Current Accounts - UK - July 2015

INTRODUCTION
Report scope and definitions
EXECUTIVE SUMMARY
The market
UK personal current account market has high and stable penetration
Figure 1: Estimated number of current accounts and current account holders – UK, 2015
Increasing margins on overdraft lending
More than 1.75 million current account switches since CASS launch
FOS reports an upsurge in current account complaints
Digital banks set to enter the current account market
Banks launch ‘MiData’ current account comparison tool
Digital banking beats all channels
Figure 2: Frequency of use of the following banking services, May 2015
Key players
Lloyds Banking Group is the largest current account provider in the UK
Figure 3: Current account providers, by group share of main current account market, May 2015
Halifax and Santander are the biggest winners of CASS
Figure 4: Net gains of full account switches completed using CASS between Q3 2014 and Q3 2014 (1 October 2013 - 30 September 2014)
While some providers continue offering switching incentives…
…others have shifted towards big in-credit current account interest rates
High-street providers look to inspire greater customer loyalty
New student current account launches and promotion of financial education
Increased competition from non-traditional entrants
High street players continue to develop their digital services…
…as well as their multi-channel capabilities
Barclays and others look to their customers with disabilities
The consumer
Almost every adult in the UK has a current account
Figure 5: Number of current accounts owned, May 2015
One in five adults owns a premium or packaged current account
Figure 6: Type of current account held, May 2015
Only 13% of current account holders own more than one type of current account
Figure 7: Number of type of current accounts held, May 2015
No fees are the most important deciding factor for consumers
Figure 8: Influential factors when choosing a new current account, May 2015
Convenient branches are head-to-head with easy-to-use websites
Current accounts which just do the basics are the desired product for the majority
Figure 9: Attitudes towards packaged and paid-for current accounts, May 2015
82% of current account holders are satisfied with their main provider…
Figure 10: Satisfaction with main current account providers, May 2015
…rising to 90% among consumers with a premium or packaged current account
Nearly half of current account holders have never switched their main provider
Figure 11: Current account switching activity, May 2015
Just over 70% of current account holders are aware of the CASS
Figure 12: Awareness and use of the CASS, May 2015
More than four in five CASS users are satisfied with the service
Figure 13: Satisfaction with CASS, May 2015
58% of adults would be interested in a current account comparison tool
Figure 14: Attitudes towards current account comparison tools, May 2015
ISSUES AND INSIGHTS
Tailored packaged current accounts can better reflect consumers’ preferences
The facts
The implications
Even dissatisfied customers fail to switch
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
UK’s personal current account market has high and stable penetration
Increasing margins on overdraft lending
More than 1.75 million current account switches since CASS launch
FOS reports an upsurge in current account complaints
Introduction of Paym pushes current account providers towards further digitalisation
Digital banks set to enter the current account market
Banks launch ‘MiData’ current account comparison tool
Digital banking beats all channels
In-branch services however, are still valued
Decline in the UK branch network continues
MARKET SIZE
UK’s personal current account market has high and stable penetration
Figure 15: Estimated number of current accounts and current account holders – UK, 2014 and 2015
ECONOMIC ENVIRONMENT AND MARKET CONDITIONS
Increasing margins on overdraft lending
Figure 16: Monthly interest rate of UK monetary financial institutions sterling overdraft for households – Not seasonally adjusted, January 2009-April15
More than 1.75 million current account switches since CASS launch
FOS reports an upsurge in current account complaints
Figure 17: Number of new complaints about current accounts to the FOS, 2013/14-2014-15 (years ending on 31 March)
Introduction of Paym pushes current account providers towards further digitalisation
Digital banks set to enter the current account market
Banks launch ‘MiData’ current account comparison tool
CHANNELS TO MARKET
Digital banking beats all channels
Figure 18: Frequency of use of the following banking services, May 2015
Mobile banking has strongest potential among Millennials…
Figure 19: Frequency of use of the following banking services, by generation, May 2015
…but is likely to pick up across all age groups
In-branch services however, are still valued
Decline in the UK branch network continues
Figure 20: UK retail bank and building society branch networks, 1997-2013
KEY PLAYERS – WHAT YOU NEED TO KNOW
Lloyds Banking Group is the largest current account provider in the UK
Halifax and Santander are the biggest winners of CASS
Packaged and premium accounts receive the greatest increase in adspend in 2014/15
Top 10 advertisers account for over 90% of total adspend
While some providers continue offering switching incentives….
