Current Accounts - UK - July 2019

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Number of current accounts continues to grow
Figure 1: Estimated number of current accounts and account holders, 2016-19
58% apply or switch online
Figure 2: Current account purchase channels, March 2019
Almost 1 million switches completed in 2018/19
Figure 3: Number of switches per month using the CASS, October 2013-May 2019
‘Dysfunctional’ overdraft market to be overhauled
Official bank service league ranking launched
Companies and brands
Barclays is the largest individual provider of main current accounts
Figure 4: Current account providers, by share of main and other current accounts, May 2019
Nationwide continues to gain customers through the CASS
LBG adds extra functionality to its apps
NatWest takes the lead in tech innovations
CYBG starts rebranding to Virgin Money
Monzo Plus: testing the waters
Starling Bank: new accounts, features and partners
The consumer
34% of people have more than one current account
17% pay for their banking
Figure 5: Type of current account owned, May 2019
Majority could be persuaded to pay for their banking
Figure 6: Reasons to pay for a current account, May 2019
People like to compartmentalise their banking
Figure 7: Reasons for owning more than one current account, May 2019
Regular overdraft users more interested in innovative features
Figure 8: Attitudes towards overdrafts, May 2019
58% of account holders use mobile banking regularly
Figure 9: Regular usage of mobile banking, May 2019
60% are open to increasing their use of mobile banking
Figure 10: Reasons to increase usage of mobile banking, May 2019
Younger generations want banks to play an active role
Figure 11: Attitudes towards current accounts and retail banking, May 2019
What we think
ISSUES AND INSIGHTS
Multi-banking only likely to increase further
The facts
The implications
Opportunity for a provider to offer a meaningfully better deal
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Number of current accounts continues to grow
58% apply or switch online
Almost 1 million switches completed in 2018/19
‘Dysfunctional’ overdraft market to be overhauled
Official bank service league ranking launched
MARKET SIZE
Number of current accounts continues to grow
Figure 12: Estimated number of current accounts, 2016-19
CHANNELS TO MARKET
Price comparison sites are the first step…
…but the provider’s own channels eventually take precedence
Figure 13: Current account research channels, March 2019
58% apply or switch online
Figure 14: Current account purchase channels, March 2019
MARKET DRIVERS
UK population surpasses 66.4 million
Figure 15: United Kingdom population mid-year estimate, 2001-18
Almost 1 million switches completed in 2018/19
Figure 16: Number of switches per month using the CASS, October 2013-May 2019
Overdraft rates fall in 2019
Figure 17: Monthly interest rate of UK monetary financial institutions Sterling overdraft for households, May 2014-May 2019
Current account interest rates remain low
Figure 18: Monthly average of UK resident banks' Sterling weighted average interest rate – interest-bearing current account deposits from individuals and individual trusts, April 2016-April 2019
REGULATORY AND LEGISLATIVE CHANGES
‘Dysfunctional’ overdraft market to be overhauled
Open Banking: regulation and compliance
Official bank service league ranking launched
Mandated and voluntary information of current account services
New voluntary code to protect victims of fraud
PPI deadline looms
Figure 19: FCA’s ad on London Underground, June 2019
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Barclays is the largest individual provider of main current accounts
Nationwide continues to gain customers through the CASS
LBG adds extra functionality to its apps
NatWest takes the tech lead
CYBG starts rebranding to Virgin Money
Monzo Plus: testing the waters
Starling Bank: new accounts, features and partners
ATL adspend falls by 49%
MARKET SHARE
Barclays is the largest individual provider of main current accounts
Figure 20: Current account providers, by share of main and other current accounts, May 2019
Amongst the multi-banked:
App-only brands are more common
Competitive offers show their double edge
Figure 21: Current account providers, by share of other current accounts, May 2019
LBG, the largest group, provides one in four main accounts
Figure 22: Current account providers (banking groups), by share of main current account market, May 2018 and May 2019
SWITCHING ACTIVITY
Nationwide continues to gain customers through the CASS
Challengers show impressive gains
TSB sees heavy losses
Figure 23: Net gains and losses of full account switches using CASS, selected brands, Q4 2018
COMPETITIVE STRATEGIES & LAUNCH ACTIVITY
LBG adds extra functionality to its apps
NatWest & Tech: taking the lead among the large banks?
