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Consumers, Saving and Investing - UK - January 2016

Published By :

Mintel

Published Date : Jan 2016

Category :

Banking

No. of Pages : N/A

The outlooks for the savings and investments markets are contrasting. Whilst the cash savings market is struggling to rally against difficult market conditions, the investment market is benefiting from growing levels of interest and the barrier-lowering effects of digital innovation.

Table of Content

Overview

What you need to know
Scope of the report

Executive Summary

The Market
Cash savings market conditions remain difficult
Figure 1: Quarterly variations in savings ratio, Q1 2005 – Q2 2015
Government seeks to encourage savers to save more
Despite the challenges consumers continue to recognise the importance of saving
Significant growth opportunities for the investment market
The Consumer
Significant proportion of savings accounts hold little to no savings
Figure 2: Consumer ownership of savings products, October 2015
Encouraging further engagement could benefit both parties
Hostile savings environment promotes shift in consumer behaviour
Figure 3: Consumer engagement with the savings market, October 2015
Investment providers have opportunity to capitalise on growing interest
Figure 4: Consumer attitudes towards investing, October 2015
Motivation to save driven by personal goals rather than external stimuli
Figure 5: Consumer attitudes towards the impact of the economic climate on their savings habits, October 2015
What we think

Issues and Insights

Persistent low rates lead to long-term shift in behaviour
The facts
The implications
Dormant accounts serve as constant reminders of missed opportunities
The facts
The implications
Online platforms could lower investment barriers
The facts
The implications

The Market – What You Need to Know

Cash savings market conditions remain difficult
The Government seeks to encourage savers to save more
Despite the challenges consumers continue to recognise the importance of saving
Significant growth opportunities for the investment market

The Saving and Investing Environment

Interest rates remain low
Figure 6: In-branch quoted household interest rates for cash savings products, January 2005-October 2015
Savings falls below pre-crisis levels
Figure 7: Quarterly variations in savings ratio, Q1 2005 – Q2 2015
Consumers plan to save less
Figure 8: Consumer spending habits, September 2015
Pensioner bonds boost NS&I deposits
Figure 9: Retail savings deposits 2005-15*
Strong performance driven by popularity of cash ISAs
Figure 10: Volume and value of ISA subscriptions, by type of ISA, 2010/11-2014/15
Faltering investor confidence slows investment fund sales
Figure 11: Retail sales of unit trusts and OEICs – UK-domiciled, 2010-15

The Regulatory Environment

Government to introduce personal savings allowance
ISA regulation undergoes significant change
Figure 12: Summary of regulatory changes made to ISAs 2014 and 2015
Pension freedoms could increase interest in investing
FCA finds the UK cash savings market to be lacking in competition
FCA outlines Asset Management Investigation

The Consumer – What You Need to Know

Significant proportion of savings accounts hold little to no savings
Encouraging further engagement could benefit both parties
Hostile savings environment promotes shift in consumer behaviour
Investment providers have opportunity to capitalise on growing interest
Motivation to save driven by personal goals rather than external stimuli

Consumer Ownership of Savings Products

Almost a fifth of consumers without savings
Figure 13: Consumer ownership of savings products, October 2015
Living in the moment culture lessens interest in saving
Cash ISAs at risk of losing competitive advantage
30% rely on one savings product
Figure 14: Number of savings products held, October 2015

Consumer Ownership of Investment Products

Lloyds Banking Group sale could boost ownership of shares
Figure 15: Consumer ownership of investment products, October 2015
The investment property opportunity for pension savers

Value of Savings and Investments

40% have less than £500 saved
Figure 16: Value of savings and investments, October 2015
40% of those with five or more products have investible assets of more than £100,000
Figure 17: Value of savings and investments by number of savings products owned, October 2015
Opportunities to re-engage with dormant savers
Figure 18: Proportion with no savings, by number of savings products owned, October 2015
Low interest rates encourage use of alternative products for savings
Figure 19: Value of savings and investments, by ownership of savings products, October 2015

Barriers to Investment

Majority of consumers own no investment products
Figure 20: Number of investment products owned, October 2015
Risk is the biggest barrier to investment uptake
Figure 21: Barriers to investment product ownership, October 2015
The online opportunity
The need to improve transparency

Consumer Engagement with the Savings Market

Low interest rates reduce engagement
Figure 22: Consumer engagement with the savings market, October 2015
Engaging the younger market
Attracting the keenest savers
Figure 23: Consumer engagement with the savings market, by number of savings products owned, October 2015

Consumer Savings Habits

Savings behaviour varies according to motivation
Help to Buy ISAs could lack flexibility needed for success
Figure 24: Consumer savings habits, by purpose for saving, October 2015
Young women putting off retirement saving

The Influence of the Economic Climate on Savings Behaviour

Interest rates have limited impact
Figure 25: Consumer attitudes towards the impact of the economic climate on their savings habits, October 2015
Younger consumers more influenced by external environment
Figure 26: Agreement with the statement “I save more when I am worried about the economic climate,” by age, October 2015
The impact on engagement
Figure 27: Consumer engagement with the savings market, by agreement with the statement “I save more when interest rates are higher,” October 2015

Consumers and Long-Term Savings

Confidence in meeting long-term savings goals is low
Figure 28: Consumer attitudes towards long-term savings, October 2015
Investing boosts confidence
Figure 29: Agreement with the statement “I am confident that I will achieve my long-term savings goals,” by ownership of savings and investment products, October 2015

Features of Savings Accounts

Access is key, especially among older savers
Figure 30: Consumer attitudes towards features of savings accounts, October 2015

Consumer Attitudes towards Investing

The biased savings market
Figure 31: Consumer attitudes towards investing, October 2015
Cash is not enough
Figure 32: Ownership of investment products, by agreement with the statement “Having cash savings alone is not enough to ensure financial security,” October 2015

Appendix – Data Sources, Abbreviations and Supporting Information

Abbreviations
Consumer research methodology

List of Table

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