Table of Contents
Overview
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- What you need to know
- Products covered in this report
Executive Summary
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- The market
- Number of current accounts increases by 2%
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- Figure 1: Estimated number of current accounts in the UK, 2015-18
- Mobile banking usage rising rapidly
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- Figure 2: Adults using online, mobile and telephone banking (millions), 2007-17
- Recent activity indicates an increase in switching
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- Figure 3: Number of switches per month using the CASS, August 2014-April 2018
- Companies and brands
- Lloyds Banking Group remains dominant
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- Figure 4: Current account providers (banking groups), by share of main and other current accounts, may 2018
- Total adspend increased by 21% in the last 12 months
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- Figure 5: Total above-the-line, online display and direct mail advertising expenditure on current accounts and other related money-transmission services, 2013/14-2017/18
- The consumer
- 98% own a current account
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- Figure 6: Number of current accounts owned, May 2018
- Large majority of consumers own a standard current account
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- Figure 7: Type of current account owned, May 2018
- Almost 70% haven’t switched in the last five years
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- Figure 8: Current account switching activity, by age, May 2018
- 18% say they are likely to switch in the next year
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- Figure 9: Likelihood to switch current account in the next 12 months, May 2018
- 72% are confident that they have the right account
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- Figure 10: Agreement with the statement “I am confident that I have the best current account(s) for my needs”, May 2018
- Less than a third interested in automated chat services
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- Figure 11: Attitudes towards current accounts, May 2018
- What we think
Issues and Insights
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- Mobile banking set to grow and grow, but may not benefit new challengers
- The facts
- The implications
- Open Banking can drive reduction in overdraft fees
- The facts
- The implications
- Developments required for chatbots to be a success
- The facts
- The implications
The Market – What You Need to Know
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- Number of current accounts increases by 2%
- Online banking the most popular channel
- Recent activity indicates an increase in switching
- Open Banking era begins
- FCA refrains from capping overdraft fees
Market Size
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- Current account market increases with population
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- Figure 12: Estimated number of current accounts in the UK, 2015-18
Channels to Market
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- Online banking the favoured channel
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- Figure 13: Preferred channels for different banking activities, May 2018
- Branch services still have role to play…
- ...particularly for the older generation
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- Figure 14: Preferred method of opening a current account, by generation, May 2018
- Use of mobile banking more than doubled between 2013 and 2017
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- Figure 15: Adults using online, mobile and telephone banking (millions), 2007-17
Market Drivers
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- UK population continues to grow
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- Figure 16: United Kingdom population mid-year estimate, 2009-17
- Current account switches peak at highest level since March 2016
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- Figure 17: Number of switches per month using the CASS, August 2014-April 2018
- Overdraft rates remain steady over the past 12 months
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- Figure 18: Monthly interest rate of UK monetary financial institutions sterling overdraft for households – Not seasonally adjusted, January 2013-April 2018
- Current account interest rates continue to fall
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- Figure 19: Monthly average of UK resident banks' sterling weighted average interest rate – Interest bearing current account deposits from individuals and individual trusts, not seasonally adjusted, January 2016-April 2018
Regulatory and Legislative Changes
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- Open Banking comes into force
- System functionality the issue for major banks
- FCA publishes new services standards
- Current account immigration checks reduced by Home Office
- FCA conducts review of retail banking business models
- FCA stops short of capping overdraft fees
- Ring-fencing initiative to isolate individual and small business operations
Companies and Brands – What You Need to Know
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- Lloyds Banking Group remains dominant
- First Open Banking solutions hit the market
- Total adspend increased by 21% in last 12 months
Market Share
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- Lloyds Banking Group continues to dominate current account market
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- Figure 20: Current account providers (banking groups), by share of main and other current accounts, May 2018
- CYBG acquires Virgin Money
- Barclays remains the biggest individual provider
- Digital challengers remain niche providers
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- Figure 21: Current account providers, by share of main and other current accounts, may 2018
- Nationwide gained the most customers through the CASS in 2017
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- Figure 22: Net gains of full account switches using CASS between 2016 and 2017*, selected brands
Competitive Strategies
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- First Open Banking solutions hit the market
- HSBC launches first Open Banking app
- Yolt integrates with RBS Group
- Current account interest rates remain low
- Nationwide and TSB the anomalies in the market
- Brands take differing approaches to switching incentives
- Cash bonuses the selling point for HSBC, NatWest and RBS
- Rewards the key for Barclays
- Free gifts the motivation for First Direct
- New challengers continue to push boundaries
- Monzo looking to expand its reach
- Foreign exchange specialist Revolut launches current account
- Use of chatbots set to increase
Advertising and Marketing Activity
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- Total adspend increased by 21% in the last 12 months
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- Figure 23: Total above-the-line, online display and direct mail advertising expenditure on current accounts and other related money transmission services, 2013/14-2017/18
- Nationwide is the biggest spender on advertising
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- Figure 24: Top 10 advertisers of current accounts and related money transmission services, 2015/16-2017/18
- Brand building accounts for over 50% of total adspend
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- Figure 25: Advertising expenditure on current accounts and other related money transmission services, 2015/16-2017/18
- TV advertising increases to 70% of total adspend
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- Figure 26: Share of advertising expenditure on current accounts and related money transmission services, by media type, 2017/18
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- 98% own a current account
- Large majority of consumers own a standard current account
- Almost 70% haven’t switched in the last five years
- 18% say they are likely to switch in the next year
- 72% are confident that they have the right account
- Less than a third interested in automated chat services
- Likely switchers more receptive to Open Banking features
Current Account Ownership
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- Vast majority own at least one current account
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- Figure 27: Number of current accounts owned, 2014-18
- Over 70% hold all accounts in their name only
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- Figure 28: Joint account ownership, May 2018
Ownership by Type of Current Account
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- Three quarters of consumers own a standard current account
- Number of reward accounts continues to increase
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- Figure 29: Type of current account owned, May 2018
- Half of those who pay for banking own a reward account
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- Figure 30: Type of fee-paying account owned, May 2018
Switching Activity
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- Almost 70% have had the same current account for at least five years
- Under-25s are more likely to have switched…
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- Figure 31: Current account switching activity, by age, May 2018
- …along with multiple account holders
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- Figure 32: Switching activity, by number of current accounts held, May 2018
Likelihood to Switch
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- 18% say they are likely to switch in the next year
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- Figure 33: Likelihood to switch current account in the next 12 months, May 2018
- Recent switchers more likely to switch again
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- Figure 34: Likelihood to switch current account in the next 12 months, by time since last current account holders last switched provider, May 2018
Confidence in Current Account Selection
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- 72% are confident that they have the right account
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- Figure 35: Agreement with the statement ‘I am confident that I have the best current account(s) for my needs’, May 2018
- Recent switchers have more confidence that their account is suitable
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- Figure 36: Agreement with the statement ‘I am confident that I have the best current account(s) for my needs’, by switching activity, May 2018
Attitudes towards Current Accounts
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- Less than a third interested in automated chat services
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- Figure 37: Attitudes towards current accounts, May 2018
- City-based Millennials most receptive to automated customer service
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- Figure 38: Current account behaviours – CHAID – Tree output, May 2018
- Likely switchers are more receptive to Open Banking features
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- Figure 39: Attitudes towards current accounts, by likelihood to switch current accounts in the next 12 months, May 2018”
- …and competitive overdrafts
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- Figure 40: Response to the statement ‘It's important for me to have a current account with competitive overdraft charges’, by likelihood to switch, May 2018
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID Methodology
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