What you need to know

The UK current account market continues to grow, driven in part by a higher proportion of people with more than one current account. However, account holders are not a homogenous group, with stark differences by demographics when it comes to preferences and behaviours. Thanks to the popularity of mobile apps, Open Banking has the potential to revolutionise the way consumers interact with financial services brands. Although it poses challenges for existing providers, it will make it easier to segment and target customers, and to offer personalised services and products. There is an opportunity for incumbents to increase their role in customers’ wider financial lives, while disruptors can build and benefit from partnerships.

This Report examines the UK current account market. This includes discussion of the size of the market, the major factors affecting retail banking and current accounts. It provides a market share of the largest providers, and analyses how this changes between primary and secondary accounts. Mintel’s exclusive consumer research looks into current account ownership, including whether accounts are held jointly with someone else. It looks into the number of people with more than one bank account, and the reasons for having multiple accounts. More specifically, it explores the types of accounts held by consumers, and what would motivate them to pay for banking. It also examines use of overdrafts, and consumers’ general attitudes towards overdrafts and current accounts in general. Lastly, it looks into use of mobile banking, and factors that would motivate people to use it more.

Products covered in this Report

The focus of this Report is on retail current accounts, including packaged accounts for mass-market customers. The Report does not cover premium or private bank accounts targeted at the mass affluent to high-net-worth customers.

The predominant type of pricing model for current accounts in the UK is the free-if-in-credit (or ‘free banking’) model. This is where the customer does not pay any direct fees for having the account if in credit, or for core services such as direct debits and cheques. Interest is usually charged on any money borrowed via an overdraft, which can be either ‘authorised’ or ‘unauthorised’.

Current accounts can be classified into various sub-types:

  • Basic current account – designed for those with a poor credit score, it does not carry any charges. Customers can set up direct debits and are provided with a debit card, but the account typically does not come with an overdraft facility or in-credit interest.

  • Standard current account – based on the free-if-in-credit model, it does not carry any charges provided there are sufficient funds in the account to meet any payments made.

  • Student and graduate current accounts – variants of the free-if-in-credit model and may offer special features, such as an interest-free overdraft.

  • Premium or packaged current account – usually involves the customer being charged a monthly fee in return for a range of additional benefits, such as travel insurance and motor breakdown cover.

  • Reward current account – usually offers a cash bonus or reward upon switching and offers cash rewards for paying in a set amount of money each month or for paying utility bills with the account.

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