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Consumers and Retail Banking - UK - September 2019

OVERVIEW
What you need to know
Scope of this Report
EXECUTIVE SUMMARY
The market
Confidence has increased in 2019
Figure 1: Consumers’ financial wellbeing, three-month moving average, January 2017-July 2019
FCA introduces rules to fix ‘dysfunctional’ overdraft market
Companies and brands
Lloyds Banking Group is the biggest retail banking provider
Goldman Sachs offers savings and digital banks offer loans
Advertising spend returns to marginal growth
Nationwide is the most recommended brand
Figure 2: Key metrics for selected brands, August 2019
The consumer
Barclays tops the list for current accounts
Figure 3: Current accounts held, July 2019
Nationwide account holders are most likely to hold additional products
Figure 4: Other banking products held, July 2019
25-44s most likely to use their main current account for daily spend
Figure 5: Method of daily spending, by age and gender, July 2019
People are generally pretty satisfied with their bank
Figure 6: Satisfaction with banking services, July 2019
A fifth have switched banks
Figure 7: Likelihood to switch account, by age, July 2019
Bonus and cashback are the biggest drivers of switching
Figure 8: Motivations to switch, July 2019
People prefer to deal with issues in person
Figure 9: Preferred methods of communication with banks, July 2019
What we think
ISSUES AND INSIGHTS
Are banks placing too much focus on digital?
The facts
The implications
Challenger banks face a struggle to become the ‘main bank’
The facts
The implications
Is it time for more targeted banking brands?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Confidence has increased in 2019
FCA introduces rules to fix ‘dysfunctional’ overdraft market
MARKET DRIVERS
Confidence has increased in 2019
Figure 10: Consumers’ financial wellbeing, three-month moving average, January 2017-June 2019
Wage growth continues to exceed inflation
Figure 11: Inflation versus earnings growth, July 2016-June 2019
Household savings ratio recovers slightly in 2018
Figure 12: Household savings ratio, 2000-18
Bank of England holds interest rates at 0.75%
Figure 13: Quoted household interest rates January 2014-July 2019
Banking and credit card complaints flat year-on-year
Figure 14: Aggregate complaints data, H2 2017-H2 2018
REGULATORY AND LEGISLATIVE CHANGES
Open Banking develops, but slower than expected
Changes to overdraft regulation
PPI deadline closes in
FCA launched a consultation on fair treatment of vulnerable customers
Strong Customer Authentication changes delayed
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Lloyds Banking Group is the biggest retail banking provider
Goldman Sachs offers savings and digital banks offer loans
Advertising spend returns to marginal growth
Nationwide is the most recommended brand
LEADING PLAYERS
Lloyds Bank continues to lead the sector
Figure 15: Customer deposit and loan values for the leading banks, 2018*
Lloyds Banking Group
Barclays
RBS Group
Santander
HSBC Group
Nationwide Building Society
Others
Botched IT migration creates the most challenging year for TSB
Monzo hits 2 million customers
Metro Bank accounting scandal
CYBG moves forward with Virgin Money integration
Starling aims to break even in 2020
LAUNCH ACTIVITY AND INNOVATION
Open Banking
Lloyds launches Open Banking app for credit cards and savings
CYBG launches energy switching service
Nationwide and Starling Bank partner with CreditLadder
Investing in innovation
First Direct launches mobile co-creation lab
Nationwide and Lloyds launch digital innovation centres
Security enhancements
TSB and NatWest offer account opening by selfie
Santander adds combined voice and phone ID authentication
NatWest launches first biometric card in the UK
Figure 16: NatWest Biometric card, March 2019
New launches
Marcus by Goldman Sachs launched in the UK
RBS prepares to launch Bó
Digital banks start offering loans
ADVERTISING AND MARKETING ACTIVITY
Advertising expenditure by retail banks stabilises
Figure 17: Above-the-line, online display and direct mail advertising expenditure on retail banking, 2014/15-2018/19
Halifax moves into top spot
Figure 18: Leading spenders on above-the-line, online display and direct mail advertising expenditure on retail banking, 2014/15-2018/19
TV takes lion’s share of spend
Figure 19: Above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2018/19
TSB places greatest focus on TV advertising
Figure 20: 10 leading spenders on above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2018/19
Brand building is the focus of advertising
Figure 21: Above-the-line, online display and direct mail advertising expenditure on retail banking, by product type, 2018/19
