Table of Contents
Overview
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- What you need to know
Executive Summary
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- The market
- Retail deposits reached a total of £1.3 trillion in 2015
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- Figure 1: Total value of retail savings deposits from UK households and % change year-on-year, 2006-15
- Interest rates continue to fall
- Cash products soar in value
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- Figure 2: Value of new adult ISA subscriptions, 2010/11-2014/15
- Savings ratio is lowest since records began
- More than half of customers arrange savings accounts online
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- Figure 3: Method used to arrange a savings account in the last three years, April 2015
- Key players
- Lloyds Banking Group retains top position despite fall in market share
- NS&I now holds 10% of the savings market share
- New challenger banks keep savings market afloat with competitive rates
- The consumer
- 23% of people have no savings or investments
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- Figure 4: Value of savings, April 2016
- Easy/instant-access accounts most popular
- Nearly half of adults own multiple savings products
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- Figure 5: Number of savings products held, April 2016
- One in four is unaware of the new PSA
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- Figure 6: Consumer awareness of the new personal savings allowance, April 2016
- Nearly half of savers are not motivated by new PSA
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- Figure 7: Impact of the new personal savings allowance, April 2016
- One in four is putting extra money into current accounts
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- Figure 8: Alternatives to saving, April 2016
- Millennials are most likely to be spending rather than saving
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- Figure 9: Alternatives to saving, by generation, April 2016
- Consumers show willingness to switch provider
- What we think
Issues and Insights
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- Consumers show willingness to switch provider, but lack any real incentive to shop around
- The facts
- The implications
- Personal Financial Management (PFM) apps are key to making saving more relevant to everyday life
- The facts
- The implications
- Millennials are the least engaged in the savings market, but most eager to increase their savings
- The facts
- The implications
The Market – What You Need to Know
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- Retail deposits reached a total of £1.3 trillion in 2015
- Interest rates continue to fall
- Cash ISA products soar in value
- Savings ratio is lowest since records began
- More than half of customers arrange savings accounts online
Market Size and Forecast
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- Retail savings deposits climbed to £1.3 trillion in 2015
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- Figure 10: Total value of retail savings deposits from UK households and % change year on year, 2006-15
- Retail savings balances expected to reach £1.6 trillion by 2021
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- Figure 11: Forecast of retail savings balances, 2011-21
- Figure 12: Forecast of retail savings balances, fan chart at current prices, 2011-21
- Forecast methodology
Channels to Market
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- More than half of customers arrange savings accounts online
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- Figure 13: Method used to arrange a savings account in the last three years, April 2015
- Vast majority arrange directly with bank/building society
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- Figure 14: Savings account purchase agent, April 2015
- Direct and online advice sources on par
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- Figure 15: Savings account first point of contact, April 2015
Market Drivers
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- Interest rates continue to fall
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- Figure 16: Average monthly quoted interest rates of UK monetary financial institutions (excluding Central Bank), not seasonally adjusted, January 2012-16
- Cash ISA products soar in value
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- Figure 17: Value of new adult ISA subscriptions, 2010/11-2014/15
- Wages exceed inflation for first time since 2009
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- Figure 18: Monthly change in RPI and average weekly earnings (regular pay, excluding bonuses), January 2010-January 2016
- Consumer confidence edges upwards
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- Figure 19: Financial confidence index, January 2011-16
- Savings ratio is lowest since records began
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- Figure 20: Gross household savings and savings ratio, seasonally adjusted at current prices, 2005-15
Regulatory and Legislative Changes
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- New Personal Savings Allowance (PSA) took effect in April 2016
- Government announces Help to Save scheme for low-income workers
- FCA launched consultation on cash savings market in January 2015
- Changes to NS&I Products
- Government budgets introduce changes to ISA market
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- Figure 21: Summary of changes made to ISAs and their potential impacts on the market, May 2016
Key Players – What You Need to Know
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- Lloyds Banking Group retains top position despite fall in market share
- NS&I now holds 10% of the savings market share
- New challenger banks keep savings market afloat with competitive rates
- Brand building continues to boost advertising expenditure
Market Share
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- Lloyds Banking Group retains top position despite fall in market share
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- Figure 22: Big providers’ total retail savings balances, shown on a group basis, UK 2014-15
- Halifax and Nationwide are market leaders
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- Figure 23: Ranking of the largest group providers of each savings product, by proportion of customers, April 2016
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- Figure 24: Market share of selected providers, by proportion of customers, April 2016
- NS&I now holds 10% of the savings market share
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- Figure 25: Retail savings balances from households and market share, by sector, 2010-15
Competitive Strategies
