Table of Contents
Overview
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- What you need to know
- Scope of this Report
Executive Summary
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- The market
- Regulators aim to boost competition
- Aggregation could reduce the big banks’ advantage
- Companies and brands
- Big banks remain dominant
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- Figure 1: Top six main current account providers, by banking groups, June 2017
- The consumer
- Only a quarter of savers hold an account with another provider
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- Figure 2: Financial product ownership and cross-sales, June 2017
- Less than one in five people are likely to switch banks
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- Figure 3: Current account holders’ switching intentions, June 2017
- Half of consumers have no major frustrations with their bank
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- Figure 4: Consumers’ frustrations with their main current account provider, June 2017
- Fees/charges have biggest influence on choice of current account
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- Figure 5: Important factors when choosing a new current account provider, June 2017
- Nearly three in four people have concerns about switching bank
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- Figure 6: Barriers to switching main current account provider, June 2017
- Two thirds of current account holders could be encouraged to share data
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- Figure 7: Open Banking incentives, June 2017
- What we think
Issues and Insights
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- Switching bank: more hassle than it’s worth?
- The facts
- The implications
- It’s not all about the money
- The facts
- The implications
- The changing role of the bank
- The facts
- The implications
The Market – What You Need to Know
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- Regulators aim to boost competition
- Aggregation could reduce the big banks’ advantage
- Low interest rates polarise consumers
- Concerns over increased borrowing
Economic and Regulatory Environment
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- Regulators aim to boost competition
- Aggregation could reduce the big banks’ advantage…
- …but will consumers opt in?
- Making the most of a challenging economic environment
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- Figure 8: Headline CPI inflation and average weekly earnings (12-month percentage change), May 2014-May 2017
- Open Banking to open up opportunities
Market Overview
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- CASS has completed over 3.7 million switches
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- Figure 9: Number of switches per month since launch of CASS, September 2013-May 2017
- Low interest rates polarise consumers
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- Figure 10: UK interest rates, January 2012-May 2017
- Low rates disincentivise saving activity…
- …and encourage people to look beyond traditional savings products
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- Figure 11: Impact of low interest rate on motivation to save and product choices/considerations, April 2017
- There is still a stigma associated with borrowing…
- …although some forms of debt are seen as more acceptable
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- Figure 12: Annual gross and net credit card lending, not seasonally adjusted, 2010-16
- Figure 13: Annual gross and net other consumer credit lending, not seasonally adjusted, 2010-16
- Surge in remortgaging as borrowers look to lock in low rates
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- Figure 14: Gross and net mortgage lending, not seasonally adjusted, 2012-16
Companies and Brands – What You Need to Know
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- Big banks remain dominant
- Reacting to consumers’ changing channel preferences
- Cost pressures force banks to water down ongoing rewards
- Nationwide becomes the industry’s largest ATL spender
Market Share
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- Big banks remain dominant
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- Figure 15: Top six main current account providers (including netted banking groups), June 2017
- Nearly one in six people say Barclays is their main bank
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- Figure 16: Consumers' main current account provider, June 2017
Competitive Strategies
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- Reacting to consumers’ changing channel preferences
- Digitising the bank branch
- Lloyds
- Nationwide
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- Figure 17: Nationwide NOW branch service
- Santander
- Iam Bank
- Switching pays off…
- …but cost pressures force banks to water down ongoing rewards
- The customer is king
- Royal Bank of Scotland
- Barclays
- Lloyds Banking Group
- Santander
- Challengers prepare for Open Banking
- Starling Bank
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- Figure 18: Starling Bank app UI shown on an iPhone
- Atom Bank
- Monzo
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- Figure 19: Monzo prepaid debit card and mobile transaction notification
- Bud Financial
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- Figure 20: Bud Financial app UI
Advertising and Marketing Activity
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- Nationwide becomes the industry’s largest ATL spender
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- Figure 21: Top 10 highest-spending retail banks/building societies for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, 2015-17*
- Providers’ ATL campaigns focus on brand building
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- Figure 22: Top 10 highest-spending retail banks/building societies for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by product category, 2015-17*
- TV accounts for nearly half of ATL expenditure
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- Figure 23: Top 10 highest-spending retail banks/building societies for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, May 2016-June 2017
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Open Banking could create a more open marketplace
- Less than one in five people are likely to switch banks
- Potential switchers may be put off
- Half of consumers have no major frustrations with their bank
- A poor online service can be the catalyst for churn
- Fees/charges have biggest influence on choice of current account
- Two thirds of current account holders could be encouraged to share data
Product Ownership and Cross-sales
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- Current account ownership is near universal
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- Figure 24: Current account ownership, June 2017
- Only a quarter of savers hold an account with another provider
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- Figure 25: Financial product ownership and cross-sales, June 2017
- Open Banking could create a more open marketplace
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- Figure 26: Repertoire of financial products owned, June 2017
- Nationwide and Halifax among the leaders at cross-selling
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- Figure 27: Repertoire of financial products owned with main provider, by selected providers, June 2017
Switching Intentions
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- Less than one in five people are likely to switch banks…
- …but prompts could encourage more to review their accounts
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- Figure 28: Current account holders’ switching intentions, June 2017
- A third of Millennials are weighing up a move
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- Figure 29: Current account holders’ switching intentions, by generation, June 2017
- HSBC customers frustrated by branch closures
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- Figure 30: Current account holders’ switching intentions, by main provider, June 2017
- Potential switchers may be put off
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- Figure 31: Barriers to switching current account, by current account holders’ switching intentions, June 2017
Consumer Pain Points
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- Half of consumers have no major frustrations with their bank
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- Figure 32: Consumers’ frustrations with their main current account provider, June 2017
- Millennials most likely to have frustrations with their bank
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- Figure 33: Proportion of consumers who have frustrations with their main current account provider, by generation, June 2017
- A poor online service can be the catalyst for churn
Important Factors when Choosing Provider
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- Fees/charges have biggest influence on choice of current account
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- Figure 34: Important factors when choosing a new current account provider, June 2017
- Interest rates are low on young consumers’ priority list
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- Figure 35: Important factors when choosing a new current account provider, by age, June 2017
- Opening offers most likely to influence potential switchers
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- Figure 36: Important factors when choosing a new current account provider, by consumers who are ‘very likely’ to switch current account provider in the next 12 months, June 2017
Barriers to Switching
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- Nearly three in four people have concerns about switching bank
- Consumers are still sceptical
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- Figure 37: Barriers to switching main current account provider, June 2017
- Time is of the essence for Millennials
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- Figure 38: Barriers to switching main current account provider, by generation, June 2017
Open Banking Incentives
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- Two thirds of current account holders could be encouraged to share data
- Getting a good value exchange
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- Figure 39: Open Banking incentives, June 2017
- Financial support
- Personalised offers
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- Figure 40: Tail screenshot and example of a notification when paying via Starling Bank
- Fast approval
- Potential switchers are the most engaged in Open Banking
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- Figure 41: Proportion of consumers who could be encouraged to share data in exchange for any of the surveyed incentives, by likeliness of switching current account provider, June 2017
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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