866-997-4948(US-Canada Toll Free)

Current Accounts - UK - July 2016

Published By :

Mintel

Published Date : Aug 2016

Category :

Banking

No. of Pages : N/A

CASS switching levels reached a peak high in March 2016, indicating that competition in the current account market has improved. The growth in the proportion of new reward account openings in recent years shows that people now want more from a current account. The appetite for this type of account shows that there are opportunities to develop fee-paying accounts as long as the benefits are meaningful and relevant to key target groups. Attitudes towards fee-paying accounts appear to be softening to some extent, although the majority remain against the idea of paying for a current account.

Table of Content

Overview

What you need to know

Executive Summary

The market
Number of current accounts continues to rise
Figure 1: Estimated number of current accounts, 2014-16
Growth in UK population drives increase in current account ownership
Large margins on overdraft lending sustained in 2015
Current account switching reaches peak high in 2016
Figure 2: Number of switches per month since launch of CASS, September 2013-April 2016
CMA publishes findings of Retail Banking Market Investigation
Companies and brands
Lloyds Banking Group is the largest current account provider in the UK
Figure 3: Current account providers, by share of main and other current account market, May 2016
Santander and Halifax continue to be biggest winners of CASS
Competition heats up in the current accounts market
Nationwide is most highly recommended and trusted brand
Figure 4: Attitudes towards and usage of selected financial services brands, May 2016
The consumer
Current account ownership is near universal
Figure 5: Number of current accounts owned, May 2016
One in seven has a fee-paying/paid for account
More than a third have switched their main current account provider
Figure 6: Current account switching activity, May 2016
Half of population have been with same provider for more than a decade
Figure 7: Current account tenure, May 2016
A better interest rate is the most persuasive incentive to switch
Figure 8: Influential factors when switching current account provider, May 2016
Two in five would be interested in a personalised account comparison service
83% are happy with their existing current account provider
Figure 9: Attitudes towards current account providers, May 2016
Consumers lack understanding of charges applied to current accounts
Figure 10: Attitudes towards fees and charges
What we think

Issues and Insights

Parents of under-16s are a key target for customisation
The facts
The implications
Lifestyle benefits have the potential to differentiate
The facts
The implications
The online and mobile-only concept for banking is now more accepted than not
The facts
The implications

The Market – What You Need to Know

Number of current accounts continues to rise
UK population continues to escalate in 2015
Large margins on overdraft lending sustained in 2015
Current account switching reaches peak high in 2016
More than half show acceptance for digital-only banking services
CMA publishes findings of Retail Banking Market Investigation

Market Size

Number of current accounts continues to rise
Figure 11: Estimated number of current accounts, 2014-16

Channels to Market

Almost 50/50 split between online and in-person for account opening
Figure 12: Method used to arrange current accounts in the last three years, April 2015
Consultations with branch staff are still valued by many
Figure 13: Information sources used to research current accounts before purchase, April 2015
More than half show acceptance for digital-only banking services
Figure 14: Consumer appetite for online and mobile-only banking, May 2016

Market Drivers

UK population continues to escalate in 2015
Figure 15: United Kingdom population mid-year estimate, 2008-15
Large margins on overdraft lending sustained in 2015
Figure 16: Monthly interest rate of UK monetary financial institutions sterling overdraft for households – Not seasonally adjusted, January 2010-March 2016
Current account switching reaches peak high in 2016
Figure 17: Number of switches per month since launch of CASS, September 2013-April 2016
Complaints about current accounts continue to mount
Figure 18: Number of new complaints about current accounts to the FOS, 2013/14-2015/16

Regulatory and Legislative Environment

Competition and Markets Authority (CMA) publishes findings of Retail Banking Market Investigation
Open Application Programming Interface (API) plans
Interest earnt on current account balances comes under the new PSA
European Commission launches consultation on retail financial services
The EU’s new Payment Services Directive (PSD2)
Announcement of a Joint Fraud Taskforce in February 2016
Online fraud strategies considered
New bereavement code of practice
EU-wide legislation on cybersecurity

Companies and Brands – What You Need to Know

Lloyds Banking Group is the largest current account provider in the UK
Santander and Halifax continue to be biggest winners of CASS
Fintech challengers
Nationwide is most highly recommended and trusted brand

Market Share

Lloyds Banking Group is the largest current account provider in the UK
Figure 19: Current account providers, by share of main and other current account market, May 2016
Major banking groups retain dominance despite slight decline in share
Newer entrants more likely to have a bigger market share of secondary current accounts
Figure 20: Current account providers, by share of main and other current account market, May 2016
Santander and Halifax continue to be biggest winners of CASS
Figure 21: Net gains of full account switches completed using CASS between Q4 2014 and Q3 2015 (1 October 2014-30 September 2015)

Competitive Strategies

Competition heats up in the current accounts market
Switching deals
Reward schemes
Cash incentives
High interest rates on balances in-credit
Greater transparency and simplified payment structures
Overdraft fees
International payments
Fee hikes
Metro Bank increases international card charges
Santander hikes everyday banking charges for popular 123 Account
Simplifying package deals
Midata Winners
Smaller banks react to CMA investigation

