Author: Mintel Group Ltd.
Last saved by: HTTP server

Current Accounts - UK - June 2005

INTRODUCTION AND ABBREVIATIONS
Aims of the report
Global information and research
Consumer research
ACORN
 ABBREVIATIONS
PREMIER INSIGHT
Getting the ‘switchers’ to switch again
Hit the North!
Younger consumers are most likely to switch for better overdrafts
HSBC can take advantage of ‘flexible’ customers
EXECUTIVE SUMMARY
Mintel estimates suggest there are around 73 million current accounts
The branch remains at the heart of the current account distribution mix
But telephone and Internet banking continue to gain in popularity
Lloyds TSB commands the largest share of the current account market
Current accounts are the most widely held financial product
Around 6 million customers are considering changing provider
The vast majority of switchers open their accounts at a branch
Customers are adopting a multichannel approach to managing finances
Disaffection with service is the most common switching prompt
MARKET FACTORS
Total adult population is set to grow by around 10% in next 20 years
Figure 1: UK population, by age bracket, 1995-2025
Rising employment levels could boost demand for current accounts
Figure 2: Total employment levels in the UK, by gender, 2000-10
Changing household patterns could also boost the number of accounts
Growth in consumer expenditure should stimulate banking activity
Figure 3: Personal disposable income and consumer expenditure, 2000-10
Basic bank accounts provide further potential for market growth
Figure 4: Total number of basic bank accounts opened net of closures, 2003 and 2004
THE BRANCH NETWORK
The combined branch network has declined by a fifth in the past decade
Figure 5: UK bank and building society combined branch networks, 1995-2003
Lloyds TSB has shut the most branches…
Figure 6: UK bank and building society branch networks, 1995 and 2003
…although Northern Rock has implemented the deepest cuts
Lloyds TSB currently has the most customers per branch
Figure 7: Average current account holders per branch, largest seven banks, 2005
But the branch will remain at the heart of the distribution mix
MARKET SIZE
Total balances held within personal bank accounts continue to rise
Figure 8: Value of UK personal bank accounts (MBBG only), 1998-2003
There were 95 million interest-bearing sight accounts in 2003
Figure 9: Number of UK personal bank accounts (MBBG only), 1998-2003
Mintel estimates suggest that there are around 73 million current accounts
Figure 10: Estimated number of current accounts, 1998-2005
Overdraft advances have risen rapidly over the last five years
Figure 11: Value of overdraft advances to individuals in the UK (MBBG only), 1998-2003
The total number of plastic cards in circulation continues to grow
Figure 12: Number of plastic cards in issue, by type, 1993-2004
The number of MBBG-owned ATMs has remained static in last few years
Figure 13: Total number of ATMs (MBBG only), 1998-2003
KEY PLAYERS
The number of current account providers has increased dramatically
The banking industry has gone through a period of major consolidation
Figure 14: Composition of MBBG member organisations (offering current accounts), 2005
Lloyds TSB commands the largest market share
Figure 15: Estimated market shares of current account providers, 2000 and 2005
 COMPANY PROFILES
Lloyds TSB
RBS/NatWest
Barclays Group
HSBC
HBOS
Abbey
PRODUCT DEVELOPMENT
Standard current accounts tend to offer similar features
Price has therefore provided the main basis for competition
In-credit interest rates are now particularly important parts of the offering
HBOS and HSBC have recently launched innovative new products
A range of packaged current accounts have also been introduced
DISTRIBUTION
ATMs are now an important part of the current account distribution mix
RBS/NatWest boasts the largest ATM network
Figure 16: Number of bank ATMs and volume of transactions, 2003
Telephone and Internet banking continue to gain in popularity
Figure 17: Number of personal bank accounts accessible by telephone and via the internet (MBBG only), 1999-2003
The volume of online transactions has risen rapidly in the past few years
Figure 18: Number of direct banking transactions (MBBG only), 2001 and 2003
ADVERTISING AND PROMOTION
The importance of advertising rises when competition intensifies
Current account advertising totalled £25 million during the last 12 months
Direct mail is now the main channel used to advertise current accounts
Figure 19: Advertising expenditure on current accounts, by media type, April 2004-March 2005
The press and TV channels are also commonly utilised
First Direct has invested most heavily in advertising
Figure 20: Advertising expenditure on current accounts, by organisation, April 2003-March 2004 and April 2004-March 2005
CONSUMER FINANCIAL ACTIVITY
Consumers are looking to refresh their finances
Relationship with the main financial services providers
Activity levels set to rise in the six months from March 2005
Figure 21: Savings, investment, borrowing and debt repayment – consumers’ expected activity, December 2003-March 2005
Those aged 30-39 will be most active over the next few months
Figure 22: Expected financial activity, by socio-demographic and income groups, March 2005 and average for the last 13 quarters
Consumers looking to build up savings
