Table of Contents
Overview
-
- What you need to know
- Report definition
Executive Summary
-
- The market
- Current Account Switch Service
-
- Figure 1: Number of switches per month since launch of CASS, September 2013-September 2016
- CMA Market Study and Reforms
- FCA supports alternative finance market
- Payments innovation poses a threat to traditional model
- Companies and brands
- Incumbent providers still dominate the market
-
- Figure 2: Current account providers, by share of main and other current account market, July 2016
- CASS has led to net losses for most challengers
-
- Figure 3: Net gains of full account switches completed using CASS between Q4 2014 and Q4 2015
- Full-service traditional challengers: How do they differ to the big banks?
- Retailers in unique position to attract new financial services customers
- The consumer
- High-street challengers top list of awareness
-
- Figure 4: Awareness of challenger brands, August 2016
- One in ten has heard of a digital-only bank
-
- Figure 5: Awareness of digital banks, August 2016
- People more likely to consider a new bank for savings
-
- Figure 6: Likelihood to consider a new bank for different financial services products, August 2016
- Customer service is a priority when choosing a provider
-
- Figure 7: Most important qualities when choosing a provider – ‘Any selected’, August 2016
- People want a bank that’s on their side
-
- Figure 8: Interest in different banking services, August 2016
- New banks must prove their ability to get the basics right
-
- Figure 9: Concerns about arranging products with a bank that is relatively new in the market, August 2016
- What we think
Issues and Insights
-
- Savings products offer challengers an opportunity to get a foothold in the market
- The facts
- The implications
- Challengers will need to prove they can get the basics right
- The facts
- The implications
- Financially-experienced are a prime target for non-traditional challengers
- The facts
- The implications
The Market – What You Need to Know
-
- Growing population increases opportunity for challengers
- Current Account Switch Service
- CMA Market Study and Reforms
- FCA supports alternative finance market
- Payments innovation poses a threat to traditional model
Market Drivers
-
- Growing population increases opportunity for challengers
-
- Figure 10: Estimated number of current accounts, 2014-16
- Challengers embrace fintech to drive competition
- Regulatory support for challenger brands
- Current Account Switch Service
-
- Figure 11: Number of switches per month since launch of CASS, September 2013-September 2016
- Project Innovate
- CMA Market Study and Reforms
- Open Banking has the greatest potential for disruption
- FCA supports alternative finance market
- Payments innovation poses a threat to traditional model
- PSD2 will accelerate innovation in the payments market
Companies and Brands – What You Need to Know
-
- Incumbent providers retain dominant share of the market
- CASS has led to net losses for most challengers
- Full-service traditional challengers: How do they differ to the big banks?
- Retailers in unique position to attract new financial services customers
Market Share
-
- Incumbent providers retain dominant share of the market…
- …and even the challengers still follow a traditional banking model
-
- Figure 12: Current account providers, by share of main and other current account market, July 2016
- CASS has led to net losses for most challengers
-
- Figure 13: Net gains of full account switches completed using CASS between Q4 2014 and Q4 2015
Competitive Strategies
-
- Full-service traditional challengers: How do they differ to the big banks?
- TSB
- Metro Bank
- Retailers in unique position to attract new financial services customers
- Tesco Bank
- M&S Bank
- John Lewis/Waitrose Partnership
- Digital-only banks focus on personal financial management
- Starling Bank wants informed customers
- Atom Bank focusses on complete personalisation
- Monzo targets budget-focussed students
The Consumer – What You Need to Know
-
- High-street challengers top list of awareness
- People more likely to consider a new bank for savings
- Customer service is a priority when choosing a provider
- People want a bank that’s on their side
- New banks must prove their ability to get the basics right
Awareness of Challenger Brands
-
- High-street challengers top list of awareness
-
- Figure 14: Awareness of challenger brands, August 2016
- TSB tops list of awareness
- Awareness lacking among younger consumers
-
- Figure 15: Repertoire of challenger brand awareness, by age, August 2016
Use of Challenger Brands
-
- Larger, established challengers top the list for usage
-
- Figure 16: Use of challenger brands, August 2016
- 45-54-year-olds most likely to have used multiple challengers
-
- Figure 17: Use of challenger brands, August 2016
- Challengers have an opportunity to reach out to the under-served
-
- Figure 18: Use of challenger brands, by household income, August 2016
Awareness of Digital Banks
-
- One in ten has heard of a digital-only bank
-
- Figure 19: Awareness of digital banks, August 2016
- Potential switchers are more aware
-
- Figure 20: Awareness of digital banks, by likelihood to consider a new bank for a current account, August 2016
- 20-24-year-olds are most aware
Likelihood to Consider a New Bank
-
- Majority are unlikely to consider a new bank
-
- Figure 21: Likelihood to consider a new bank for different financial services products, August 2016
- People are more open when it comes to savings accounts
- Convenience of only having one provider is also a barrier to switching
Most Important Qualities When Choosing a Provider
-
- One in five says that high interest rates are most important…
-
- Figure 22: Most important qualities when choosing a current account provider, August 2016
- …but customer service is still an underlying priority
-
- Figure 23: Most important qualities when choosing a provider – ‘Any selected’, August 2016
- Online banking has widespread importance…
- …but generational variances show growing demand for mobile services
-
- Figure 24: Most important qualities when choosing a provider – ‘Any selected’, by age, August 2016
- The importance of a branch poses a challenge for online-centric providers
Interest in Banking Services
-
- People want a bank that’s on their side
-
- Figure 25: Interest in different banking services, August 2016
- Ethical banking appeals to half of consumers
- Empathy rather than apathy
- Are challengers better-placed to respond to consumer demand for innovation?
- Online and mobile only banks pose a threat
-
- Figure 26: Interest in new/niche banking concepts – CHAID – Tree output, August 2016
- Challenger brand users more interested in new concepts
-
- Figure 27: Interest in new/niche banking concepts, by repertoire of challenger brand use, August 2016
Concerns About New Banks
-
- The legacy of the financial crisis on challenger brands
- But banks must first prove their capability in basic operations
-
- Figure 28: Concerns about arranging products, August 2016
Appendix – Data Sources, Abbreviations and Supporting Information
-
- Abbreviations
- Methodology
- Consumer research methodology
Back to top