Consumers and Retail Banking - UK - September 2014

INTRODUCTION
Abbreviations
EXECUTIVE SUMMARY
 MARKET SHARE
Top five banking groups account for 85% market share
Figure 1: Main current account provider, by banking group, May 2014
 PRODUCT OWNERSHIP AND CHANNEL USE
Product ownership and cross-sales
Incumbents increasingly at risk of losing wallet share
Figure 2: Products held and cross-sales, May 2014
Frequency of use of main banking channels
Online and mobile banking integrate banking into everyday life
Figure 3: Frequency of banking channel use, May 2014
Perceived value of banking channels
Online banking leads the way
Figure 4: Importance of banking services, May 2014
 ATTITUDES TOWARDS RETAIL BANKING
Bargain hunting increasingly important to consumers
Figure 5: Consumer attitudes towards banking, May 2014
 ACCOUNT SWITCHING
Consumer intentions in using the Current Account Switch Service
Inertia reigns supreme
Figure 6: Consumer intentions in using the Current Account Switch Service, May 2014
Awareness of the current account switch service
Three quarters of consumers aware of the Current Account Switch Service
Figure 7: Awareness of the Current Account Switch Service, May 2014
Features/services appealing to potential switchers
Banks face a difficult decision when it comes to channel prioritisation
Figure 8: Features/services appealing to potential switchers, May 2014
Consideration of switching to various banking providers
Challengers start to appeal to consumers
Figure 9: Consideration of switching to various banking providers, May 2014
What we think
ISSUES AND INSIGHTS
As long as people still believe that banks are “all the same”, the Current Account Switch Service will have minimal impact
The facts
The implications
Challenging demographics: how to impress Generation Y
The facts
The implications
Are we looking at a future of branchless banks?
The facts
The implications
Adapting the branch to fit diverse consumer requirements
The facts
The implications
TREND APPLICATION
Inter-generational Knowledge Exchange
Predictive financial advice at your fingertips
Access Anything, Anywhere
MARKET DEVELOPMENTS
Key points
The economic recovery is feeding through into retail banking results
Figure 10: Retail banking profits, by provider, 2013 and 2014
Digital disruption has raised consumer expectations
Analysis of big data can help incumbents maintain their advantage in a changing environment
Developments in FinTech challenge banks’ ownership of consumer data
Competition in the industry is slowly increasing
Regulation is holding back innovation
Talking ‘bout my reputation
Figure 11: Results for first quarter of Current Account Switch Service
RETAIL BANKING PROVIDERS: MARKET SHARE
Key points
Decreasing dominance?
Figure 12: Main current account provider, May 2014
Simple, personal and fair leads the way
Lloyds’ market share reflects the spin-off of TSB branches
Figure 13: Market share, May 2014
TSB is the exception, not the rule
COMPANY PROFILES
Barclays
Figure 14: Key financial data for Barclays plc, 2011-13
Figure 15: Key financial data for Barclays plc, 2013 and 2014
Figure 16: Key data for Barclays PLC, 2012 and 2013
HSBC
Figure 17: Key financial data for HSBC, 2011-13
Figure 18: Key financial data for HSBC, 2012 and 2013
Figure 19: Key data for HSBC, 2012 and 2013
Lloyds Banking Group
Figure 20: Key financial data for Lloyds Banking Group, 2011-13
Figure 21: Key financial data for Lloyds Banking Group, 2013 and 2014
Figure 22: Key financial data for Lloyds Banking Group, 2012 and 2013
Figure 23: Key financial data TSB, 2013 and 2014
Figure 24: Key data for TSB, 2013 and 2014
Nationwide
Figure 25: Key financial data for Nationwide, 2013 and 2014
Figure 26: Key data for Nationwide, 2013 and 2014
RBS
Figure 27: Key financial data for RBS Group, 2011-13
Figure 28: Key financial data for RBS Group, 2013 and 2014
Figure 29: Key financial information for RBS Bank, 2012 and 2013
Figure 30: Key data for RBS Group (UK Retail Banking Division), 2011-13
Santander
Figure 31: Key financial data for Santander UK, 2011-13
Figure 32: Key financial data for Santander UK, 2013 and 2014
Figure 33: Key data for Santander Group, 2012 and 2013
The Co-operative Bank
Figure 34: Key financial data for The Co-operative Bank, 2012 and 2013
Figure 35: Key data for the Co-operative Bank, 2012 and 2013
Virgin Money
Figure 36: Key financial data for Virgin Money, 2012 and 2013
