Deposit and Savings Accounts - UK - April 2011

INTRODUCTION
Abbreviations
EXECUTIVE SUMMARY
The Market
Retail savings balances have marginally increased
Some scope for growth in the coming years
Figure 1: Forecast of outstanding retail savings balances, 2005-15
Short-term savings top the list of financial priorities for 2011
Market Factors
Saving intentions will face financial realities
Worried consumers will sit and wait
Surge in online banking registrations at major retail banks
Companies, Brands and Innovation
Santander stands out from the crowd
Figure 2: Attitudes towards and usage of deposit and savings account brands, January 2011
Share of Big Six remains relatively unchanged
Figure 3: Proportion of savers holding an account with the leading players, February 2011
Adspend grew in 2010 and 2011 will be a competitive year
The Consumer
Savings accounts held by four fifths of the adult population
Figure 4: Consumers without any savings, by age, February 2011
Climbing the savings ladder
Better to save, or to clear debts?
Security, retirement, and education
What we think
ISSUES IN THE MARKET
What is currently motivating people to save?
How are price comparison sites affecting the market?
Are low interest rates stopping people from saving?
How can different consumer groups be tempted to increase savings?
FUTURE OPPORTUNITIES
Proving credentials in the savings market
Certainty in an uncertain world
INTERNAL MARKET ENVIRONMENT
Key points
Savings ratio still up on pre-recession levels...
Figure 5: Household saving ratio (% of Post Tax Income), seasonally adjusted, 2006-10
... but is forecast to remain flat in 2011
Reduced household incomes affect savings ability
Low base rate hits savings for millions
Figure 6: bank of England base rate, end of quarter, Q1 1975-Q4 2010
…and are hitting margins
Figure 7: Average monthly quoted deposit interest rates at banks and building societies, January 2004-January 2011
Short-term savings top the list of financial priorities for 2011…
…but fixed term accounts are tempting many
Consumers’ intentions... and reality
Market still ruled by confusing number of products
Interest in ISAs at new high
Relaunch of inflation-beating NS&I bonds
Further changes
New ISA transfer times
BROADER MARKET ENVIRONMENT
Key points
UK households are still concerned with paying off debt
Fourth quarter GDP figures show negative growth
Figure 8: GDP quarterly percentage change, Q1 2004-Q4 2010
Unemployment falls back in February, but remains high
Figure 9: Unemployment rate, UK, January 2000-February 2011
UK consumer confidence at alarming low
Figure 10: Gfk NOP Consumer Confidence Index, January 1988-February 2011
UK’s aging population means fewer people actively saving
Figure 11: Trends in the age structure of the UK population, 2005-15
Prosperity increasing in the long term
Figure 12: Forecast adult population trends, by socio-economic group, 2005-15
Improved consumer advice needed
Rebuilding retail banking at times of turmoil – a golden opportunity?
An advice gap opening
COMPETITIVE CONTEXT
Key points
Healthy rise in ISA deposits in 2010
Figure 13: ISA sales, by type of ISA, 2003/04-2009/10
Call for investment as stock market grows
Figure 14: FTSE-100 Index, end of month, January 1994-January 2011
Current account balances forecast to grow further
SWOT ANALYSIS
Figure 15: Deposit and savings accounts – SWOT Analysis, 2011
WHO’S INNOVATING?
