2003-08
- More than 30 million adults hold a deposit or savings account
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- Figure 10: Ownership of deposit or savings accounts and NS&I products, December 2008
- Cash ISAs are a key segment of the deposit-based savings market
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- Figure 11: Cash ISA balances outstanding, 2003-08
- Sales of cash ISAs increased by 10% in 2008
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- Figure 12: Number of mini cash ISAs receiving subscriptions and the value of gross subscriptions, 2002/03-2007/08
- Forecast
- Balances to rise as individuals shore up savings
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- Figure 13: Forecast of retail savings balances outstanding, 2004-14
- Factors used in the forecast
Market Share
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- Key points
- Lloyds Banking Group is the dominant force in the savings market
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- Figure 14: Estimated deposit-based savings account volume market share, by savings brands, December 2008
- Market concentration has increased in the last couple of years
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- Figure 15: Combined volume market share of top five deposit-based savings account providers, by financial services group, 2006 and 2008
Companies and Products
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- Key points
- There have been significant changes to the operating landscape
- The Lloyds/HBOS merger has created a savings colossus
- A number of leading banks are now partly, or wholly, in state hands
- Santander has increased its presence within the UK savings market
- Nationwide has driven consolidation in the building society sector
- Co-operative Bank and Britannia are set to form a mutual alliance
Brand Elements
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- Brand map
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- Figure 16: Attitudes and usage of deposit and savings account brands, March 2009
- Nationwide
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 17: Attitudes towards the Nationwide brand, March 2009
- Northern Rock
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 18: Attitudes towards the Northern Rock brand, March 2009
- Halifax
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 19: Attitudes towards the Halifax brand, March 2009
- The Co-operative Bank
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 20: Attitudes towards The Co-operative Bank brand, March 2009
- Barclays
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 21: Attitudes towards the Barclays brand, March 2009
- Brand qualities of deposit and savings account brands
- Nationwide safest, but Barclays as competent
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- Figure 22: Personalities of various deposit and savings account brands, March 2009
- Experience of deposit and savings account brands
- Halifax most experienced, but big banks dominate
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- Figure 23: Consumer usage of various deposit and savings account brands, March 2009
- Brand intentions for deposit and savings account brands
- Nationwide most considered, Northern Rock most off-putting
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- Figure 24: Consideration of various deposit and savings account brands, March 2009
- Brand satisfaction for deposit and savings account brands
- Nationwide and The Co-operative seen as most excellent
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- Figure 25: Satisfaction with various deposit and savings account brands, March 2009
- Brand commitment to deposit and savings account brands
- Lloyds leads for loyalty
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- Figure 26: Commitment to various deposit and savings account brands, March 2009
- Round-up
Brand Communication and Promotion
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- Key points
- Savings account providers invest heavily in advertising
- Total industry adspend amounted to £100 million in 2008
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- Figure 27: Advertising expenditure on savings accounts, 2004-08
- Instant-access and regular savings accounts are heavily promoted
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- Figure 28: Advertising expenditure on savings accounts, by product categories, 2007 and 2008
- The press is the main advertising medium used by savings providers
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- Figure 29: Advertising expenditure on savings accounts, by media type, 2007 and 2008
- ING Direct tops the savings account adspend table
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- Figure 30: Advertising expenditure on savings accounts, by organisation, 2007 and 2008
Channels to Market
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- Key points
- Combined branch network has declined by a fifth in the last decade
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- Figure 31: UK bank and building society combined branch networks, 1997-2007
- Telephone and internet continue to gain in popularity
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- Figure 32: Number of personal customers registered to access accounts, by telephone and computer (MBBG only), 2002-07
- The branch will retain a key position in the distribution mix…
- …although the trend to multichannel strategies will continue
The Consumer – Product Ownership
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- Key points
- Survey background
- More than six in ten adults hold a deposit or savings account
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- Figure 33: Ownership of savings and investment products, December 2008
- Almost eight in ten ABC1 over-55s own a savings account
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- Figure 34: Savings and investment ownership, by gender, age and socio-economic group, December 2008
- A large proportion of homeowners hold a deposit account
