Table of Contents
Introduction and Abbreviations
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- Global information and research
- Consumer research
- ACORN
- Abbreviations
Executive Summary
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- There is an urgent need to fill the savings gap
- Low rates makes saving unpopular
- Debt levels continue to rise
- Equities fall while cash ISAs increase
- New products introduced
- Savers invest elsewhere
- Half of households have no savings or less than £1,500 saved
- DSAs owned by three fifths of adults
- MBBGs continue to dominate the sector
- Interest-bearing sight accounts are most favoured
- RBS has highest value of deposits in sight accounts
- Consumers need to shop around as high street banks offer least favourable rates
- TV and press account for bulk of advertising spend in the sector
- Instant access accounts are more popular among respondents
- Londoners are least likely to own DSAs
- Future
Market Factors
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- PDI rises as savings ratio set to fall from 2004 onwards
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- PDI, and savings ratio, at current prices, 1997-2007
- The savings gap creates an urgent need for consumers to save for retirement
- Interest rates prove unfavourable for savers
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- Interest rates, January 1992-July 2003
- Rising debt levels
- Cash ISAs provide a safe haven for savers
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- Amounts subscribed into the cash component of ISAs, 1999-2003
- Falling share prices make equities less of an attractive option
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- FTSE 100 index, 1995-2003
- Government introduces new products to encourage saving and self-provision
- Savers seek other less risky havens for excess funds
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- New buy-to-let mortgages issued by CML members, 1999-2002
- A third of all households have no savings
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- Household savings, by household type and amount, 2001-02
Market Size
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- Consumers have a fairly wide range of investment/savings products
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- Types of savings and investment products owned, July 2003
- DSAs are owned by six in ten consumers
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- Ownership of deposit/savings products, July 2003
- Concentration of all UK private sector holdings among the MBBGs
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- UK private sector holdings of selected sterling assets, 1997-2002
- Interest-bearing sight accounts hold the majority of assets
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- Value of individuals’ deposits with the MBBGs, 1997-2002
- Growth in number of customer accounts slows
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- Number of customer accounts at MBBGs, 1997-2002
- Notice accounts fight back
Key Players
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- The Royal Bank of Scotland continues to lead with the value of deposits held in demand accounts
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- Deposits held with the MBBGs, 1997-2002
- Northern rock enjoys substantial growth in value of demand accounts
- Barclays still dominates in notice account sector
- Online providers make an impact
- Supermarkets maximise the value of their extensive customer base
- Nationwide is by far the largest building society
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- Number of investing members of building societies, 2002
Products and Pricing
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- Demand or instant access accounts
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- Sample rates available on high street instant access accounts with a balance of £500, August 2003
- Consumers willing to shop around get the best deals
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- Best rates available on instant access accounts with a balance of £500, August 2003
- Notice or time accounts
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- Best rates available on notice accounts, August 2003
- ISAs now play a role in the DSA market
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- Selected rates available on ISAs, August 2003
Advertising and Promotion
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- TV and press account for the bulk of advertising expenditure
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- Above-the-line advertising expenditure on deposit and savings accounts, by outlet type, years to April 2002 and April 2003
- Halifax accounts for over a third of advertising expenditure
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- Above-the-line advertising expenditure on deposit and savings accounts, years to April 2002 and April 2003
The Consumer
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- Instant access are the more popular DSAs
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- Ownership of deposit/savings products, by gender, age and socio-economic group, July 2003
- One-person households under 65 and the pre-/no family lifestage are least likely to hold DSAs
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- Ownership of deposit/savings products, by lifestage and Special Group, July 2003
- Ownership of deposit/savings products, by working status, marital status, household income, and tenure, July 2003
- Consumers in London are least likely to own DSAs
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- Ownership of deposit/savings products, by region, ACORN categories, new technology users and newspaper readership, July 2003
- Interest rates continue to feature significantly
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- Important features when selecting a deposit/savings accounts, July 2003
- Company reputation matters to many savers
- Respondents aged 65+ are more interested in instant access
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- Important features when selecting deposit/savings accounts, by demographic sub-group, July 2003
- A requirement for branch networks features highly among consumers in Yorkshire and the North East
- Tax-free benefits still have their place…
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- Further important features when selecting deposit/savings accounts, by demographic sub-group, July 2003
- …especially with notice account holders
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- Important features when selecting a deposit/savings account, by type of product, July 2003
- Rates changes largely influence consumers to review savings provision
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- Events or lifestyle decisions influencing consumers to review the provision of deposit/savings accounts, July 2003
- Many consumers have not reviewed their DSA provisions recently
- Consumers are just as likely to respond to a cut in rates on their own DSAs as to higher rates offered elsewhere
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- Events influencing review of deposit/savings accounts, by demographic sub-group, July 2003
- ABs keep a tight rein on finances, while making strategic decisions
- Saving for retirement, a car or home improvements are important to certain consumers
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- Further events influencing review of deposit/savings accounts, by demographic sub-group, July 2003
- Notice account holders are more likely to review their arrangements
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- Events/lifestyle decisions influencing review of account, by type of product, July 2003
- Inertia still exists as consumers are keen to keep their savings account with their main account provider
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- Statements about deposit and savings accounts, July 2003
- The Special Group of ABC1 retired consumers are least likely to save with an unfamiliar provider even with good rates
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- Statements about deposit/savings account, by demographic sub-group, July 2003
- Notice account holders are likely to be aware of rates
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- Events/lifestyle decisions influencing choice of account, by type of product, July 2003
The Future
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- Cash ISAs will continue to play a significant role in the DSA sector
- How long can high street banks continue to offer uncompetitive rates?
- Retailers have a good chance of increasing market share
- Sustained recovery of the stock market will see savers gradually return to equities…
- …as the housing market continues to lure savers
- There is great potential for the DSAs sector to grow in the future
Forecast
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- Healthy growth anticipated
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- Forecast of the UK market for deposit and savings accounts, by value, 2002-07
- Interest-bearing sight accounts most dynamic both by value and volume
- Cash ISAs are a success story
- NPD stimulates growth
- Consumer apathy a bonus for this market
- Factors incorporated
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