Deposit and Savings Accounts - UK - April 2014

INTRODUCTION
Report scope and product definitions
Abbreviations
EXECUTIVE SUMMARY
The market
Steady growth trend is forecast to continue
Figure 1: Forecast of retail savings balances, fan chart at current prices, 2008-18
Retail deposits increased by nearly 4% in 2013
Figure 2: Total value of retail savings balances from households, 2008-13
Cash ISA subscriptions back on the rise
Market factors
Rates of return continue to act as a disincentive to save….
…but gap between inflation and wage growth is narrowing
Companies, brands and innovation
Largest providers of savings accounts
Figure 3: Providers’ market share based on total retail savings balances, shown on a group basis, UK, 2013
Online banking channels are the preferred channel
Figure 4: Activities relating to savings, by channel preference, January 2014
Sharp decline in industry adspend continues in 2013
Figure 5: Total advertising expenditure on cash savings products, 2009-13
The consumer
Over two fifths with savings have less than £20,000
Figure 6: Value of savings and investments, January 2014
Easy-access accounts among the most popular savings products
Figure 7: Ownership of savings accounts, January 2014
Just over a quarter of non-savers expect to start saving
Figure 8: Future savings expectations, January 2014
Less positive outlook for non-savers
Figure 9: Future savings expectations, January 2014
Interest rate is a priority when choosing savings products
Figure 10: Influential factors for savings product uptake, January 2014
Nearly two thirds of savings account holders tend to keep extra money in their current account
Figure 11: Saving habits using current accounts, January 2014
Figure 12: Attitudes towards saving in a current account, January 2014
What we think
ISSUES AND INSIGHTS
Consumers are not driven entirely by interest rates anymore
The facts
The implications
Competitive current accounts challenge easy-access savings accounts
The facts
The implications
Move towards scrapping ‘teaser rates’ and rewarding customer loyalty
The facts
The implications
TREND APPLICATION
Savings providers can ‘nudge’ consumers into saving
Helping people feel protected
The next generation of savers
REGULATION IN THE SAVINGS MARKET
Key points
Budget 2014 reveals support for savers
Introduction of CASS has turned all eyes on current accounts
FCA to investigate savings market
Funding for Lending Scheme has harmed savers
MARKET DRIVERS
Key points
Low base rate and high inflation continue
Figure 13: Average annual changes in the RPI, CPI and Bank of England base rate, UK, 2005-13
Rates of return continue to suffer
Figure 14: Average monthly quoted branch-based deposit interest rates, January 2007-February 2014
Savings ratio slips in 2013
Figure 15: Gross household savings and savings ratio, seasonally adjusted and at current prices, UK, 2002-13
Gap between inflation and wage growth is narrowing
Figure 16: Monthly change in RPI and average weekly earnings, January 2009-January 2014
Consumer sentiment on an upward trend…
Figure 17: GfK Consumer confidence barometer – UK, January 1994-February 2014
Figure 18: Spending and saving confidence, March 2001-December 2013*
…but many continue to feel under financial pressure
COMPETITOR PRODUCTS
Key points
Cash ISA subscriptions back on the rise
Figure 19: Value of new ISA subscriptions, 2007/08-2012/13
Product innovation in the current account market renders struggle for saving accounts
Equity-based investments remain far behind in popularity
Figure 20: Ownership of savings and investments, by asset type, November 2013
Figure 21: Ownership of savings and investments, November 2013
WHO’S INNOVATING?