Launch Activity and Innovation

Nationwide launches FlexBasic current account
Mobile developments
Mobile banking improvements
App-based accounts
Cheque pay-in technology
Demand for greater transparency
Tesco Bank shows customers ‘lost interest’
Lloyds Bank develops a new way to compare current accounts
Fintech challengers
Blockchain and cryptocurrencies

Advertising and Marketing Activity

Advertising spend on current accounts decreases in 2015/16
Figure 22: Total above-the line, online display and direct mail advertising expenditure on current accounts and other related money-transmission services, 2011/12 - 2015/16
Top ten advertisers account for vast majority of spend
Figure 23: Top ten advertisers of current accounts and related money-transmission services, 2013/14-2015/16
Advertising expenditure shifts towards brand building for current accounts
Figure 24: Advertising expenditure on current accounts and other related money-transmission services, 2013/14-2015/16
TV is dominant channel for advertising expenditure on current accounts
Figure 25: Share of advertising expenditure on current accounts and related money-transmission services, by media type, 2015/16 (12 months to 30 April)
Nielsen Ad Intel coverage

Brand Research

What you need to know
Brand map
Figure 26: Attitudes towards and usage of selected financial services brands, May 2016
Key brand metrics
Figure 27: Key metrics for selected financial services brands, May 2016
Brand attitudes: Tesco Bank most associated with rewarding loyalty
Figure 28: Attitudes, by financial services brand, May 2016
Brand personality: The Co-operative Bank is most likely to be described as tired and boring
Figure 29: Brand personality – macro image, May 2016
Metro Bank, Virgin Money and First Direct seen as most progressive
Figure 30: Brand personality – micro image, May 2016
Brand analysis
Nationwide is most highly recommended and trusted brand
First Direct delivers on customer experience
Halifax and Barclays top awareness and usage
Tesco Bank most associated with rewarding loyalty
HSBC and the Co-operative Bank suffer from recent negative press

The Consumer – What You Need to Know

One in seven has a fee-paying/paid for account
More than a third have switched their main current account provider
Half of population have been with same provider for more than a decade
A better interest rate is the most persuasive incentive to switch
Two in five would be interested in a personalised account comparison service
Consumers lack understanding of charges applied to current accounts

Current Account Ownership

99% of adult online population have a current account
Figure 31: Number of current accounts owned, May 2016
Nearly one third of adults have multiple current accounts
Higher earners are more likely to own multiple current accounts
Figure 32: Number of current accounts held, by gross annual household income, May 2016
28% of people hold current accounts jointly with someone else
Figure 33: Current accounts held jointly with someone else, May 2016

Ownership by Type of Current Account

One in seven has a fee-paying/paid for account
Figure 34: Type of current account held, May 2016
Packaged accounts on a par with reward accounts
Figure 35: Types of fee-paying/paid for account, May 2016
Added-value accounts are more popular with higher income earners

Current Account Switching Activity

More than a third have switched their main current account provider
Figure 36: Current account switching activity, May 2016
Multiple account ownership improves likelihood to switch

Current Account Tenure and Attitudes towards Switching

Half of population have been with same provider for more than a decade
Figure 37: Current account tenure, May 2016
43% think switching is not worth the hassle
Figure 38: Attitudes towards current account switching, May 2016

Influential Factors when Switching Current Account Provider

A better interest rate is the most persuasive incentive to switch
Figure 39: Influential factors when switching current account provider, May 2016
Cashback on purchases are on par with one-off cash incentives
Nearly one in five would be influenced by lifestyle benefits

Attitudes towards Personalised Current Account Comparison Services

Only one in ten has heard of the Midata scheme
Figure 40: Consumer awareness of the Midata scheme, May 2016
Two in five would be interested in a personalised account comparison service
Figure 41: Attitudes towards a personalised current account comparison services, May 2016
Majority would be concerned about security of their data

Attitudes towards Current Account Providers

83% are happy with their existing current account provider
Figure 42: Attitudes towards current account providers, May 2016
68% say current account provider is first port of call for other banking products

Attitudes towards Fees and Charges

Consumers lack understanding about charges applied to current accounts
Figure 43: Attitudes towards fees and charges
Opportunity exists to charge set monthly fee in exchange for rewards
Parents of under-18s most likely to take advantage of loyalty rewards and overdraft facilities
Figure 44: Attitudes to current accounts – CHAID – Table output, May 2016

Appendix – CHAID analysis

Methodology
Figure 45: Attitudes to current accounts– CHAID – Tree output, May 2016

Appendix – Data Sources, Abbreviations and Supporting Information

Products covered in this Report
Abbreviations
Consumer research methodology

List of Table

NA

Make an enquiry before buying this Report

Please fill the enquiry form below.

  • Full Name *
  • Your Email *
  • Job Title
  • Company *
  • Phone No. * (Pls. Affix Country Code)
  • Message
  • Security Code *

Upcoming Reports

  • Sugar and Gum Confectionery - UK - January 2015

    Rising dental health concerns can create an opportunity for chewing gum brands. Currently much of the marketing for sugar-free gums centres around fresh breath, however, the dental health benefits, particularly for children, could warrant more focus. Though explored internationally, tooth-friendly gums tailored for children remain rare in the UK market....