…others have shifted towards big in-credit current account interest rates
High-street providers look to inspire greater customer loyalty
New student current account launches and promotion of financial education
Increased competition from non-traditional entrants
High street players continue to develop their digital services…
…as well as their multi-channel capabilities
Barclays and others look to their customers with disabilities
MARKET SHARE
Lloyds Banking Group is the largest current account provider in the UK
Figure 21: Current account providers, by share of main and other current account market, May 2015
Nationwide has a strong presence in the secondary market
Halifax and Santander are the biggest winners of CASS
Figure 22: Net gains of full account switches completed using CASS between Q3 2014 and Q3 2014 (1 October 2013-30 September 2014)
Current account balances are taking over from savings accounts
Figure 23: Big providers’ total retail savings balances, shown on a group basis – UK, 2013-14
ADVERTISING SPEND
Peak in advertising spend on current accounts in 2013/14
Figure 24: Total advertising expenditure on current accounts and other related money-transmission services, 2010/11-2014/15 (12 months ending 31 March)
Packaged and premium accounts receive the greatest increase in adspend in 2014/15
Figure 25: Advertising expenditure on current accounts and other related money-transmission services, 2012/13-2014/15 (12 months to 31 March)
Top 10 advertisers account for over 90% of total adspend
Figure 26: Top ten advertisers of current accounts and related money-transmission services, 2012/13-2014/15 (12 months to 31 March)
TV dominates adspend on current accounts
Figure 27: Share of advertising expenditure on current accounts and related money-transmission services, by media type, 2014/15 (12 months to 31 March)
A note on adspend
COMPETITIVE STRATEGIES – PRODUCT DEVELOPMENT
While some continue offering switching incentives….
…others have shifted towards big in-credit current account interest rates
High-street providers look to inspire greater customer loyalty
Barclays: Blue Rewards
Lloyds Bank: Club Lloyds, Everyday Offers and It’s On Us
RBS and NatWest: Cashback Plus loyalty scheme
New student current account launches
Promotion of financial education among the younger customer base
Nationwide: Nationwide Education and The Big Money Movie Pitch
Lloyds Banking Group: Partnership with Newcastle University on digital banking innovation project
Halifax: Student bespoke online banking service
Santander: SmartBank, the new mobile app for students
COMPETITIVE STRATEGIES – NON-TRADITIONAL ENTRANTS AND CHANNEL EVOLUTION
Increased competition from non-traditional entrants
High street players continue to develop their digital services…
NatWest: Trial for new ‘life events’ mobile apps
Halifax: Nymi Band trials
Barclays: Twitter payments through Pingit
Barclays: App available through AppleWatch
Barclays: Cheque imaging service
Lloyds Banking Group: Electronic identification
RBS/NatWest: Fingerprint login
…as well as their multi-channel capabilities
TSB invests £250m in ‘bricks and clicks’
TSB and RBS: New branch design
RBS/NatWest: Bank holiday opening trial
Lloyds Bank: Online appointment booking system
Barclays: Video Banking
Nationwide NOW
Barclays and others look to their customers with disabilities
BRAND RESEARCH
What you need to know
Brand map
Figure 28: Attitudes towards and usage of selected brands, May 2015
Key brand metrics
Figure 29: Key metrics for selected brands, May 2015
Brand attitudes: Co-operative Bank maintains socially aware reputation
Figure 30: Attitudes, by brand, May 2015
Brand personality: Santander and Virgin Money use upbeat associations to boost standout
Figure 31: Brand personality – Macro image, May 2015
Negative press around HSBC creates more damaging connotations
Figure 32: Brand personality – Micro image, May 2015
Brand analysis
Nationwide and First Direct most likely to enthuse customers
Halifax remains most used brand, while Tesco Bank shows most potential
Virgin Money and Santander use more vibrant brand images to stand out
HSBC joins Barclays and Co-operative Bank towards misleading and irresponsible side of the market
NatWest, Lloyds Bank and TSB occupy centre ground
Clydesdale Bank, Metro Bank and Yorkshire Building Society’s lower usage results in a weaker brand image
THE CONSUMER – WHAT YOU NEED TO KNOW
Almost every adult in the UK has a current account
Nearly one third of consumers have multiple accounts
One in five adults own a premium or packaged current account
Higher earners are more likely to own premium or packaged current accounts
No fees are the most important deciding factor for consumers
Convenient branches are head-to-head with easy-to-use websites
Mobile apps are considered more important by Millennials
Financial situation influences desirable features
Current accounts which just do the basics are the desired product for the majority
Customisation may be the key to success
82% of current account holders are satisfied with their main provider…
…rising to 90% among consumers with a premium or packaged current account