Key points
Current account landscape reduces incentive to innovate
New savings accounts emerge from challenger banks
FirstSave launches three competitive fixed-rate online savings accounts
Aldermore lets business customers customise their terms
Providers look to simplify their savings product range
Technology assists with promoting savings
MARKET SIZE AND FORECAST
Key points
Retail deposits increased by nearly 4% in 2013
Figure 22: Retail savings balances from households, by sector, 2004-13
Money flowing into sight accounts as savers look towards packaged current accounts
Figure 23: Volume and value of individual interest-bearing current and deposit accounts (MBBGs only), 2004-12
Five-year forecast of the value of retail deposits
Figure 24: Forecast of retail savings balances, fan chart at current prices, 2008-18
Figure 25: Forecast of total retail savings balances, 2008-18
Forecast methodology
Fan chart explanation
MARKET SHARE
Key points
Lloyds Banking Group holds the top position based on overall retail savings balances
Figure 26: Providers’ total retail savings balances, shown on a group basis – UK, 2012-13
Halifax, Barclays and Nationwide are the market leaders in the retail savings account market
Figure 27: Ranking of the largest providers of savings accounts, by proportion of customers, January 2014
COMPANIES AND PRODUCTS
Lloyds Banking Group
Company description
Ranking in the retail savings market
Savings product range
Distribution mix
Recent financial performance
Figure 28: Key annual financial data for Lloyds Banking Group, 2012 and 2013
Brand positioning and strategy
Recent activity
Barclays
Company description
Ranking in the retail savings market
Savings product range
Distribution mix
Recent financial performance
Figure 29: Key annual financial data for Barclays Plc, 2012 and 2013
Brand positioning and strategy
Recent activity
Nationwide
Company description
Ranking in the retail savings market
Savings product range
Distribution mix
Recent financial performance
Figure 30: Key interim financial data for Nationwide Building society, H1 2012 and H1 2013
Brand positioning and strategy
Recent activity
HSBC
Company description
Ranking in the retail savings market
Savings product range
Distribution mix
Recent financial performance
Figure 31: Key annual financial data for HSBC Bank Plc, 2012 and 2013
Brand positioning and strategy
Recent activity
Santander
Company description
Ranking in the retail savings market
Savings product range
Distribution mix
Recent financial performance
Figure 32: Key annual financial data for Santander UK, 2012 and 2013
Brand positioning and strategy
Recent activity
RBS Group
Company description
Ranking in the retail savings market
Savings product range
Distribution mix
Recent financial performance
Figure 33: Key annual financial data for RBS Group, 2012-13
Brand positioning and strategy
Recent activity
BRAND COMMUNICATION AND PROMOTION
Key points
Sharp decline in industry adspend continues in 2013
Figure 34: Total advertising expenditure on cash savings products, 2009-13
Instant-access accounts suffer greatest decline in adspend
Figure 35: Total advertising expenditure on cash savings products, by product type, 2009-13
Halifax holds top position as highest spending advertiser in the savings account market
Figure 36: Top ten advertisers of savings accounts (excluding cash ISAs), 2011-13
Barclays top advertiser of cash ISAs
Figure 37: Top ten advertisers of cash ISAs, 2011-13
A note on adspend
CHANNELS TO MARKET
Key points
Online banking channels are preferred…
Figure 38: Activities relating to savings, by channel preference, January 2014
…even among older age groups
Figure 39: Activities relating to savings by channel preference, by age, January 2014
Mobile banking should pick up even more in the coming years
Many consumers still use branches
Decline in the UK branch network is speeding up
Figure 40: UK bank and building society branch networks, 2003-12
Balancing ‘bricks and clicks’ may be the best way forward
VALUE OF SAVINGS AND INVESTMENTS
Key points
Survey background
Over two fifths with savings below £20,000
Figure 41: Value of savings and investments, January 2013 and January 2014
Higher earners most likely to have savings worth more than £50,000
Figure 42: Value of savings and investments, by gross annual household income, January 2014
Older adults more likely to have a higher level of savings
Figure 43: Value of savings and investments, by gender and age, January 2014
Young savers create opportunities in the savings market
Gender gap in the value of savings
Figure 44: Value of savings and investments, by gender and age, January 2014
OWNERSHIP OF SAVINGS PRODUCTS
Key points
Easy-access accounts among the most popular savings products
Figure 45: Ownership of savings accounts, January 2014
Regular savings accounts tend to appeal to the younger adult savers…
Figure 46: Ownership of savings accounts, by age, January 2014
…while fixed-term and tax-exempt savings products appeal to those with high value of savings
