Table of Contents
Executive Summary
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- The market
- Mass affluent consumers account for 7.5% of the adult population
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- Figure 1: The UK wealth pyramid, based on ownership of investible assets* (excluding housing equity), 2014
- Market factors
- Introduction of CASS has turned all eyes on standard current accounts
- Impact of the RDR
- A degree of optimism is returning to the UK wealth management sector…
- …and among investors
- Companies, brands and innovation
- Major high street bank brands dominate the mass affluent sector
- Limited product innovation in the mass affluent banking sector
- 25% growth in total adspend on banking products and services in 2013/14
- Multichannel distribution mix
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- Figure 2: Channels used to access current accounts, July 2014
- The consumer
- Profile of the wealth target market
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- Figure 3: Segmentation of the wealth target market, by value of investible assets (wealth tier), July 2014
- Less than a quarter of the mass affluent have a premium bank account
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- Figure 4: Type of current account owned, July 2014
- 45% of the wealth target market have never switched their current account
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- Figure 5: Current account switching behaviour, July 2014
- Only 4% plan to switch in the next 12 months
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- Figure 6: Current account switching intentions, July 2014
- Reasons for overlooking premium accounts
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- Figure 7: Reasons for overlooking premium accounts, July 2014
- Appealing features of premium accounts
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- Figure 8: Appealing features of premium or private bank accounts, July 2014
- What we think
Issues and Insights
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- Balancing premium ‘bricks and clicks’ for the mass affluent
- The facts
- The implications
- First Direct demonstrates the power of good service
- The facts
- The implications
Trend Application
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- Make It Mine
- Return to the Experts
- Life Hacking
Market Drivers
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- Key points
- Higher earners enjoy a greater level of confidence
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- Figure 9: How respondents would describe their financial situation, by gross annual household income, September 2014
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- Figure 10: Current financial situation compared to a year ago, by gross annual household income, September 2014
- A degree of optimism is returning to the UK wealth management sector
- Opportunities to help affluent consumers to expand their investment portfolio
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- Figure 11: Affluent consumers’ saving and investment plans over the next 12 months, July 2014
- Retirement advice will be a priority for affluent consumers
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- Figure 12: Consumers’ saving and investment priorities over the next 12 months, July 2014
- Introduction of CASS has turned all eyes on standard current accounts
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- Figure 13: Consumer awareness of the Current Account Switch Services, by gross annual household income, May 2014
- Impact of the RDR
- Wealth managers and private banks behind in their compliance
- UK banks leaving the advice market…but will they return?
- How are consumers affected?
- FCA targets wealth managers and private banks with new division
Who’s Innovating?
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- Key points
- Technology advances in the mass affluent sector
- From voice recognition technology…
- …to finger vein authentication technology
- Banks introducing Wi-Fi in branches
- US banks using PFM tools to attract the mass affluent: grounds for inspiration for the UK?
Market Size
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- Key points
- Total target market covers 13% of the UK adult population
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- Figure 14: The UK wealth pyramid, based on ownership of investible assets* (excluding housing equity), 2014
- Mass affluent consumers account for 7.5% of the adult population
- Only 23% of mass affluent consumers have a premium account
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- Figure 15: Type of current account owned, by wealth tier, July 2014
Market Share
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- Key points
- Major high street bank brands dominate the mass affluent sector
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- Figure 16: Main current account provider, by segmentation of the wealth market, July 2014
- First Direct shows the value of service to premium customers
- Multiple current account ownership among the more affluent
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- Figure 17: Provider of main current account and other/secondary accounts, July 2014
- Coutts and Barclays Wealth lead the way in the UK wealth management sector
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- Figure 18: Top 15 wealth managers, by assets under management (AUM) and number of client accounts, UK, 2012 and 2013
Companies and Products
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- Barclays
- Company description
- Branch network
- Mass retail proposition
- Premium proposition for the mass affluent
- Private banking for HNW
- Recent financial performance
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- Figure 19: Key annual financial data for Barclays Plc, 2012 and 2013
- Recent activity
- Citibank
- Company description
- Branch network
- Premium proposition for the mass affluent
- Private banking for HNW
- Recent financial performance
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- Figure 20: Key annual financial data for Citigroup’s Global Consumer Banking division and EMEA Regional Consumer Banking, 2012 and 2013
- Recent activity
- HSBC
- Company description
- Branch network
- Mass retail proposition
- Premium proposition for the mass affluent
- Private banking for HNW
- Recent financial performance
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- Figure 21: Key annual financial data for HSBC Bank Plc, 2012 and 2013
- Recent activity
- Lloyds Banking Group
- Company description
- Branch network
- Mass retail proposition
- Premium proposition for the mass affluent
- Private banking for HNW
- Recent financial performance
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- Figure 22: Key annual financial data for Lloyds Banking Group, 2012 and 2013
- Recent activity
- RBS Group
- Company description
- Branch network
- Mass retail proposition
- Premium proposition for the mass affluent
- Private banking for HNW
- Recent financial performance