Nielsen Ad Intel coverage
Sponsorships
BRAND RESEARCH
Brand map
Figure 22: Attitudes towards and usage of selected brands, August 2019
Key brand metrics
Figure 23: Key metrics for selected brands, August 2019
Brand attitudes: Santander seen to reward loyalty
Figure 24: Attitudes, by brand, August 2019
Brand personality: Challenger banks create a sense of fun
Figure 25: Brand personality – Macro image, August 2019
Nationwide is viewed as reliable, honest and helpful
Figure 26: Brand personality – Micro image, August 2019
Brand analysis
Nationwide is the most recommended brand
Barclays and Lloyds – prestigious and authoritative but impersonal
Santander and Halifax enjoy high levels of trust
HSBC and NatWest suffer low recommendations
First Direct delivers an excellent experience
TSB and Co-operative struggle to rebuild brands
Digital banks leverage a playful and progressive image
Metro Bank struggles to stand out
THE CONSUMER – WHAT YOU NEED TO KNOW
Barclays tops the list for current accounts
Nationwide account holders are most likely to hold additional products
25-44s most likely to use their main current account for daily spend
People are generally pretty satisfied with their bank
A fifth have switched banks
Bonus and cashback are the biggest drivers of switching
People prefer to deal with issues in person
CURRENT ACCOUNT OWNERSHIP
Barclays is most widely used current account provider
Big four continue to dominate
Figure 27: Current accounts held, July 2019
Nationwide has the oldest customer base
Figure 28: Current accounts held, by age and socio-economic group, July 2019
Challenger banks struggle to gain ‘Main Bank’ status
Figure 29: Proportion of current account holders saying it is their main current account, July 2019
More than a third of 25-34 year olds hold multiple current accounts
Figure 30: Repertoire analysis of current accounts held, by age, July 2019
BANKING PRODUCTS HELD
More than half hold credit cards or savings accounts
Figure 31: Other banking products held, July 2019
Savings accounts are most likely to be held with the main account
Figure 32: Other banking products held with main bank, July 2019
Nationwide members are most likely to hold additional products
Figure 33: Other banking products held with main bank, by main bank, July 2019
ACCOUNT USED FOR DAILY SPENDING
25-44s are most likely to use their current account for daily spend
Less than a fifth rely on cash
Over-65s are most likely to use credit cards for daily spending
Figure 34: Method of daily spending, by age and gender, July 2019
SATISFACTION WITH BANKING SERVICES
People are generally satisfied with their online banking services…
…and least happy with interest rates
Figure 35: Satisfaction with banking services, July 2019
Nationwide customers value the branch network
Figure 36: Satisfaction with communication channels (any satisfied), by main bank, July 2019
RBS customers less happy about service
Figure 37: Satisfaction with banking service (any satisfied), by main bank used, July 2019
Most people are satisfied with their main bank
Figure 38: Overall satisfaction, July 2019
KEY DRIVER ANALYSIS
Service is key but customers are still attached to branches
Figure 39: Key drivers of overall satisfaction with main current account provider, July 2019
Figure 40: Overall satisfaction with main current account provider – Key driver output, July 2019
SWITCHING HABITS
A fifth have switched in the last three years
Switching peaks among 25-34 year olds
Figure 41: Switching habits, by age and gender, July 2019
Switching peaks among higher-income households
Figure 42: Switching habits, by household income, July 2019
Over a quarter of non-switchers under 45 would consider switching
Figure 43: Likelihood to switch account, by age, July 2019
MOTIVATIONS AND BARRIERS TO SWITCHING
Bonuses encourage switchers but banks are scaling back
Figure 44: Motivations to switch, July 2019
Spending tools hold greater appeal to the young
Figure 45: Encouragements to switch, by age and socio-economic group, July 2019
Happy customers don’t switch
Figure 46: Discouragements to switch, July 2019
PREFERRED METHODS OF COMMUNICATION
People prefer to deal with issues in person
Figure 47: Preferred methods of communication with banks, July 2019
The key is making real people easily accessible
Figure 48: Preferred methods of communication with banks, by age, July 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – KEY DRIVER ANALYSIS
Interpretation of results
Figure 49: Overall satisfaction with main current account provider – Key driver output, July 2019
Figure 50: Satisfaction with main current account provider, July 2019

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