Nationwide and Santander customers are the most satisfied with their provider
More than three fifths do not distinguish between current account providers
Nearly half of current account holders have never switched their main provider
Multiple account holders and paid-for current account holders are more likely to have switched
Majority of current account holders do not consider one-off cash incentives as being worthwhile
Just over 70% of current account holders are aware of the CASS
More than four in five CASS users are satisfied with the service
58% of adults would be interested in a current account comparison tool…
…but only just over one quarter would be happy to share their personal data for personalised information on deals
CURRENT ACCOUNT OWNERSHIP
Almost every adult in the UK has a current account
Figure 33: Number of current accounts owned, May 2015
Nearly one third of consumers have multiple accounts
Higher earners are more likely to have multiple current accounts
Figure 34: Number of current accounts held, by gross annual household income, May 2015
OWNERSHIP BY TYPE OF CURRENT ACCOUNT
One in five adults owns a premium or packaged current account
Figure 35: Type of current account held, May 2014 and 2015
Only 13% of current account holders own more than one type of current account
Figure 36: Number of type of current accounts held, May 2015
Figure 37: Type of current account held, by number of types owned, May 2015
Higher earners are more likely to own premium or packaged current accounts
Figure 38: Type of current account held, by gross annual household income, May 2015
Premium or packaged current account holders are more likely to be Santander customers
Figure 39: Main current account provider, by type of current account owned, May 2015
INFLUENTIAL FACTORS WHEN CHOOSING A CURRENT ACCOUNT
No fees are the most important deciding factor for consumers
Figure 40: Influential factors when choosing a new current account, by rank, May 2015
Convenient branches are head-to-head with easy-to-use websites
Mobile apps are considered more important by Millennials
Figure 41: Any response to ‘Easy-to-use mobile app’, by age, May 2015
Financial situation influences desirable features
Figure 42: Influential factors when choosing a new current account, by current financial situation, May 2015
ATTITUDES TOWARDS PAID-FOR PACKAGED CURRENT ACCOUNTS
Nearly three quarters of consumers are not prepared to pay for a current account
Figure 43: Attitudes towards packaged and paid-for current accounts, May 2015
Current accounts which just do the basics are the desired product for the majority
Customisation may be the key to success
Just under two thirds of current account holders find additional offers irrelevant to them
SATISFACTION WITH CURRENT ACCOUNT PROVIDERS
82% of current account holders are satisfied with their main provider…
Figure 44: Satisfaction with main current account providers, May 2015
…rising to 90% among consumers with a premium or packaged current account
Figure 45: Satisfaction with main current account provider, by main current account type owned, May 2015
Nationwide and Santander customers are the most satisfied with their provider
Figure 46: Satisfaction with main current account provider, by main current account provider, May 2015
More than three fifths do not distinguish between current account providers
Figure 47: Attitudes towards current account providers, May 2015
CURRENT ACCOUNT SWITCHING ACTIVITY
Nearly half of current account holders have never switched their main provider
Figure 48: Current account switching activity, May 2015
Multiple account holders are more likely to have switched…
Figure 49: Current account switching activity, by number of current accounts held, May 2015
…as are paid-for premium or packaged current account holders
Figure 50: Current account switching activity, by current account ownership, May 2015
Santander, Nationwide and Halifax customers are more likely to have switched
Figure 51: Current account switching activity, by main current account provider, May 2015
Majority of current account holders do not consider one-off cash incentives as being worthwhile
Figure 52: Attitudes towards introductory cash incentives, May 2015
AWARENESS AND USE OF THE CASS
Just over 70% of current account holders are aware of the CASS
Figure 53: Awareness and use of the CASS, May 2015
Awareness is greater among the older age groups
Figure 54: Awareness and use of the CASS, by age, May 2015
Higher earners more likely to have used CASS
Figure 55: ‘I had heard of this service before today, and I have already used it’, by gross annual household income, May 2015
SATISFACTION WITH CASS
More than four in five CASS users are satisfied with the service
Figure 56: Satisfaction with CASS, May 2015
ATTITUDES TOWARDS CURRENT ACCOUNT COMPARISON TOOLS
58% of adults would be interested in a current account comparison tool…
Figure 57: Attitudes towards current account comparison tools, May 2015
…but only just over one quarter would be happy to share their personal data for personalised information on deals
Figure 58: Attitudes towards current account comparison tools and deals, by generation, May 2015