Table of Contents
Introduction
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- Note on consumer research
- Abbreviations
Executive Summary
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- The market
- Product ownership and cross-selling
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- Figure 1: Product holding and cross-sales of selected retail banking products, August 2011
- Limited appetite for account switching
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- Figure 2: Switching intentions and customer satisfaction, August 2011
- Market factors
- A difficult economic backdrop
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- Figure 3: Monthly, three-monthly and 12-monthly UK consumer confidence indices, January 1997-August 2011
- Considerable regulatory change on the horizon
- Companies, brands and innovation
- Lloyds TSB is the leading current account provider
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- Figure 4: Main current account provider, by individual brand, August 2011
- Trust in banking brands remains low
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- Figure 5: Attitudes towards and usage of retail banking brands, August 2011
- The consumer – retail banks and financial advice
- Savings are the most popular area for financial advice
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- Figure 6: Type of advice sought from main bank, August 2011
- Confidence in bank advice differs between products
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- Figure 7: Perceptions of the standard of advice offered by banks, by product, August 2011
- Less than one in ten have received poor financial advice from a bank
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- Figure 8: Experience of and attitudes towards banks and financial advice, August 2011
- Limited product range is one of the main concerns about bank advice
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- Figure 9: Attitudes towards banks and financial advice, August 2011
- Bank advice is widely seen as sales-driven
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- Figure 10: Words associated with banks as a source of financial advice, August 2011
- What we think
Issues in the Market
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- How satisfied are people with their bank?
- Which customers are more likely to switch banking providers?
- Are people happy with the financial advice offered by banks?
- In what product areas are consumers most confident about bank-based advice?
- How important are online channels in delivering financial advice?
Future Opportunities
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- Taking bank advice to the community
- Should retail banks follow the example of B&Q?
Economic and Regulatory Environment
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- Key points
- UK economy weakens amid ongoing uncertainty
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- Figure 11: UK GDP growth – percentage change, latest quarter on previous quarter, Q1 2008-Q2 2011
- Unemployment holds steady at around 2.5 million
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- Figure 12: UK unemployment, number unemployed aged 16+, January 2000-August 2011
- Savings ratio falls as household budgets are squeezed
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- Figure 13: Household saving ratio, Q1 2008-Q1 2011
- House prices remain flat
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- Figure 14: Average UK house prices, January 2002-August 2011
- Regulation/Legislative issues
- The ICB report
- Ring-fencing retail banking
- Increase in capital requirements
- A competitive retail banking sector
- Other divestment activity
- New structure for the financial services regulation
Retail Banks and Financial Advice – Background
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- Key points
- Bank staff are still a key channel for financial advice
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- Figure 15: Main sources of financial advice used, March 2011
- The changing landscape of financial advice – the RDR
- RDR is causing a dilemma for banks
- Some banks have already chosen to scale back financial advice services
The Interest Rate Effect
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- Key points
- Continued low interest rates
- Margins have widened in the mortgage market
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- Figure 16: Average quoted household mortgage rates, January 2006-July 2011
- Consumer credit rates have risen
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- Figure 17: Average quoted consumer credit rates, January 2006-July 2011
- Margins under pressure in the savings market
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- Figure 18: Average quoted rates for instant-access savings, cash ISA and fixed-rate bonds, January 2006-July 2011
Consumer Sentiment
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- Key points
- Consumer confidence falls in 2011
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- Figure 19: Monthly, three-monthly and 12-monthly UK consumer confidence indices, January 1997-August 2011
- UK households face income squeeze
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- Figure 20: RPI and average weekly earnings, 2005-11
- Two fifths have seen financial position deteriorate over the last year
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- Figure 21: Consumer financial position compared to 12 months ago, August 2011
- Only a fifth of adults feel their financial situation is healthy
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- Figure 22: Current consumer financial situation, August 2011
Segment Performance
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- Key points
- Current accounts remain the key battleground for retail banks
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- Figure 23: Number of active current account holders and number of current accounts, 2008-11
- Only a minority switch current account providers
- Potential changes on the horizon
- Retail savings balances have plateaued
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- Figure 24: Outstanding retail savings balances, 2005-11
- ISA sales boosted by increase in subscription limits
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- Figure 25: Number of ISAs and amounts subscribed, by type, 1999/2000-2010/11
- Demand for unsecured lending remains weak
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- Figure 26: Unsecured lending, January 2000-July 2011