Key points
A new way of banking emerges after the recession
NatWest makes a play to become a consumer champion
... and others are following
Supermarkets have entered the fixed bonds market
MARKET SIZE AND FORECAST
Key points
Retail savings balances have marginally increased
Figure 16: Retail savings balances outstanding, 2003-10
Compared to previous years’ growth, savings are flat in 2010
People focusing on paying off debt rather than saving
Banks and building societies battle for top online savings rates
Consumers shifting funds into notice accounts
Figure 17: Number and value of individual interest-bearing sight and time accounts (MBBG* only), 2003-09
Ever more money being put away in ISAs
Figure 18: Number of cash ISA* accounts and the value of gross subscriptions, by tax year, 2002/03-2009/10
Building societies recover strongly in 2010
Figure 19: Cash ISA balances outstanding, 2003-10
 FORECAST
Savings balances should return to growth…
Figure 20: Forecast of outstanding retail savings balances, 2005-15
…but in real terms, values will see little change
Figure 21: Forecast of outstanding retail savings balances, 2005-15
Forecast methodology
MARKET SHARE
Key points
Lloyds banking group dominates the savings market
Figure 22: Savings account ownership, by provider, February 2011
COMPANIES AND PRODUCTS
Barclays
HSBC
Lloyds Banking Group
Nationwide
RBS Group
Santander
BRAND COMMUNICATION AND PROMOTION
Key points
In 2010, adspend grew, and 2011 will be a competitive year
Surge in cash ISAs represents a shift in mindset.
Figure 23: Total savings adspend, segmented by minor brand category, 2007-08/2009-10
The big banks continue to dominate when it comes to savings adspend...
... but building societies have entered the race
Figure 24: Top 20 advertisers in savings, 2006-07/2009-10
Press and TV represent two biggest categories of savings adspend
Figure 25: Total adspend on savings by media type, 2006-07/2009-10
BRAND RESEARCH
Brand map
Figure 26: Attitudes towards and usage of deposit and savings account brands, January 2011
Brand attitudes
Figure 27: Attitudes by deposit and savings account brand, January 2011
Brand personality
Figure 28: Deposit and savings account brand personality – macro image, January 2011
Figure 29: Deposit and savings account brand personality – micro image, January 2011
Correspondence analysis
Brand experience
Figure 30: Deposit and savings account brand usage, January 2011
Figure 31: Satisfaction with various deposit and savings account brands, January 2011
Brand consideration
Figure 32: Consideration of deposit and savings account brands, January 2011
Brand momentum
Figure 33: Consumer perceptions of current deposit and savings account brand performance, January 2011
Net promoter score
Figure 34: Deposit and savings account brand recommendation – Net Promoter Score, January 2011
Brand index
Figure 35: Deposit and savings account brand index, January 2011
Figure 36: Deposit and savings account brand index vs. recommendation, January 2011
Target group analysis
Figure 37: Target groups, January 2011
Figure 38: Deposit and savings account brand usage, by target groups, January 2011
Group One – The Conformists
Group Two – Simply the Best
Group Three – Shelf Stalkers
Group Four – Habitual Shoppers
Group Five – The Individualists
CHANNELS TO MARKET
Key points
2011 should see fewer bank closures than in previous years
Figure 39: UK bank and building society combined branch networks, 1998-2009
Surge in online banking registrations at major retail banks
Figure 40: Number of personal customers registered to access accounts by telephone and computer (MBBG only), 2002-09
Key points
Four in five have some form of savings
Figure 41: Savings product ownership, February 2011
Young adults are savings-deprived
Figure 42: Consumers without any savings, by age, February 2011
Figure 43: Consumers without any savings, by annual household income, February 2011
All age groups equally likely to have cash-based investment
Older, wealthier consumers taking advantage of the stock market
Lower incomes invest in savings with instant access
Premium Bonds – it could be you
Saving among singles
The ‘big six’ continue to dominate
Figure 44: Companies with which savings accounts are held, February 2011
Figure 45: Companies with which savings accounts are held, by demographics, February 2011
REPERTOIRE ANALYSIS
Key points
Savings are embraced by the majority
Figure 46: Repertoire of financial product ownership, February 2011
Married couples and high earners more likely to own multiple types of savings products
Figure 47: Repertoire of savings product ownership, by demographics, February 2011
Saving generally begins with an instant access account…
Figure 48: Savings product ownership, by repertoire of savings product ownership, February 2011
… followed by a cash ISA
NS&I products suit a variety of needs and demographic groups
Locking assets away and investing with risk reserved for those with a variety of savings products
Santander attracting those with a wide range of holdings
Figure 49: Market position of the ‘big six’, by repertoire of savings product ownership, February 2011
Owners of five or more types of product more likely to be saving for emotional security
ATTITUDES TOWARDS SAVING
Key points
One quarter are paying off debts/mortgage…
Figure 50: Attitudes towards saving, February 2011
...but the same proportion hope to boost their savings
Inertia still a powerful force in the market
The scope to shift savings online
Young adults eager to save
Figure 51: Attitudes towards saving, by demographics, February 2011
High earners looking to add to their savings...