Barclays increases the fee for its Blue Rewards
TSB cuts down its interest rates on balances
CYBG starts rebranding to Virgin Money
Post Office Money closes its current account
CHALLENGERS & DISRUPTION 
Monzo
Monzo Plus: testing the waters
Monzo’s marketplace: expanding into savings
First major ad campaign
Starling Bank
New features: overdrafts and loans
New products: joint, teen and euro accounts
New partners
Dozens: new current account provider
Monese launches current account linked with Avios in ‘world’s first’
Current accounts in the FCA’s regulatory sandbox
FinecoBank offers access to global currency platform
Beyond current accounts
ADVERTISING AND MARKETING ACTIVITY
ATL adspend falls by 49%
Figure 24: Total above-the-line, online display and direct mail advertising expenditure on current accounts, 2014/15-2018/19
Majority of adspend on brand building
Figure 25: Advertising expenditure on current accounts, by category, 2014/15-2018/19
Nationwide remains the top advertiser
Figure 26: Top 10 advertisers of current accounts, 2016/17-2018/19
TV advertising accounts for 83% all spend
Figure 27: Advertising expenditure on current accounts, by media type, 2018/19
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
34% of people have more than one current account
17% pay for their banking
Majority could be persuaded to pay for their banking
People like to compartmentalise their banking
Regular overdraft users more interested in innovative features
58% of account holders use mobile banking regularly
Younger generations want banks to play an active role
CURRENT ACCOUNT OWNERSHIP
Account ownership is almost universal among online population
Figure 28: Current account ownership, May 2019
34% have more than one current account
Figure 29: Multiple current account ownership, 2014-19
29% have a joint account
Figure 30: Joint account ownership, May 2019
OWNERSHIP BY TYPE OF CURRENT ACCOUNT
71% of account holders own a standard account
Figure 31: Type of current account owned, May 2019
17% pay for their banking
Figure 32: Ownership of fee-paying current accounts, by age, May 2019
REASONS TO PAY FOR A CURRENT ACCOUNT
Majority could be persuaded to pay for their banking
People prefer easy-to-access benefits
Loyalty schemes sound appealing
Figure 33: Reasons to pay for a current account, May 2019
There’s room for competition
Figure 34: Repertoire of reasons to pay for a current account, May 2019
Overseas benefits may not be enough
Figure 35: Monzo’s ad on the London Underground, May 2019
REASONS FOR OWNING MORE THAN ONE CURRENT ACCOUNT
People like to compartmentalise their banking…
…and benefit from a competitive market
Extra current accounts are also a backup
Figure 36: Reasons for owning more than one current account, May 2019
Younger consumers more likely to make the most of it
Figure 37: Repertoire of reasons for owning more than one current account, by age, May 2019
USAGE OF AND ATTITUDES TOWARDS OVERDRAFTS
One in four account holders use their overdraft
Figure 38: Access to and usage of overdrafts, May 2019
Vast majority would like to have a free buffer
Figure 39: Attitudes towards overdrafts, May 2019
Turning an overdraft into a loan is appealing to regular users
Figure 40: Interest in loan option for overdrafts, by overdraft access and usage, May 2019
Taking back control (of overdraft limits)
Figure 41: Current Accounts – CHAID – Tree output, May 2019
MOBILE BANKING: USAGE AND MOTIVATORS
58% of account holders use mobile banking regularly
Figure 42: Regular usage of mobile banking, by age, May 2019
60% are open to increasing their usage
Seamless online and mobile banking
Simple features can help people feel in control
Figure 43: Reasons to increase usage of mobile banking, by current usage, May 2019
Simplicity and getting the basics right are key
Figure 44: TURF Analysis – mobile banking motivators, May 2019
Small improvements can have an impact
Figure 45: Repertoire of motivators to increase use of mobile banking, May 2019
ATTITUDES TOWARDS CURRENT ACCOUNTS AND RETAIL BANKING
Younger generations want banks to play an active role…
Figure 46: Interest in money management help from banks, by age, May 2019
…while older generations are more sceptical…
Figure 47: Interest in spending controls on transactions, by age, May 2019
…and less open to biometric debit cards
Figure 48: Interest in biometric debit cards, by age, May 2019
Response to IT failures needs to be decisive
Figure 49: Account holders who have been affected by an IT failure at their bank, by age, May 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID analysis methodology
Figure 50: Current Accounts CHAID analysis – Table output, Attitudes towards overdrafts, May 2019
Figure 51: Current Accounts CHAID analysis – Table output, Attitudes towards current accounts and retail banking, May 2019
Figure 52: Current Accounts CHAID analysis – Table output, reasons to increase usage of mobile banking, May 2019
TURF analysis methodology
Figure 53: TURF analysis – table output, May 2019