- Mortgage market shows little prospect of growth
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- Figure 27: Gross mortgage lending, January 2000-July 2011
- General insurance – a mixed picture
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- Figure 28: Premium analysis UK, by selected classes of business, 2005/06-2009/10
Retail Banking Providers
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- Key points
- Lloyds TSB retains top spot in the current account market
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- Figure 29: Main current account provider, by individual brand, August 2011
- Three in ten have a Lloyds Banking Group current account
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- Figure 30: Main current account provider at group level, August 2011
Company Profiles
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- Barclays
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- Figure 31: Key financial data for Barclays Plc (& UK Retail Banking Division), 2009 and 2010
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- Figure 32: Key data for Barclays Plc (UK Retail and Business Banking division), 2009-11*
- RBS
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- Figure 33: Key financial data for RBS Group (UK Retail Banking Division), 2009-10 and H1 2010-11
- Figure 34: Key data for RBS Group (UK Retail Banking Division), 2009 and 2010
- HSBC
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- Figure 35: Key financial data for HSBC plc (UK Retail Banking Division), 2009-10 and H1 2010-11
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- Figure 36: Key data for HSBC plc (UK Retail Banking Division), 2009 and 2010
- Nationwide
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- Figure 37: Key financial data of Nationwide, 2010 and 2011
- Santander
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- Figure 38: Key financial data for Santander UK plc (Retail Banking Division), 2009 and 2010
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- Figure 39: Key data for Santander UK plc (Retail Banking Division), 2009 and 2010
- Lloyds Banking Group
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- Figure 40: Key financial data of Lloyds Banking Group (Retail Banking Division), 2009 and 2010
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- Figure 41: Key data of Lloyds Banking Group (Retail Banking Division), 2009-10 and H1 2010-11
Brand Research
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- Brand map
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- Figure 42: Attitudes towards and usage of retail banking brands, August 2011
- Brand attitudes
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- Figure 43: Attitudes, by retail banking brand, August 2011
- Brand personality
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- Figure 44: Retail banking brand personality – macro image, August 2011
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- Figure 45: Retail banking brand personality – micro image, August 2011
- Correspondence analysis
- Brand experience
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- Figure 46: Retail banking brand usage, August 2011
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- Figure 47: Satisfaction with various retail banking brands, August 2011
- Figure 48: Satisfaction with various retail banking brands, August 2011
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- Figure 49: Consideration of retail banking brands, August 2011
- Figure 50: Consumer perceptions of current retail banking brand performance, August 2011
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- Figure 51: Retail banking brand recommendation – Net Promoter Score, August 2011
- Brand index
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- Figure 52: Retail banking brand index, August 2011
- Figure 53: Retail banking brand index vs. recommendation, August 2011
- Target group analysis
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- Figure 54: Target groups, August 2011
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- Figure 55: Retail banking brand usage, by target groups, August 2011
- Figure 56: Further retail banking brand usage, by target groups, August 2011
- Group One – Conformists
- Group Two – Simply the Best
- Group Three – Shelf Stalkers
- Group Four – Habitual Shoppers
- Group Five – Individualists
Retail Banking Channels – Consumer Usage
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- Key points
- Three in ten use internet banking at least once a week
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- Figure 57: Channels and frequency used to access banking services, 2011
- Internet is increasingly used for a range of day-to-day banking services
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- Figure 58: Methods used to access banking services, 2007-11
- Bank branches are still preferred channel for financial advice
- Mobile banking usage is showing strong growth
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- Figure 59: Use of mobile banking services, 2010 and 2011
Product Ownership and Cross-Selling
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- Key points
- 1.9 financial products are held with existing current account provider
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- Figure 60: Product holding and cross-sales, August 2011
- Savings products are main source of cross-sales
- Main banking providers have an advantage in consumer credit markets
- Scope to improve cross-sales to current account holders
- Four fifths have arranged at least one additional product with their bank
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- Figure 61: Number of financial products arranged with main current account provider and other providers, August 2011
- Figure 62: Product holding and cross-sales, by repertoire of products with current account provider, August 2011
- Halifax leads the way in bank cross-sales
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- Figure 63: Repertoire of products with current account provider, by main current account provider, August 2011
- Figure 64: Repertoire of products with current account provider, by main current account provider, August 2011
Switching and Satisfaction
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- Key points
- Majority of current account holders are happy with their main bank
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- Figure 65: Switching intentions and customer satisfaction, August 2011
- Which consumers are the most content with their bank?
