Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Restoring trust by increasing transparency in the market
- Increase the functionality of online account management
Market in Brief
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- Retail savings balances increased by just 1% in 2009
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- Figure 1: Retail savings balances outstanding*, 2002-09
- The recession has reduced people’s ability to save…
- …with further downward pressure on PDI expected
- Equity-based investment is the main alternative to cash savings
- The big high street providers dominate the market
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- Figure 2: Estimated savings account market share (by volume), February 2010
- Savings adspend has increased during the credit crunch
- Online account management has boomed over the last decade
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- Figure 3: Number of registered customers, and number of online/telephone banking transactions, by transaction type (MBBG only), 2002 and 2008
- Around half of all UK adults have a savings account…
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- Figure 4: Ownership of savings, investmnets and other financial products, February 2010
- ABs and older people are likely to have more investible assets
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- Figure 5: Total value of savings and investments, February 2010
- ABs are more rate sensitive, older people are more loyal
Internal Market Environment
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- Key points
- Low interest rates have helped borrowers…
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- Figure 6: Bank of England base rate, end of quarter, Q1 1975-Q4 2009
- …and encouraged people to focus on paying off debt
- A lack of incentive for savers at present
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- Figure 7: Average monthly quoted deposit interest rates at banks and building societies, January 2005-January 2010
- Credit conditions have improved slightly
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- Figure 8: BoE base rate vs 3-month LIBOR, January 2002-January 2010
- Increased use of bonus rates and restrictions
- Greater demand for fixed-rate bonds
- FSA regulation has been extended to banking conduct
Broader Market Environment
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- Key points
- The recession has encouraged some people to save more…
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- Figure 9: Household saving ratio, seasonally adjusted, Q1 2005-Q2 2009
- …although disposable incomes have been squeezed
- An ageing population is not conducive to high savings rates…
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- Figure 10: UK population, by age bracket, 2000-15
- …but growth in the AB population is a positive
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- Figure 11: Structure of the UK population, by socio-economic group, 2004-14
- Households’ financial positions have improved of late
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- Figure 12: Households’ financial position, Q1 2009-Q1 2010
- A focus on saving and debt repayment during the recession
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- Figure 13: Consumers’ intended savings, investment, borrowing and debt repayment activity, June 2002-February 2010*
- ISA deposits and regular savings plan are top of the list
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- Figure 14: Intended cash-based saving activities, Q3/Q4 2002-Q1/Q2 2010*
Competitive Context
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- Key points
- Cash ISA subscriptions increased significantly in 2008/09
- The stockmarket rally has also encouraged investment in equities
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- Figure 16: FTSE 100 Index, end of month, January 1994-January 2010
- Stocks and shares ISA subscriptions fell in 2008/09
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- Figure 17: Stocks and shares component ISA subscriptions, 2000/01-2008/09
SWOT Analysis
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- Figure 18: Deposit and savings accounts – SWOT analysis, 2010
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Who’s Innovating?
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- Key points
- The credit crunch has reduced levels of innovation in the market
- Increased use of bonuses during the credit crunch…incentives and preferential rates…
- …as well as incentive schemes and preferential rates
- …and preferential rates for existing customers
- Investec and Nationwide use average best buy rates
Market Size and Forecast
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- Key points
- Retail savings balances increased by just 1% in 2009
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- Figure 19: Retail savings balances outstanding*, 2002-09
- People focusing on paying off debt rather than saving
- Building societies suffered in 2009
- Fixed-rate bonds became more popular during the credit crunch
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- Figure 20: Number and value of individual interest-bearing sight and time accounts (MBBG only), 2003-08
- Almost half of the population have a non-ISA savings account
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- Figure 21: Ownership of savings accounts, investments and other financial products, February 2010
- Forecast
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- Figure 22: Forecast of retail savings balances outstanding*, 2005-15
- Factors used in the forecast
Market Share
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- Key points
- The big high street providers dominate the savings market
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- Figure 23: Estimated savings account market share (by volume), February 2010
- Just 5% of savers have an account with a direct bank
Companies and Products
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- Major players
- Barclays
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- Figure 24: Savings product range of Barclays, 2010
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- Figure 25: Financials for Barclays’ UK Retail Banking business unit, 2008 and 2009
- HSBC
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- Figure 26: Savings product range of HSBC, 2010
- Figure 27: Savings product range of First Direct, 2010
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- Figure 28: HSBC financials – UK Personal Financial Services, 2007 and 2008
- Lloyds Banking Group
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- Figure 29: Savings product range of Lloyds TSB, 2010
- Figure 30: Savings product range of HBOS, 2010
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- Figure 31: Key financial data for Lloyds TSB’s retail division, 2007 and 2008
- Nationwide
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- Figure 32: Savings product range of Nationwide, 2010
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- Figure 33: Financials for Nationwide’s retail business segment, 2008 and 2009
- RBS Group
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- Figure 34: Savings product range of NatWest, 2010
- Figure 35: Savings product range of RBS, 2010
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- Figure 36: Financial data for RBS Group’s UK Retail division, 2008 and 2009
- Santander Group
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- Figure 37: Estimated retail market share of Santander, 2008 and 2009
- Figure 38: Savings product range of Santander, 2010