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- Figure 23: Key annual financial data for RBS Group, 2012 and 2013
- Recent activity
- Santander
- Company description
- Branch network
- Mass retail proposition
- Private banking for HNW
- Recent financial performance
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- Figure 24: Key annual financial data for Santander UK, 2012 and 2013
- Recent activity
Brand Communication and Promotion
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- Key points
- 25% growth in total adspend on banking products and services in 2013/14
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- Figure 25: Total advertising expenditure on banking and asset management products and services, by product category, 2009/10-2013/14
- Lloyds Bank takes the lead in advertising expenditure
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- Figure 26: Top five advertisers of packaged/premium accounts and mass-market wealth management services, 2009/10-2013/14
- TV and press advertising dominate the packaged, premium and mass affluent banking market
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- Figure 27: Share of advertising expenditure on packaged/premium accounts and mass-market wealth management, by media type, 2011/12-2013/14 (12 months to 31 July)
- A note on adspend
Channels to Market
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- Key points
- Mass affluent customers desire multiple access points…
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- Figure 28: Channels used to access current accounts, July 2014
- …and hence a multichannel solution
- Having an extensive branch network remains an advantage
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- Figure 29: Approximate number of branches operated, by top five retail banking groups, 2012 and 2013
Profile Analysis of the Wealth Target Market
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- Key points
- Survey background
- Segmenting respondents according to wealth
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- Figure 30: Segmentation of the wealth target market, by value of investible assets (wealth tier), July 2014
- Demographic profile of the wealth target market
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- Figure 31: Demographic profile of wealth target market, by wealth tier, July 2014
- The wealth target market is not homogeneous
- Saving and investment product ownership across wealth tiers
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- Figure 32: Ownership of savings and investment products, by wealth tier, July 2014
Current Account Ownership
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- Key points
- Less than a quarter of the mass affluent have a premium bank account
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- Figure 33: Type of current account owned, July 2014
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- Figure 34: Type of current account owned, by wealth tier, July 2014
- The need to reach people who do not feel ‘rich’
- Multiple account ownership among the more affluent
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- Figure 35: Type of current account owned, by top three most popular types of account, July 2014
- 25-44-year-olds most likely to own a premium account
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- Figure 36: Type of current account owned, by age, July 2014
- Premium account holders are most likely to be customers of Barclays or HSBC
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- Figure 37: Main current account provider, by type of current account owned, July 2014
Current Account Switching Behaviour
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- Key points
- 45% of the wealth target market have never switched their current account
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- Figure 38: Current account switching behaviour, July 2014
- Similar switching behaviour observed across the wealth tiers
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- Figure 39: Current account switching behaviour, by wealth tier, July 2014
- Half of over-65s have never switched accounts
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- Figure 40: Current account switching behaviour, by age, July 2014
- Packaged account holders are more likely to have switched
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- Figure 41: Current account switching behaviour, by type of account held, July 2014
Consumer Intentions Regarding Switching
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- Key points
- Only 4% plan to switch in the next 12 months
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- Figure 42: Current account switching intentions, July 2014
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- Figure 43: Current account switching intentions, by wealth tier, July 2014
- Previous switchers are more likely to consider switching again
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- Figure 44: Current account switching intentions, by past switching behaviour, July 2014
- Premium or private account holders least likely to switch in the future
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- Figure 45: Current account switching intentions, by type of current account, July 2014
Reasons for Overlooking Premium Accounts
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- Key points
- More than two in five affluent consumers are happy with their existing current account
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- Figure 46: Reasons for overlooking premium accounts, July 2014
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- Figure 47: Reasons for overlooking premium accounts, by wealth tier, July 2014
- 8% have never looked into premium or private accounts
- More than a third of affluent adults are not willing to pay for current accounts
- Some affluent consumers cannot see the value of fee-charging accounts
Appealing Features of Premium Accounts
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- Key points
- Affluent consumers consider travel benefits most appealing
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- Figure 48: Appealing features of premium or private bank accounts, July 2014
- Preferential access to bank staff valued particularly by frequent users of in-branch counter services
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- Figure 49: Appealing features of premium or private bank accounts, by frequency of in-branch counter services usage, July 2014
- Premium features considered appealing even among non-fee-charging current account holders
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- Figure 50: Appealing features of premium or private bank accounts, by type of current account held, July 2014
- A risk of accusations of mis-selling
- Little disparity across the wealth tiers
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- Figure 51: Appealing features of premium or private bank accounts, by wealth tier, July 2014
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