- Under-35s are more likely to switch banking provider
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- Figure 66: Switching intentions and switching activity, by age, August 2011
- Which banks have the happiest customers?
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- Figure 67: Switching intentions and customer satisfaction, by most popular main current account provider, August 2011
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- Figure 68: Switching intentions and customer satisfaction, by next most popular main current account provider, August 2011
- And where is there room for improvement?
- Link between product ownership and customer satisfaction
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- Figure 69: Switching intentions and customer satisfaction, by repertoire of products with current account provider, August 2011
Retail Banks and Advice – Type of Advice Sought
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- Key points
- One in four have received savings-related advice from their bank
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- Figure 70: Type of advice sought from main bank, August 2011
- Scope to expand bank advice services?
- Under-35s are more likely to turn to their bank for advice
- Barclays customers are more likely to turn to bank for advice
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- Figure 71: Type of advice sought from main bank, by most popular main current account provider, August 2011
- Figure 72: Type of advice sought from main bank, by next most popular main current account provider, August 2011
- 12% have turned to bank for advice on three or more products
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- Figure 73: Repertoire of financial products/services where advice has been sought from main bank, August 2011
- Figure 74: Type of advice sought from main bank, by repertoire of financial products where advice has been sought from main bank, August 2011
Retail Banks and Advice – Preferred Channels
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- Key points
- Branches are the most popular way to access bank advice...
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- Figure 75: Preferred channel for financial advice, August 2011
- ...but there is appetite for online advice among some groups
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- Figure 76: Preferred channel for financial advice, by age, August 2011
- RDR will have an impact on in-branch advice but only in some areas
- Current account switchers are more likely to turn to internet for advice
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- Figure 77: Preferred channel for financial advice, by switching intentions and customer satisfaction, August 2011
Retail Banks and Advice – Experience and Preferences
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- Key points
- More than two fifths prefer to do their own financial research
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- Figure 78: Experience of and attitudes towards banks and financial advice, August 2011
- Reasonable level of satisfaction with bank-based financial advice
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- Figure 79: Agreement with statement ‘I am happy with the financial advice I have received from a bank’, by age, August 2011
- Link between financial advice experience and customer satisfaction
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- Figure 80: Switching intentions and customer satisfaction, by most popular experience of and attitudes towards banks and financial advice, August 2011
- Self-directed financial research is driven by cynicism towards banks
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- Figure 81: Switching intentions and customer satisfaction, by next most popular experience of and attitudes towards banks and financial advice, August 2011
- Santander and Nationwide customers are most likely to avoid bank-based advice
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- Figure 82: Experience of and attitudes towards banks and financial advice, by main current account provider, August 2011
- Figure 83: Experience of and attitudes towards banks and financial advice, by main current account provider, August 2011
Retail Banks and Advice – Consumer Perceptions by Product Type
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- Key points
- Consumers are most confident about savings-related bank advice…
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- Figure 84: Perceptions of the standard of advice offered by banks, by product, August 2011
- …but there is room for improvement in other product areas
- Pensions are not identified with retail banking channels
- Has the PPI scandal undermined confidence in consumer credit advice?