...but others are struggling to find spare cash
Interest rates are a non-issue for many
Over-55s and high earners are most likely to chase rates
Figure 52: Attitudes towards online management of savings, researching and moving savings to obtain best rates, by age, February 2011
Figure 53: Attitudes towards online management of savings, researching and moving savings to obtain best rates, by socio-economic group, February 2011
Online banking does not necessarily translate to frequent switching
Apathy amongst consumers without savings
Figure 54: Attitudes towards saving, by consumers without savings, February 2011
Price comparison sites popular amongst stock market investors
Figure 55: Attitudes towards online management of savings, researching and moving savings to obtain best rates, by type of savings product owned, February 2011
Aggregators could be key to winning fixed-rate business
Figure 56: Attitudes towards online management of savings, researching and moving savings to obtain best rates, by type of cash savings product owned, February 2011
Nationwide and Santander are the choice of the financially savvy
Figure 57: Attitudes towards savings, by companies with which savings accounts are held, February 2011
Consumers are adding to their emergency funds in 2011
Figure 58: Motivations for planning to increase savings over the next year, February 2011
MOTIVATIONS FOR SAVING AND INVESTING
Key points
Household bills and emergencies top savings priorities
Figure 59: Motivations for saving, February 2011
Young adults save for major events and house deposits
Wealthy consumers have adequate pensions and save for emotional security
Education costs set to be prioritised amongst middle and higher income families
Low earners saving to pay regular bills
Taking the long-term view
Figure 60: Motivations for saving, by product ownership, February 2011
Consumers with locked away assets have multiple savings priorities
Figure 61: Motivations for saving, by cash-based savings ownership, February 2011
Big ticket purchasers likely to be the most driven savers in 2011
Figure 62: Motivations for saving, by attitudes towards saving, February 2011
TARGET GROUPS
Key points
Motivated, or apathetic?
Figure 63: Savings product target groups, February 2011
 HOUSEHOLD EXPENSES DOMINATED
Savings profile
Demographics
Consumer behaviour insight
 DEBT/MORTGAGE REPAYERS
Savings profile
Demographics
Consumer behaviour insight
 FINANCIALLY COMFORTABLE SAVERS
Savings profile
Demographics
Consumer behaviour insight
 HIGHLY MOTIVATED SAVERS
Savings profile
Demographics
Consumer behaviour insight
APPENDIX – PRODUCT OWNERSHIP
Figure 64: Most popular financial product ownership, by demographics, February 2011
Figure 65: Next most popular financial product ownership by demographics, February 2011
Figure 66: Other financial product ownership, by demographics, February 2011
APPENDIX – REPERTOIRE ANALYSIS
Figure 67: Repertoire of financial product ownership, by demographics, February 2011
Figure 68: Repertoire of financial product ownership, by demographics, February 2011
APPENDIX – ATTITUDES TOWARDS SAVING
Figure 69: Most popular savings behaviour, by demographics, February 2011
Figure 70: Next most popular savings behaviour, by demographics, February 2011
APPENDIX – MOTIVATIONS FOR SAVING AND INVESTING
Figure 71: Most popular motivations for saving, by demographics, February 2011
Figure 72: Next most popular motivations for saving, by demographics, February 2011
APPENDIX – TARGET GROUPS
Figure 73: Target groups, by demographics, February 2011
Figure 74: Savings behaviour, by target groups, February 2011
Figure 75: Motivations for saving, by target groups, February 2011
Figure 76: Financial product ownership, by target groups, February 2011