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- Figure 35: Savings and investment ownership, by marital status, lifestage, ACORN group, working status, income and household tenure, December 2008
- Most M&S and Waitrose customers own a savings account
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- Figure 36: Savings and investment ownership, by TV region, technology users, newspaper readership and supermarket usage, December 2008
- Six in ten 35-44-year-olds hold an instant-access account
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- Figure 37: Deposit-based savings ownership, by gender, age and socio-economic group, December 2008
- A third of consumers hold more than one type of savings account
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- Figure 38: Number of types of deposit-based savings account held, by consumers, December 2008
- A quarter of the single-product group hold a cash ISA
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- Figure 39: Ownership of deposit-based savings accounts, by number of types of deposit-based savings account held, December 2008
- Almost half of instant-access account holders also own a cash ISA
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- Figure 40: Ownership of deposit-based savings accounts, by deposit-based savings products, December 2008
The Consumer – Favoured Account Providers
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- Key points
- A fifth of savers hold an account with Halifax
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- Figure 41: Proportion of adult savers who hold a deposit account with each savings provider, December 2008
- HSBC has a comparatively young customer profile
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- Figure 42: Proportion of adult savers who hold a deposit account with the leading players, by gender, age and socio-economic group, December 2008
- Nationwide has a strong bias towards ABC1 third age savers
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- Figure 43: Proportion of adult savers who hold a deposit account with the leading players, by marital status, lifestage, Mintel’s Special Groups, ACORN group and TV region, December 2008
- A fifth of broadsheet readers hold a savings account with Barclays
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- Figure 44: Proportion of adult savers who hold a deposit account with the leading players, by working status, income, household tenure, technology users and newspaper readership, December 2008
- Almost three in ten ‘wealthy’ savers hold an account with Halifax
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- Figure 45: Proportion of adult savers who hold a deposit account with the leading players, by total value of savings and investments, December 2008
The Consumer – Attitudes towards Saving
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- Key points
- Three in ten adults would save regularly if they had the cash
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- Figure 46: Level of agreement with statements about saving money, by gender, December 2008
- Highlighting ‘lifestyle’ goals could encourage young adults to save
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- Figure 47: Level of agreement with statements about saving money, by age, December 2008
- Almost a third of ABs are focused on debts rather than saving
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- Figure 48: Level of agreement with statements about saving money, by socio-economic group, December 2008
- Accessibility is the key issue for deposit account holders
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- Figure 49: Level of agreement with statements about saving money, by savings and investment ownership groups, December 2008
- Influence of interest rates rises in line with the amounts saved
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- Figure 50: Level of agreement with statements about saving money, by total value of savings and investments, December 2008
- One in five savers appreciate the convenience of online accounts
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- Figure 51: Level of agreement with statements about savings account management, by gender, December 2008
- The recession is boosting the savings habit among the 25-34s
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- Figure 52: Level of agreement with statements about savings account management, by age, December 2008
- ABs are unlikely to remain loyal to one savings provider
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- Figure 53: Level of agreement with statements about savings account management, by socio-economic group, December 2008
- Internet accounts appeal to a large minority of ‘wealthy’ savers
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- Figure 54: Level of agreement with statements about savings account management, by total value of savings and investments, December 2008
The Consumer – Targeting Opportunities
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- Key points
- Dissecting the workforce according to attitudes towards saving
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- Figure 55: Segmentation based upon consumers’ attitude towards saving, December 2008
- Debt Clearers
- Good Intentions
- Hot Targets
- Disinterested
- There are large variations in the cluster group profiles
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- Figure 56: Segmentation based upon consumers’ attitude towards saving, by gender, age, socio-economic group, lifestage, ACORN group, tenure, TV region and newspaper readership, December 2008
- Almost a third of Hot Targets are attracted to online accounts
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- Figure 57: Agreement with statements about savings account management, by typologies based upon consumers’ attitude towards saving, December 2008
- Almost four in ten Lloyds TSB customers are Hot Targets
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- Figure 58: Segmentation based upon consumers’ attitude towards saving, by savings institution, December 2008
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