Figure 23: Leading financial activities planned in the next six months, March 2004-March 2005
Mixed messages on housing activity
Figure 24: Intended mortgage and property purchase activity, December 2002-March 2005
Lloyds TSB increases leading market share position
Figure 25: Leading main financial services providers: market shares, March 2004-March 2005
RBS and Nationwide BS should boost their savings business
Figure 26: Saving, investment and lending market sizes, by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), March 2005
Bank of Scotland has the most ‘active’ customers
Figure 27: Activity levels of main financial providers’ customer bases, March 2005
THE CONSUMER
A current account is the most widely held financial product
Figure 28: Ownership rates for selected financial products, by gender, March 2005
ABC1s, people in the South and 25-44s boast highest ownership rates
Figure 29: Current account ownership rates, by age, socio-economic group and TV region, March 2005
A fifth of current account holders bank with Lloyds TSB
Figure 30: Where respondents hold their main current account, 2003 and 2005
Lloyds TSB has an ageing current account customer profile
Figure 31: Current account provider, by gender, age and socio-economic group, March 2005
Nearly a fifth of C2DE 18-34-year-olds hold their main account with HBOS
Figure 32: Current account provider, by age/socio-economic group and TV region, March 2005
HSBC is particularly strong in the pre-/no family group
Figure 33: Current account provider, by lifestage, working status, marital status and technology users, March 2005
Almost a quarter of broadsheet readers bank with RBS/NatWest
Figure 34: Current account provider, by newspaper readership, commercial TV viewing and supermarket usage, March 2005
Two thirds of account holders still bank with their original provider
Figure 35: Propensity to switch provider, March 2005
But three in ten current account holders have switched providers…
…and around 6 million customers are considering changing supplier
Inertia is particularly strong among the over-55s
Figure 36: Propensity to switch provider, by gender, age and socio-economic group, March 2005
People in northern Britain are more inclined to consider switching
Figure 37: Propensity to switch provider, by TV region, lifestage and newspaper readership, March 2005
HBOS customers are more inclined to consider switching
Figure 38: Propensity to switch provider, by current account provider, March 2005
CONSUMER ATTITUDES AND TARGETING OPPORTUNITIES
The range of access routes has expanded in the last few years
But the vast majority of switchers open their accounts at a branch
Figure 39: Channels that switchers used to open their account, March 2005
One in seven 35-44-year-olds used the phone to switch
Figure 40: Channels that switchers used to open their account, by gender, age and socio-economic group, March 2005
Recent switchers are more likely to have made online applications
Figure 41: Channels that switchers used to open their account, by when switched, March 2005
HBOS switchers overwhelmingly use the branch to open accounts
Figure 42: Channels that switchers used to open their account, by provider, March 2005
The branch remains the most popular way to operate an account
Figure 43: Channels that switchers use to manage their account, March 2005
But a third of switchers now use the Internet to conduct their finances
ABs, 25-44-year-olds and men are most likely to manage accounts online
Figure 44: Channels that switchers use to manage their account, by gender, age and socio-economic group, March 2005
Four in ten switchers who open accounts online still use branches
Figure 45: Channels that switchers use to manage their account, by how switched, March 2005
Half of HSBC switchers use the Internet to manage their account
Figure 46: Channels that switchers use to manage their account, by provider, March 2005
Disaffection with service is the most common switching prompt
Figure 47: Reasons why current account customers might switch, by gender, March 2005
Higher interest rates can also encourage customers to switch
Overdraft charges were also found to be relatively important
But four in ten current account holders would not switch provider
ABC1s and younger consumers are more likely to consider switching
Figure 48: Reasons why current account customers might switch, by age/socio-economic group, March 2005
Younger consumers are the most likely to switch for better overdrafts
CHAID analysis indicates that NatWest/RBS has a fairly affluent customer base
Figure 49: CHAID analysis of the customer bases of the main current account providers, March 2005
Repertoire analysis reinforces interest rate as the second most important factor
Figure 50: Repertoire of number of prompts to persuade people to switch provider, by main prompts, March 2005
INDUSTRY VIEWS
THE FUTURE
Competition in the current account market will remain intense
The account switching market could be set to increase
Service will remain the key switching prompt…
…but consumers are likely to become increasingly price-conscious
The Internet is increasingly expected to come to the fore
FORECAST
79 million current accounts by 2010
Figure 51: Forecast of the volume of current accounts, 2005-10
Factors incorporated in the forecast

This report is supplied in accordance with Mintel's terms and conditions.  
© Mintel Group Ltd.