Table of Contents
Executive Summary
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- The market
- Growth stays at 3% in 2018
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- Figure 1: Total retail savings deposits, 2008-18
- Total savings deposits forecast to near £2 trillion by 2023
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- Figure 2: Forecast of total retail savings deposits, 2013-23
- Rate rises filter through to new fixed-rate accounts
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- Figure 3: Effective interest rates on household deposit balances versus official Bank of England base rate, January 2010-February 2019
- Earnings growth outpacing inflation
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- Figure 4: Annual change in the Consumer Price Index (CPI) and average weekly earnings (year on year 3 months average), October 2012-January 2019
- Over one third hope to add to their savings
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- Figure 5: Trends in saving activities over the last three months, June 2012-January 2019
- Companies and brands
- LBG accounted for 17% of retail savings balances in 2018
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- Figure 6: Providers’ total retail savings balances at year end, shown on a group basis – UK, 2017-18
- Goldman Sachs’ ‘Marcus’ account looks set to disrupt the easy access market
- Best buy cash ISA rates reach highest level since 2016
- The consumer
- Easy access accounts continue to be strongly favoured
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- Figure 7: Ownership of cash savings products, February 2019
- Providers face challenge to accommodate a range of preferences
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- Figure 8: Incentives when choosing a savings account provider, February 2019
- Current account providers retain strong grip on the market
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- Figure 9: Preferred sources of information when looking for a new savings account provider, February 2019
- Saving for security tops the list of motivations
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- Figure 10: Saving plans over the next two years, February 2019
- Few expect to save in a limited access account
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- Figure 11: Saving expectations over the next two years, February 2019
- Savings superstores appeal to over half
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- Figure 12: Awareness of and interest in savings superstores, February 2019
- What we think
Issues and Insights
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- Improving brand profile and gaining consumer trust is vital for savings superstores
- The facts
- What this means
- High street brands must adapt in order to attract younger savers
- The facts
- What this means
The Market – What You Need to Know
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- Growth stays at 3% in 2018
- Significant growth among easy access savers, and interest-paying current accounts
- Interest rates are on the rise
- Earnings growth outpacing inflation
Market Size and Forecast
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- Growth remained low in 2018…
- …but competition and focus on savings is increasing
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- Figure 13: Total retail savings deposits, 2008-18
- Total savings deposits forecast to near £2 trillion by 2023
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- Figure 14: Forecast of total retail savings deposits, 2013-23
- Figure 15: Forecast of total retail savings balances, at current and constant prices, 2013-23
- Forecast methodology
Market Segmentation
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- Interest-bearing sight deposits increase market share
- Non-interest bearing deposits fall by 11%
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- Figure 16: Household retail savings balances, by main product type, 2014-18
Market Drivers
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- Interest rates edge upwards…
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- Figure 17: Effective interest rates on household deposit balances versus official Bank of England base rate, January 2010-February 2019
- …however future movement is largely dependent on Brexit
- FCA discussion paper looks to increase competition in the market
- Earnings growth on the rise as inflation falls
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- Figure 18: Annual change in the Consumer Price Index (CPI) and average weekly earnings (year on year 3 months average), October 2012-January 2019
- Saving ratio increases but is still negative
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- Figure 19: UK households’ cash basis saving ratio and national accounts saving ratio, seasonally adjusted and at current prices, Q1 2014-Q2 2018
- Over one in three have more than £10,000 saved
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- Figure 20: Value of savings and investments, February 2018 vs February 2019
Consumer Environment
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- Opportunities to boost focus on saving
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- Figure 21: Trends in saving activities over the last three months, June 2012-January 2019
- Half are concerned about the effect of Brexit on the cost of living …
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- Figure 22: Attitudes towards the effect of Brexit on the cost of living, July 2016-January 2019
- …and a third about the impact on the value of their savings and investments
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- Figure 23: Attitudes towards the effect of Brexit on the value of savings and investments, July 2016-January 2019
Companies and Brands – What You Need to Know
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- LBG accounts for 17% of retail savings balances
- Best buy cash ISA rates reach highest level since 2016
- Goldman Sachs’ ‘Marcus’ account looks set to disrupt the easy access market
- Hargreaves Lansdown launches the latest savings superstore