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- Figure 39: Key financial data for Santander, UK, 2008 and 2009
Brand Communication and Promotion
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- Key points
- Savings adspend increased substantially during the credit crunch…
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- Figure 40: Total finance and savings adspend, 2006-09
- …especially on fixed-rate bonds
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- Figure 41: Savings adspend, by sub-category, 2007-09
- Adspend on instant-access accounts has fallen considerably
- The big banks dominate when it comes to savings adspend…
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- Figure 42: Savings adspend, by top 20 advertisers, 2007-09
- …although ING Direct had the highest expenditure in 2009
- Press adverts accounted for half of total savings adspend in 2009
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- Figure 43: Savings adspend, by media type, 2007-09
Channels to Market
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- Key points
- The branch network has shrunk over the last decade
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- Figure 44: Number of branches of selected banks and building societies, 2002-08
- The changing role of the branch network
- Online banking transactions have risen considerably
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- Figure 45: Number of registered customers, and number of online/telephone banking transactions, by transaction type (MBBG only), 2002 and 2008
The Consumer – Product Ownership
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- Key points
- Around half of UK adults have a non-ISA savings account
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- Figure 46: Ownership of savings, investments and other financial products, February 2010
- Demand for fixed-rate bonds increased during the credit crunch
- Concentrating on the top end of the market
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- Figure 47: Ownership of savings and investment products, by various demographics, February 2010
The Consumer – Value of Savings and Investments
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- Key points
- A third of people have either no, or unsubstantial savings…
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- Figure 48: Total value of savings and investments, February 2010
- …while 10% of UK adults are classed as mass affluent
- Older people have a higher amount of savings and investments
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- Figure 49: Total value of savings and investments, by various demographics, February 2010
- ABs are at least three times more likely to be mass affluent
The Consumer – Choice of Savings Provider
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- Key points
- The big banks dominate the savings market…
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- Figure 50: Who people hold their savings accounts with, February 2010
- …with Lloyds Banking Group being the largest provider
- Broadsheet readers are likely to have an account with a direct bank
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- Figure 51: Who people hold their savings accounts with, by various demographics, February 2010
- Affluent consumers are more likely to save with a direct bank
- Nationwide customers are more likely to have investments
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- Figure 52: Savings, investments and other types of financial products owned, by who people hold their savings accounts with, February 2010
- Nationwide savers are more affluent
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- Figure 53: Total value of savings and investments, by who people hold their savings accounts with, February 2010
The Consumer – Attitudes towards Saving Money
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- Key points
- Consumers have been focusing on paying off debt
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- Figure 54: Attitudes towards saving money, February 2010
- Interest rates are key, but accessibility is also important
- Apathy still plays a part in the savings market
- Men are more rate-sensitive than women
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- Figure 55: Attitudes towards saving money, by various demographics, February 2010
- Young people are more likely to increase their savings this year
- ABs are more likely to be ‘rate tarts’
- Equity-based investors are wealthier, but are also more savvy
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- Figure 56: Attitudes towards saving money, by ownership of savings, investments and other financial products, February 2010
- Mass affluent consumers are a lot more difficult to retain
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- Figure 57: Attitudes towards saving money, by total value of savings and investments, February 2010
- Nationwide and Halifax savers may be less loyal
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- Figure 58: Attitudes towards saving money, by who people hold their savings accounts with, February 2010
The Consumer – Target Groups
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- Key points
- The Loyalists are most likely to have a savings account…
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- Figure 59: Ownership of savings, investments and other financial products, by target groups, February 2010
- …while The Unengaged are the least likely to own one
- High earners are more likely to be Hardcore Savers
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- Figure 60: Target groups, by various demographics, February 2010
- Retired people are more likely to be Loyalists
- The Loyalists are the most affluent group
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- Figure 61: Total value of savings and investments, by target groups, February 2010
- Direct banks appeal more to Hardcore Savers
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- Figure 62: Who people hold their savings accounts with, by target groups, February 2010
- Hardcore Savers may appeal to banks in need of retail deposits…
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- Figure 63: Attitudes towards saving money, by target groups, February 2010
- …but The Loyalists are better for customer retention
Appendix – The Consumer – Product Ownership
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- Figure 64: Most popular financial products own, by demographics, February 2010
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- Figure 65: Other financial products own, by demographics, February 2010
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Appendix – The Consumer – Value of Savings and Investments
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- Figure 66: Total value of savings and investments, by demographics, February 2010
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Appendix – The Consumer – Choice of Savings Provider
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- Figure 67: Most popular savings accounts held with, by demographics, February 2010
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Appendix – The Consumer – Attitudes towards Saving Money
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- Figure 68: Most popular attitudes towards saving money, by demographics, February 2010
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Appendix –The Consumer – Target Groups
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- Figure 69: Target groups, by demographics, February 2010
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