- Experience tends to boost perceptions of the standard of advice
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- Figure 85: Standard of advice offered by banks, by product, by most popular type of advice sought from main bank, August 2011
- Figure 86: Standard of advice offered by banks, by product, by next most popular type of advice sought from main bank, August 2011
- Bank advice sceptics are most concerned about investment, pension and protection advice
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- Figure 87: Standard of advice offered by banks, by product, by most popular experience of and attitudes towards banks and financial advice, August 2011
Retail Banks and Advice – General Attitudes and Perceptions
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- Key points
- A restricted product range is the main concern for consumers
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- Figure 88: Attitudes towards banks and financial advice, August 2011
- One in four have concerns about the standard of bank advice
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- Figure 89: Attitudes towards the standard of bank advice, by annual household income, August 2011
- A more convenient location?
- Concerns about quality increase with experience of bank advice
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- Figure 90: Attitudes towards banks and financial advice, by repertoire of financial products where advice has been sought from main bank, August 2011
- Account switchers are more likely to appreciate more flexible advice locations
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- Figure 91: Attitudes towards banks and financial advice, by switching intentions and customer satisfaction, August 2011
- More than 50% see bank-related financial advice as sales-driven
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- Figure 92: Words associated with banks as a source of financial advice, August 2011
- Sales-driven culture prevents some from seeking financial advice
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- Figure 93: Words associated with banks as a source of financial advice, by experience of and attitudes towards banks and financial advice, August 2011
- Convenience is highlighted by frequent advice users
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- Figure 94: Words associated with banks as a source of financial advice, by repertoire of financial products where advice has been sought from main bank, August 2011
Retail Banks and Advice – Targeting Opportunities
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- Key points
- Almost a third are Bank advice advocates
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- Figure 95: Target groups for attitudes towards banks and financial advice, August 2011
- Bank advice advocates
- Sales pressure worriers
- Bank advice critics
- The Indifferent
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- Figure 96: Words associated with banks as a source of financial advice, by target groups, August 2011
Appendix – Background Data
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- Figure 97: Write-offs of loans to individuals, 2005-10
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Appendix – Retail Banking Providers
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- Figure 98: Most popular main current account provider, by demographics, August 2011
- Figure 99: Next most popular main current account provider, by demographics, August 2011
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Appendix – Brand Research
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- Figure 100: Brand usage, August 2011
- Figure 101: Brand commitment, August 2011
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- Figure 102: Brand momentum, August 2011
- Figure 103: Brand diversity, August 2011
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- Figure 104: Brand satisfaction, August 2011
- Figure 105: Brand recommendation, August 2011
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- Figure 106: Brand attitude, August 2011
- Figure 107: Brand image, August 2011
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- Figure 108: Brand image – micro image, August 2011
- Figure 109: Profile of target groups, by demographics, August 2011
- Figure 110: Psychographic segmentation, by target group, August 2011
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- Figure 111: Brand usage, by target group, August 2011
- Brand index
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- Figure 112: Brand index, August 2011
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Appendix – Product Ownership and Cross-selling
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- Figure 113: Savings account ownership, owned/arranged with current account and with other provider, by demographics, August 2011
- Figure 114: Cash ISA ownership, owned/arranged with current account and with other provider, by demographics, August 2011
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- Figure 115: Any stock market-based investment product ownership, owned/arranged with current account and with other provider, by demographics, August 2011
- Figure 116: Credit card ownership, owned/arranged with current account and with other provider, by demographics, August 2011
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- Figure 117: Unsecured personal loan ownership, owned/arranged with current account and with other provider, by demographics, August 2011
- Figure 118: Mortgage ownership, owned/arranged with current account and with other provider, by demographics, August 2011
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- Figure 119: Life insurance ownership, owned/arranged with current account and with other provider, by demographics, August 2011