- Savings adspend increased by 5% in 2018/19
Market Share
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- Lloyds Banking Group remains the dominant force in the market
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- Figure 24: Providers’ total retail savings balances at year end, shown on a group basis – UK, 2017-18
- High-street banks lead the way for easy-access and regular saver accounts
- Fixed-rate savers are more likely to use lesser-known providers
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- Figure 25: Savings product provider used, by product type, February 2019
Competitive Strategies
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- Smaller savings providers look to have reinvigorated the cash ISA
- Lloyds and Nationwide place emphasis on saving for the future
- High-street banks offer preferential rates to current customers
Launch Activity and Innovation
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- Marcus shakes up the easy access market
- Hargreaves Lansdown launches online savings marketplace
- Open Banking developments offer tools to boost savings
- On the high street…
- …and through new partnerships
- Case study: mobile- and online-only brands are developing their savings account offerings
Advertising and Marketing Activity
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- Savings adspend increased by 5% in 2018/19
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- Figure 26: Above-the-line, online display and direct mail advertising expenditure on cash savings products, by type of product, 2016-19
- Nationwide tops advertising spend for 2018/19
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- Figure 27: Top 15 advertisers of above-the-line, online display and direct mail advertising on cash savings products, 2016/17-2018/19
- TV adspend share falls, but remains the dominant channel
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- Figure 28: Share of above-the-line, online display and direct mail advertising expenditure on cash savings products, by type of media, 2018/19
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Easy access accounts remain the most popular
- Providers face challenge to accommodate a range of preferences
- Current account providers retain strong grip on the market
- Saving for security tops the list of motivations
- Few expect to save in a limited access account
- Savings superstores appeal to over half
Product Ownership
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- Over half own an easy access account
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- Figure 29: Ownership of cash savings products, February 2019
- Scope to increase ownership of limited access accounts
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- Figure 30: Ownership of cash savings products, by value of savings and investments, February 2019
Important Factors When Choosing a Savings Account Provider
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- Cash incentives top the list
- Branch-based providers have strong appeal
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- Figure 31: Incentives when choosing a savings account provider, February 2019
- High-street banking savers want cross-channel access
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- Figure 32: Incentives when choosing a savings account provider, by savings account provider used, February 2019
- Generation Z and Millennials are the most likely to be tempted by budgeting tools
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- Figure 33: Importance of budgeting tools when choosing a new savings provider, by generation, February 2019
Preferred Sources of Saving Account Information
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- Current account providers are the most popular sources of information
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- Figure 34: Preferred sources of information when looking for a new savings account provider, February 2019
- 43% of customers of the big five banking groups would use a price comparison site
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- Figure 35: Preferred sources of information when looking for a new savings account provider, by savings account provider used, February 2019
Saving Plans
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- Building a savings buffer is the major priority
- Almost one third of Generation Z are saving for a big ticket purchase
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- Figure 36: Saving plans over the next two years, February 2019
- Budgeting tools can help people achieve their goals
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- Figure 37: Saving plans over the next two years, by incentives when choosing a new savings provider, February 2019
Saving Expectations
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- Little interest in limited access products
- Competition from high interest-paying current account persists
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- Figure 38: Saving expectations over the next two years, February 2019
- Price comparison sites are the main source of information for those looking to open a new account or switch
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- Figure 39: Preferred channels used when looking for a new savings account provider, by savers expecting to open a new savings account or switch their saving provider, February 2019
Interest in Online Savings Marketplaces
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- Over 50% are interested in using savings superstores…
- …but trust remains a barrier
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- Figure 40: Awareness of and interest in savings superstores, February 2019
- Those looking to save for a deposit are key targets
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- Figure 41: Awareness of and interest in savings superstores, by savings plans, February 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Figure 42: Best and worst case forecasts scenarios for total retail savings deposits, 2018-23
- Forecast methodology
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