Table of Contents
Executive Summary
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- The market
- Number of current accounts continues to rise
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- Figure 1: Estimated number of current accounts, 2014-16
- Growth in UK population drives increase in current account ownership
- Large margins on overdraft lending sustained in 2015
- Current account switching reaches peak high in 2016
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- Figure 2: Number of switches per month since launch of CASS, September 2013-April 2016
- CMA publishes findings of Retail Banking Market Investigation
- Companies and brands
- Lloyds Banking Group is the largest current account provider in the UK
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- Figure 3: Current account providers, by share of main and other current account market, May 2016
- Santander and Halifax continue to be biggest winners of CASS
- Competition heats up in the current accounts market
- Nationwide is most highly recommended and trusted brand
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- Figure 4: Attitudes towards and usage of selected financial services brands, May 2016
- The consumer
- Current account ownership is near universal
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- Figure 5: Number of current accounts owned, May 2016
- One in seven has a fee-paying/paid for account
- More than a third have switched their main current account provider
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- Figure 6: Current account switching activity, May 2016
- Half of population have been with same provider for more than a decade
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- Figure 7: Current account tenure, May 2016
- A better interest rate is the most persuasive incentive to switch
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- Figure 8: Influential factors when switching current account provider, May 2016
- Two in five would be interested in a personalised account comparison service
- 83% are happy with their existing current account provider
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- Figure 9: Attitudes towards current account providers, May 2016
- Consumers lack understanding of charges applied to current accounts
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- Figure 10: Attitudes towards fees and charges
- What we think
Issues and Insights
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- Parents of under-16s are a key target for customisation
- The facts
- The implications
- Lifestyle benefits have the potential to differentiate
- The facts
- The implications
- The online and mobile-only concept for banking is now more accepted than not
- The facts
- The implications
The Market – What You Need to Know
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- Number of current accounts continues to rise
- UK population continues to escalate in 2015
- Large margins on overdraft lending sustained in 2015
- Current account switching reaches peak high in 2016
- More than half show acceptance for digital-only banking services
- CMA publishes findings of Retail Banking Market Investigation
Market Size
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- Number of current accounts continues to rise
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- Figure 11: Estimated number of current accounts, 2014-16
Channels to Market
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- Almost 50/50 split between online and in-person for account opening
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- Figure 12: Method used to arrange current accounts in the last three years, April 2015
- Consultations with branch staff are still valued by many
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- Figure 13: Information sources used to research current accounts before purchase, April 2015
- More than half show acceptance for digital-only banking services
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- Figure 14: Consumer appetite for online and mobile-only banking, May 2016
Market Drivers
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- UK population continues to escalate in 2015
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- Figure 15: United Kingdom population mid-year estimate, 2008-15
- Large margins on overdraft lending sustained in 2015
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- Figure 16: Monthly interest rate of UK monetary financial institutions sterling overdraft for households – Not seasonally adjusted, January 2010-March 2016
- Current account switching reaches peak high in 2016
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- Figure 17: Number of switches per month since launch of CASS, September 2013-April 2016
- Complaints about current accounts continue to mount
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- Figure 18: Number of new complaints about current accounts to the FOS, 2013/14-2015/16
Regulatory and Legislative Environment
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- Competition and Markets Authority (CMA) publishes findings of Retail Banking Market Investigation
- Open Application Programming Interface (API) plans
- Interest earnt on current account balances comes under the new PSA
- European Commission launches consultation on retail financial services
- The EU’s new Payment Services Directive (PSD2)
- Announcement of a Joint Fraud Taskforce in February 2016
- Online fraud strategies considered
- New bereavement code of practice
- EU-wide legislation on cybersecurity
Companies and Brands – What You Need to Know
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- Lloyds Banking Group is the largest current account provider in the UK
- Santander and Halifax continue to be biggest winners of CASS
- Fintech challengers
- Nationwide is most highly recommended and trusted brand
Market Share
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- Lloyds Banking Group is the largest current account provider in the UK
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- Figure 19: Current account providers, by share of main and other current account market, May 2016
- Major banking groups retain dominance despite slight decline in share
- Newer entrants more likely to have a bigger market share of secondary current accounts
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- Figure 20: Current account providers, by share of main and other current account market, May 2016
- Santander and Halifax continue to be biggest winners of CASS
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- Figure 21: Net gains of full account switches completed using CASS between Q4 2014 and Q3 2015 (1 October 2014-30 September 2015)
Competitive Strategies
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- Competition heats up in the current accounts market
- Switching deals
- Reward schemes
- Cash incentives
- High interest rates on balances in-credit
- Greater transparency and simplified payment structures
- Overdraft fees
- International payments
- Fee hikes
- Metro Bank increases international card charges
- Santander hikes everyday banking charges for popular 123 Account
- Simplifying package deals
- Midata Winners
- Smaller banks react to CMA investigation
Launch Activity and Innovation
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- Nationwide launches FlexBasic current account
- Mobile developments
- Mobile banking improvements