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- Account closures and rate cutting
- Simplification of product ranges
- New challenger banks keep savings market afloat with competitive rates
- Personalisation
- Gamification to help people save
- Making saving social
- Rewarding loyal customers
- Mobile improvements
Launch Activity and Innovation
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- Personal Financial Management (PFM) apps
- Social saving apps
- Neobanks offer a new banking format to savings customers
- Yorkshire BS launches new Single Access Savings account
- Skipton Building Society launches Special Edition Tracker
- Peer-to-peer investing offers an alternative to savers
Advertising and Marketing Activity
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- Brand building continues to boost advertising expenditure
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- Figure 26: Total above-the line, online display and direct mail advertising expenditure on cash savings products, by product type 2012/13-2015/16
- Key player expenditure shifts dramatically
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- Figure 27: Top ten advertisers of cash savings products (excluding cash ISAs and children’s saving products), 2013-16
- Advertisers direct 84% of content towards TV and press
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- Figure 28: Total advertising expenditure on cash savings products (excluding cash ISAs and children’s savings products), by media type, 2015/16 (12 months to 31 March)
- Nielsen Media Research coverage
The Consumer – What You Need to Know
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- 23% of people have no savings or investments
- Easy- or instant-access accounts are the most popular
- Nearly half of adults own multiple savings products
- One in four is unaware of the new PSA
- One in four is putting extra money into their current account
- Millennials are most likely to be spending rather than saving
Value of Savings and Investments
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- 23% of people have no savings or investments
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- Figure 29: Value of savings and investments, April 2016
- Parents of adult children living at home are most likely to have no savings
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- Figure 30: Value of savings and investments, by age of children/step-children living in household, April 2016
- Single dwellers are most likely to have no savings
Ownership of Savings Products
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- Easy-access or instant access accounts are the most popular
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- Figure 31: Ownership of cash savings accounts, by type, April 2016
- Baby Boomers and Swing Generation are most likely to have NS&I products
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- Figure 32: Ownership of national savings products, by generation, April 2016
- Likelihood to open notice or fixed- accounts increases in line with value of savings
Number of Savings Products Held
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- Nearly half of adults own multiple savings products
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- Figure 33: Number of savings products held, April 2016
- Cash ISAs and easy-access accounts continue to dominate among multiple account holders
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- Figure 34: Ownership of savings products, by number of saving product types held, April 2016
Awareness and Understanding of Changes to the Personal Savings Allowance
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- One in four is unaware of the new PSA
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- Figure 35: Consumer awareness of the new personal savings allowance, April 2016
- Understanding gap exists in relation to new PSA
- Retirees are most likely to be aware and understand meaning of change
- Younger Millennials are least engaged with savings market
Impact of the New Personal Savings Allowance
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- Nearly half of savers are not motivated by new PSA
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- Figure 36: Impact of new Personal Savings Allowance, April 2016
- One in ten is planning to save less in their cash ISA as a result of PSA
- 18-34-year-olds are most likely to be planning to increase savings
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- Figure 37: Impact of the new personal savings allowance, by age group, April 2016
Alternatives to Saving
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- One in four is putting extra money into their current account
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- Figure 38: Alternatives to saving, April 2016
- 18-34-year-olds are most likely to be investing as an alternative to saving
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- Figure 39: Alternatives to saving, by age group, April 2016
- Millennials are most likely to be spending rather than saving
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- Figure 40: Alternatives to saving, by generation, April 2016
- Nearly half of savers are not finding alternative uses for their disposable income
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- Figure 41: Number of alternatives to saving, by value of savings and investments, April 2016
- People in Inner & Greater London are most likely to have 3+ alternative uses for their savings
Approaches to Exploring New Accounts
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- Consumers show willingness to switch provider
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- Figure 42: Behaviours when exploring savings options, April 2016
- Older people are less likely to move savings to a different provider
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- Figure 43: Likelihood to move savings to another provider for a better rate, by age group, April 2016
- Younger people are most likely to consider introductory bonuses
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- Figure 44: Likelihood to consider introductory bonuses, by age group, April 2016
- People with £20,000-49,000 in savings are most likely to use PFM apps
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- Figure 45: Likelihood to use Personal Financial Management apps, by value of savings, April 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Products covered in this report
- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Forecast – Retail savings balances
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- Figure 46: Best- and worst-case forecast for the value of total retail savings balances, 2016-21
- Forecast methodology
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