Figure 37: Key data for Virgin Money, 2012 and 2013
BRAND COMMUNICATION AND PROMOTION
Key points
Adspend grew by 10% over the course of 2014
Figure 38: Advertising expenditure by retail banking providers, 2012-14
Figure 39: Retail banking advertising expenditure, by advertiser, 2012-14
£67 million spent on brand building
Figure 40: Retail banking expenditure, by advertiser, 2013 and 2014
Television is the key marketing channel
Figure 41: Retail banking advertising expenditure, by media type, 2014
A note on adspend
PRODUCT OWNERSHIP AND CROSS-SALES
Key points
Cross-selling opportunities
Figure 42: Financial services product ownership and cross-sales, May 2014
Technology will erode the “one-stop shop” appeal of the industry giants
Figure 43: Financial services product ownership and cross-sales, by number of products held with main current account provider, May 2014
Keeping up with the Joneses…or with Nationwide and Barclays
Figure 44: Savings account and credit card ownership, by provider, May 2014
Disintermediation dilemma
Figure 45: Number of products held with main current account provider, May 2014
Capturing Generation Y
Figure 46: Number of products held, by age, May 2014
IMPORTANCE OF BANKING CHANNELS
Key points
Online (almost) every time
Figure 47: Relative perceived importance of banking channels as rated the most important, May 2014
Mobile banking yet to go mainstream
Figure 48: Frequency of mobile and online banking channel usage, by age, May 2014
NatWest and Barclays ‘get’ Mobile Banking
Figure 49: Most important banking channel, by provider, May 2014
Differences in ownership drive differences in opinion
Figure 50: Most important banking channel, by product ownership, May 2014
Figure 51: Those who never use in-branch counter services, May 2014
Figure 52: Those who never use in-branch advice services, by product ownership, May 2014
I want what I want, when I want it
Figure 53: Frequency of banking channel use, May 2014
Differences in ownership drive differences in opinion
Figure 54: Most important banking channel, by product ownership, May 2014
Figure 55: Frequency of channel use, by product type, May 2014
ATTITUDES TOWARDS RETAIL BANKING
Key points
Majority of consumers believe it is important to shop around
Figure 56: Consumer attitudes towards banking, May 2014
Most people think banks take their customers for granted
Figure 57: Consumer attitudes about the concept of loyalty in retail banking, May 2014
Aligning bank and consumer definitions of loyalty
69% agree that “banking is never really free”
Figure 58: Belief that “banking is never really free”, by age and financial situation, May 2014
Free banking: The triumph of hope over experience?
Attitudes towards cashback highlight the challenge faced by banks
Figure 59: Attitudes towards current account rewards, May 2014
Beware of generalisations
Figure 60: Concern about branch closures compared with the belief that digital services are more important than branch services, by age, May 2014
INTENDED USE OF CURRENT ACCOUNT SWITCH SERVICE
Key points
Irreversible inertia?
Figure 61: Consumer intentions to use the Current Account Switch Service, may 204
Figure 62: Intention to switch current account provider, May 2014 compared to June 2013
Consumers find it difficult to see the point in switching
Figure 63: Attitude towards banking, by attitude towards switching, May 2014
Confusion over the differences between products acts as a barrier to competition
Figure 64: Likelihood to switch, by product ownership, May 2014
Figure 65: Potential movers, by products held with main current account provider and with alternative provider, May 2014
 AWARENESS OF THE CURRENT ACCOUNT SWITCH SERVICE
Message received, but not translated
Figure 66: Awareness of the Current Account Switch Service, May 2014
Awareness varies widely across demographic groups
Figure 67: Awareness of the Current Account Switch Service, by age, May 2014
Figure 68: Proportion of each age group classed as a potential mover, May 2014
CURRENT ACCOUNT SWITCHING – CONSIDERATION OF RETAIL BANKING SERVICES AND FEATURES
Key points
Banks face a tough decision when it comes to prioritising channels for development
Figure 69: Features/services appealing to potential account switchers, May 2014
Channel hopping
Figure 70: Use of banking channel once a month or more, by likelihood to switch, May 2014
Push or Pull?