- App-based accounts
- Cheque pay-in technology
- Demand for greater transparency
- Tesco Bank shows customers ‘lost interest’
- Lloyds Bank develops a new way to compare current accounts
- Fintech challengers
- Blockchain and cryptocurrencies
Advertising and Marketing Activity
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- Advertising spend on current accounts decreases in 2015/16
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- Figure 22: Total above-the line, online display and direct mail advertising expenditure on current accounts and other related money-transmission services, 2011/12 - 2015/16
- Top ten advertisers account for vast majority of spend
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- Figure 23: Top ten advertisers of current accounts and related money-transmission services, 2013/14-2015/16
- Advertising expenditure shifts towards brand building for current accounts
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- Figure 24: Advertising expenditure on current accounts and other related money-transmission services, 2013/14-2015/16
- TV is dominant channel for advertising expenditure on current accounts
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- Figure 25: Share of advertising expenditure on current accounts and related money-transmission services, by media type, 2015/16 (12 months to 30 April)
- Nielsen Ad Intel coverage
Brand Research
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- What you need to know
- Brand map
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- Figure 26: Attitudes towards and usage of selected financial services brands, May 2016
- Key brand metrics
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- Figure 27: Key metrics for selected financial services brands, May 2016
- Brand attitudes: Tesco Bank most associated with rewarding loyalty
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- Figure 28: Attitudes, by financial services brand, May 2016
- Brand personality: The Co-operative Bank is most likely to be described as tired and boring
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- Figure 29: Brand personality – macro image, May 2016
- Metro Bank, Virgin Money and First Direct seen as most progressive
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- Figure 30: Brand personality – micro image, May 2016
- Brand analysis
- Nationwide is most highly recommended and trusted brand
- First Direct delivers on customer experience
- Halifax and Barclays top awareness and usage
- Tesco Bank most associated with rewarding loyalty
- HSBC and the Co-operative Bank suffer from recent negative press
The Consumer – What You Need to Know
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- One in seven has a fee-paying/paid for account
- More than a third have switched their main current account provider
- Half of population have been with same provider for more than a decade
- A better interest rate is the most persuasive incentive to switch
- Two in five would be interested in a personalised account comparison service
- Consumers lack understanding of charges applied to current accounts
Current Account Ownership
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- 99% of adult online population have a current account
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- Figure 31: Number of current accounts owned, May 2016
- Nearly one third of adults have multiple current accounts
- Higher earners are more likely to own multiple current accounts
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- Figure 32: Number of current accounts held, by gross annual household income, May 2016
- 28% of people hold current accounts jointly with someone else
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- Figure 33: Current accounts held jointly with someone else, May 2016
Ownership by Type of Current Account
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- One in seven has a fee-paying/paid for account
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- Figure 34: Type of current account held, May 2016
- Packaged accounts on a par with reward accounts
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- Figure 35: Types of fee-paying/paid for account, May 2016
- Added-value accounts are more popular with higher income earners
Current Account Switching Activity
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- More than a third have switched their main current account provider
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- Figure 36: Current account switching activity, May 2016
- Multiple account ownership improves likelihood to switch
Current Account Tenure and Attitudes towards Switching
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- Half of population have been with same provider for more than a decade
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- Figure 37: Current account tenure, May 2016
- 43% think switching is not worth the hassle
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- Figure 38: Attitudes towards current account switching, May 2016
Influential Factors when Switching Current Account Provider
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- A better interest rate is the most persuasive incentive to switch
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- Figure 39: Influential factors when switching current account provider, May 2016
- Cashback on purchases are on par with one-off cash incentives
- Nearly one in five would be influenced by lifestyle benefits
Attitudes towards Personalised Current Account Comparison Services
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- Only one in ten has heard of the Midata scheme
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- Figure 40: Consumer awareness of the Midata scheme, May 2016
- Two in five would be interested in a personalised account comparison service
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- Figure 41: Attitudes towards a personalised current account comparison services, May 2016
- Majority would be concerned about security of their data
Attitudes towards Current Account Providers
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- 83% are happy with their existing current account provider
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- Figure 42: Attitudes towards current account providers, May 2016
- 68% say current account provider is first port of call for other banking products
Attitudes towards Fees and Charges
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- Consumers lack understanding about charges applied to current accounts
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- Figure 43: Attitudes towards fees and charges
- Opportunity exists to charge set monthly fee in exchange for rewards
- Parents of under-18s most likely to take advantage of loyalty rewards and overdraft facilities
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- Figure 44: Attitudes to current accounts – CHAID – Table output, May 2016
Appendix – CHAID analysis
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- Methodology
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- Figure 45: Attitudes to current accounts– CHAID – Tree output, May 2016
Appendix – Data Sources, Abbreviations and Supporting Information
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- Products covered in this Report
- Abbreviations
- Consumer research methodology
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