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Consumers and Retail Banking - UK - September 2016

Published By :

Mintel

Published Date : Sep 2016

Category :

Banking

No. of Pages : N/A

The traditional retail banking providers continue to retain a dominant share of the market, despite the threat posed by challenger banks and innovative FinTech firms. However, the implementation of Open Banking by 2018 poses another threat, by making it easier for consumers to identify where they could get better value elsewhere. This could lead to higher rates of switching, but is likely to have the biggest impact on providers themselves, which will be incentivised to improve their services in order to retain customers.

Table of Contents

OVERVIEW
What you need to know

EXECUTIVE SUMMARY
The market
Open Banking will lead to improved services
Consumer borrowing continues to grow
Figure 1: Gross consumer credit and mortgage lending, 2009-15
Companies and brands
Barclays is the largest individual provider of current accounts
Figure 2: Main banking groups, by aggregated share of main current account market, July 2016
Branch closures continue
Adspend grows by 8% in 2016
Figure 3: Top 15 highest spenders for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, 2014-16*
The consumer
Savings accounts are second most widely owned financial services product
Figure 4: Financial product ownership and cross-sales, July 2016
72% interested in a more personalised service
Figure 5: Interest in personalised banking services, July 2016
Majority are satisfied with their bank
Figure 6: Overall satisfaction with main banking provider, July 2016
Online banking can only partially meet consumer needs
Figure 7: Attitudes towards retail banking services, July 2016
What we think

ISSUES AND INSIGHTS
Cross-selling in retail banking driven by customer inertia
The facts
The implications
Providers will need to find the right balance with personalised services
The facts
The implications
Lack of interest in switching will hinder use of Open Banking
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Open Banking will lead to improved services
Low interest rates continue to disengage savers
Borrower confidence boosted by rate cut

MARKET OVERVIEW
CMA announces package of reforms to increase competition
Technology and transparency underpin measures to improve competition
Number of CASS users continues to grow
Consumer borrowing continues to grow
Figure 8: Gross consumer credit and mortgage lending, 2009-15
Low interest rates continue to disengage savers
Figure 9: Savings account interest rates, January 2011-July 2016
Mortgage and loan customers look forward to longer period of low rates
Figure 10: Consumer credit interest rates, January 2011-July 2016

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Barclays is the largest individual provider of current accounts
Branch closures continue
Adspend grows by 8% in 2016

MARKET SHARE
Barclays is the largest individual provider of current accounts
Figure 11: Current account providers, by share of main and other current account market, July 2016
Lloyds Banking Group is biggest overall provider
Figure 12: Top 6 main current account providers, by aggregated share of main current account market, July 2016
Challengers pose a threat to future market share?

COMPANY STRATEGIES
Branch closures continue
Lloyds Banking Group
RBS
Metro Bank and Nationwide remain committed
Embracing technology to transform consumer experiences
Barclays
Santander
Mobile-only banks make soft launch
Focusing on customer satisfaction
Nationwide
First Direct

BRAND COMMUNICATION AND PROMOTION
Lloyds Bank is the biggest spender on retail banking advertising
Figure 13: Top 15 highest spenders for recorded above-the-line, online display and direct mail advertising expenditure on retail banking, 2014-16*
TV claims ever-increasing share of adspend…
…but digital spend is increasing
Figure 14: Recorded above-the-line, online display and direct mail advertising expenditure on retail banking, by media type, 2014-16
Nielsen Ad Intel coverage

THE CONSUMER – WHAT YOU NEED TO KNOW
Savings accounts are the most widely cross-sold products
Majority are interested in personalised services
Four in five are satisfied with their provider…
…with the helpfulness of staff being a key driver
Online banking can only partially meet consumer needs

PRODUCT OWNERSHIP AND CROSS-SALES
Majority have one current account
Figure 15: Current account ownership, July 2016
Savings accounts are second most widely owned product
Figure 16: Financial product ownership and cross-sales, July 2016
Customers are less loyal when it comes to credit cards
People more likely to look elsewhere for insurance
Banks face further cross-selling challenges
Figure 17: Repertoire of financial products, July 2016
Barclays, Halifax and Nationwide are best at cross-selling
Figure 18: Repertoire of financial products with main provider, by selected providers, July 2016

INTEREST IN PERSONALISED BANKING SERVICES
72% interested in a more personalised service
Figure 19: Interest in personalised banking services, July 2016
Generational differences highlight higher expectations among younger consumers
Figure 20: Interest in personalised banking services, by age, July 2016

OVERALL SATISFACTION WITH MAIN PROVIDER
Four in five are satisfied with their provider
Figure 21: Overall satisfaction with main banking provider, July 2016
Nationwide has highest levels of customer satisfaction
Figure 22: Overall satisfaction with main banking provider, July 2016

SATISFACTION WITH RETAIL BANKING SERVICES
Consumers most satisfied with helpfulness of staff
Figure 23: Satisfaction with retail banking services, July 2016
Rewarding loyalty pays off
Figure 24: Satisfaction with rewards for loyalty, by number of financial products with main current account provider, July 2016
Nationwide stands out for the helpfulness of its staff
Figure 25: Satisfaction with retail banking services, by main current account provider, July 2016
Staff are key to overall satisfaction
Figure 26: Key drivers of overall satisfaction with main current account provider, July 2016
Figure 27: Overall satisfaction with main current account provider – Key driver output, July 2016

ATTITUDES TOWARDS RETAIL BANKING SERVICES
Online banking can only partially meet consumer needs
Figure 28: Attitudes towards retail banking services, July 2016
Cross-selling opportunities greatest among 16-34-year-olds
Online-only banks pose a significant threat
The reality of an online-only bank is less attractive as finances become more complex
Figure 29: Consideration of banks that only offer online and mobile services, by age, July 2016
Only one in 10 happy to share their account transaction data
Attitudes towards Midata show barriers and appetite for Open Banking

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

APPENDIX – BANKING CHANNELS – FREQUENCY OF USE
Figure 30: Frequency of banking services use, July 2016

List of Table

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