Figure 47: Ownership of savings accounts, by value of savings and investments, January 2014
Over half of adult savers have multiple savings products
Figure 48: Number of savings product types held, January 2014
Figure 49: Ownership of savings products, by number of savings product types held, January 2014
Higher-income households more likely to own more product types
Figure 50: Number of savings product types held, by gross annual household incomes, January 2014
FUTURE SAVINGS EXPECTATIONS
Key points
Just over a quarter of non-savers expect to start saving
Figure 51: Future savings expectations, January 2014
Figure 52: Future savings expectations, January 2014
Young savers are confident about the next six months
Figure 53: Future savings expectations, by age, January 2014
Regular savings account holders most likely to increase their savings
Figure 54: Future savings expectations, by ownership of savings accounts, January 2014
INFLUENTIAL FACTORS FOR SAVINGS PRODUCT UPTAKE
Key points
Interest rate is a priority when choosing savings products
Figure 55: Influential factors for savings product uptake, January 2014
Figure 56: Influential factors for savings product uptake, January 2014
Consumers also on the look-out for loyalty rewards
Online access more important than branch access
FSCS protection is a main concern for those with higher value savings
Figure 57: Influential factors for savings product uptake, by value of savings and investments, January 2014
SAVING HABITS USING CURRENT ACCOUNTS
Key points
Nearly two thirds of savings account holders tend to keep extra money in their current account
Figure 58: Saving habits using current accounts, January 2014
Figure 59: Attitudes towards saving in a current account, January 2014
Consumer inertia may also be a factor
Competitive interest rates on current accounts stand in the way of saving accounts
APPENDIX – MARKET DRIVERS
Figure 60: Real households’ disposable income, 2002-13
Figure 61: Trends in current financial situation compared to a year ago, January 2012-14
APPENDIX – COMPETITOR PRODUCTS
Figure 62: Volume and value of ISA subscriptions, by type of ISA, 2007/08-2012/13
APPENDIX – MARKET SIZE AND FORECAST
Figure 63: Total market forecast, best- and worst-case scenarios
APPENDIX – CHANNELS TO MARKET
Figure 64: UK bank and building society branch networks, 2002-12
Details on providers’ branch networks
Lloyds Banking Group
Santander UK
Barclays
RBS Group
HSBC
Consumer data on preferences for retail banking channels
Figure 65: Preferences for retail banking channels, by ownership of different types of savings accounts, January 2014
Figure 66: Preferences for retail banking channels – Researching a savings product, by demographics, January 2014
Figure 67: Preferences for retail banking channels – Applying for a savings product, by demographics, January 2014
Figure 68: Preferences for retail banking channels – Checking your savings balance, by demographics, January 2014
Figure 69: Preferences for retail banking channels – Transferring money between accounts, by demographics, January 2014
APPENDIX – VALUE OF SAVINGS AND INVESTMENTS
Figure 70: Value of savings and investments, by demographics, January 2014
Figure 71: Value of savings and investments, by demographics, January 2014 (continued)
APPENDIX – OWNERSHIP OF SAVINGS PRODUCTS
Figure 72: Ownership of savings accounts, by demographics, January 2014
Figure 73: Ownership of savings accounts, by demographics, January 2014 (continued)
Figure 74: Ownership of savings accounts, by demographics, January 2014 (continued)
Figure 75: Number of savings product types held, by demographics, January 2014
APPENDIX – FUTURE SAVINGS EXPECTATIONS
Figure 76: Future savings expectations of individuals with savings and/or investments, by demographics, January 2014
Figure 77: Future savings expectations of individuals with no savings or investments, by demographics, January 2014
APPENDIX – INFLUENTIAL FACTORS FOR SAVINGS PRODUCT UPTAKE
Figure 78: Influential factors for savings product uptake, by demographics, January 2014
Figure 79: Influential factors for savings product uptake, by demographics, January 2014 (continued)
Figure 80: Influential factors for savings product uptake – Rank 1, by demographics, January 2014
Figure 81: Influential factors for savings product uptake – Rank 1, by demographics, January 2014 (continued)
Figure 82: Influential factors for savings product uptake – Rank 2, by demographics, January 2014
Figure 83: Influential factors for savings product uptake – Rank 2, by demographics, January 2014 (continued)
Figure 84: Influential factors for savings product uptake – Rank 3, by demographics, January 2014
Figure 85: Influential factors for savings product uptake – Rank 3, by demographics, January 2014 (continued)
APPENDIX – SAVING HABITS USING CURRENT ACCOUNTS
Figure 86: Saving habits using current accounts, by demographics, January 2014
Figure 87: Attitudes towards saving in a current account, by demographics, January 2014
Figure 88: Attitudes towards saving in a current account, by demographics, January 2014 (continued)