- Figure 120: Home insurance (any type) ownership, owned/arranged with current account and with other provider, by demographics, August 2011
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- Figure 121: Car insurance ownership, owned/arranged with current account and with other provider, by demographics, August 2011
- Figure 122: Income protection/critical illness cover ownership, owned/arranged with current account and with other provider, by demographics, August 2011
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Appendix – Switching and Satisfaction
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- Figure 123: Agreement with statements about switching intentions and customer satisfaction, by demographics, August 2011
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Appendix – Retail Banks and Advice – Type of Advice Sought
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- Figure 124: Most popular type of advice sought from main bank, by demographics, August 2011
- Figure 125: Next most popular type of advice sought from main bank, by demographics, August 2011
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Appendix – Retail Banks and Advice – Preferred Channels
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- Figure 126: Preferred channel for financial advice, by demographics, August 2011
- Figure 127: Preferred channel for financial advice, by most popular main current account provider, August 2011
- Figure 128: Preferred channel for financial advice, by next most popular main current account provider, August 2011
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Appendix –Retail Banks and Advice – Experience and Preferences
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- Figure 129: Most popular experience of and attitudes towards banks and financial advice, by demographics, August 2011
- Figure 130: Next most popular experience of and attitudes towards banks and financial advice by demographics, August 2011
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Appendix – Retail Banks and Advice – Consumer Perceptions by Product Type
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- Figure 131: Perceptions of the standard of advice offered by banks, by product, August 2011
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- Figure 132: Perceptions of the standard of advice offered by banks, by product, by most popular main current account provider, August 2011
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- Figure 133: Perceptions of the standard of advice offered by banks, by product, by next most popular main current account provider, August 2011
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- Figure 134: Standard of savings accounts/cash ISAs advice offered by banks, by demographics, August 2011
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- Figure 135: Standard of longer-term investment advice offered by banks, by demographics, August 2011
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- Figure 136: Standard of pensions advice offered by banks, by demographics, August 2011
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- Figure 137: Standard of credit cards advice offered by banks, by demographics, August 2011
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- Figure 138: Standard of personal loans (unsecured) advice offered by banks, by demographics, August 2011
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- Figure 139: Standard of mortgage advice offered by banks, by demographics, August 2011
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- Figure 140: Standard of life insurance advice offered by banks, by demographics, August 2011
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- Figure 141: Standard of home insurance advice offered by banks, by demographics, August 2011
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- Figure 142: Standard of critical illness/income protection advice offered by banks, by demographics, August 2011
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- Figure 143: Standard of general financial management advice offered by banks, by demographics, August 2011
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Appendix – Retail Banks and Advice – General Attitudes and Perceptions
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- Figure 144: Attitudes towards banks and financial advice, by demographics, August 2011
- Figure 145: Most popular words associated with banks and financial advice, by demographics, August 2011
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- Figure 146: Other words associated with banks and financial advice, by demographics, August 2011
- Figure 147: Other words associated with banks and financial advice, by demographics, August 2011
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- Figure 148: Words associated with banks as a source of financial advice, by switching intentions and customer satisfaction, August 2011
- Figure 149: Words associated with banks as a source of financial advice, by attitudes towards banks and financial advice, August 2011
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Appendix – Retail Banks and Advice – Targeting Opportunities
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- Figure 150: Target groups, by demographics, August 2011
- Figure 151: Preferred channel for financial advice, by target groups, August 2011
- Figure 152: Switching intentions and customer satisfaction, by target groups, August 2011
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- Figure 153: Type of advice sought from main bank, by target groups, August 2011
- Figure 154: Main current account provider, by target groups, August 2011
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