Figure 71: Factors motivating the desire to switch among potential account switchers, May 2014
Figure 72: Features appealing to current account switchers, by age, May 2014
CURRENT ACCOUNT SWITCHING – CONSIDERATION OF RETAIL BANKING BRANDS
Key points
Most potential switchers are still looking at the industry giants
Figure 73: Consideration of different banking providers – potential switchers, May 2014
Rise of the challengers
No two are alike
Figure 74: Intention to switch to specific provider, by age, May 2014
Figure 75: Intention to switch to specific provider, by age, May 2014 (continued)
APPENDIX – PRODUCT OWNERSHIP AND CROSS-SALES
Figure 76: Product ownership and cross-sales – Savings account, by demographics, May 2014
Figure 77: Product ownership and cross-sales – Cash ISA, by demographics, May 2014
Figure 78: Product ownership and cross-sales – Any stock market-based investment product, by demographics, May 2014
Figure 79: Product ownership and cross-sales – Credit card, by demographics, May 2014
Figure 80: Product ownership and cross-sales – Personal loan, by demographics, May 2014
Figure 81: Product ownership and cross-sales – Business loan, by demographics, May 2014
Figure 82: Product ownership and cross-sales – Mortgage, by demographics, May 2014
Figure 83: Product ownership and cross-sales – Life insurance, by demographics, May 2014
Figure 84: Product ownership and cross-sales – Home insurance, by demographics, May 2014
Figure 85: Product ownership and cross-sales – Car insurance, by demographics, May 2014
Figure 86: Product ownership and cross-sales – Income protection/critical illness cover, by demographics, May 2014
Figure 87: Product ownership and cross-sales – Business bank account, by demographics, May 2014
Figure 88: Product ownership and cross-sales, by demographics, May 2014
APPENDIX – IMPORTANCE OF BANKING CHANNELS
Figure 89: Importance of banking services – In-branch counter services, by demographics, May 2014
Figure 90: Importance of banking services – In-branch advice services, by demographics, May 2014
Figure 91: Importance of banking services – Online banking, by demographics, May 2014
Figure 92: Importance of banking services – Telephone banking, by demographics, May 2014
Figure 93: Importance of banking services – Mobile banking, by demographics, May 2014
Figure 94: Frequency of use of various retail banking channels – In-branch counter services, by demographics, May 2014
Figure 95: Frequency of use of various retail banking channels – In-branch advice services, by demographics, May 2014
Figure 96: Frequency of use of various retail banking channels – Online banking, by demographics, May 2014
Figure 97: Frequency of use of various retail banking channels – Telephone banking, by demographics, May 2014
Figure 98: Frequency of use of various retail banking channels – Mobile banking, by demographics, May 2014
Figure 99: Frequency of mobile and branch banking channels, by product ownership, May 2014
APPENDIX – ATTITUDES TOWARDS RETAIL BANKING
Figure 100: Agreement with the statement ‘I don’t believe banking is ever really free’, by demographics, May 2014
Figure 101: Agreement with the statement ‘The number of bank branches that are closing worries me’, by demographics, May 2014
Figure 102: Agreement with the statement ‘It is a good idea for banks to offer services in different locations’, by demographics, May 2014
Figure 103: Agreement with the statement ‘Online/mobile services are more important to me than branch services’, by demographics, May 2014
Figure 104: Agreement with the statement ‘Building societies are better at rewarding loyalty than banks’, by demographics, May 2014
Figure 105: Agreement with the statement ‘Banks take their customers for granted’, by demographics, May 2014
Figure 106: Agreement with the statement ‘It is important to look for the best deals on the market yourself’, by demographics, May 2014
Figure 107: Agreement with the statement ‘I am lazy when it comes to making sure I am getting the best deals’, by demographics, May 2014
Figure 108: Agreement with the statement ‘Some banks are better than others at looking after their customers’, by demographics, May 2014
Figure 109: Agreement with the statement ‘Current accounts that offer cashback and other rewards are a good idea’, by demographics, May 2014
Figure 110: Agreement with the statement ‘I would like to have a current account that offers cashback or other rewards’, by demographics, May 2014
Figure 111: Agreement with the statement ‘It would be worth paying for a current account if it offered cashback/rewards on spending and purchases’, by demographics, May 2014
Figure 112: Positive attitudes towards banking, by provider, May 2014
Figure 113: Attitudes towards banking, by age, May 2014
APPENDIX – INTENDED USE OF CURRENT ACCOUNT SWITCH SERVICE
Figure 114: Consumer intentions of using the Current Account Switch Service, by demographics, May 2014
APPENDIX – AWARENESS OF THE CURRENT ACCOUNT SWITCH SERVICE
Figure 115: Consumer awareness of the Current Account Switch Service, by demographics, May 2014
APPENDIX – CURRENT ACCOUNT SWITCHING – CONSIDERATION OF RETAIL BANKING SERVICES AND FEATURES
Figure 116: Most popular features/services appealing to potential account switchers, by demographics, May 2014
Figure 117: Next most popular features/services appealing to potential account switchers, by demographics, May 2014
APPENDIX – CURRENT ACCOUNT SWITCHING – CONSIDERATION OF RETAIL BANKING BRANDS
Figure 118: Most popular consideration of switching to various retail banking brands, by demographics, May 2014
Figure 119: Next most popular consideration of switching to various retail banking brands, by demographics, May 2014
Figure 120: Popular consideration of switching to various retail banking brands, by demographics, May 2014
Figure 121: Other consideration of switching to various retail banking brands, by demographics, May 2014
Figure 122: Least popular consideration of switching to various retail banking brands, by demographics, May 2014
APPENDIX – MARKET SHARE
Figure 123: Most popular main account provider, by demographics, May 2014
Figure 124: Next most popular main account provider, by demographics, May 2014
Figure 125: Other main account provider, by demographics, May 2014
Figure 126: Least popular main account provider, by demographics, May 2014