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Deposit and Savings Accounts - UK - April 2012

Published By :

Mintel

Published Date : Sep 2012

Category :

Banking

No. of Pages : 115 Pages


Our research suggests that many people are baffled by the number of different savings accounts and rates on offer. Any attempts by providers to simplify their product ranges or to introduce applications that help people quickly and easily navigate the maze of choices would be welcomed by customers. At the same time, maintaining a competitive rate and good customer communications will also help retention levels.
TABLE OF CONTENT

Introduction
Report scope and product definitions
Key data sources and BBA product categories
Abbreviations

Executive Summary
The market
Retail savings balances grew by 3% in 2011
Figure 1: Forecast of retail savings balances, at current prices – fan chart, 2006-16
Sub-sector performance
Size of the ‘saver’ population
Figure 2: Estimated number of retail savers in the UK, by type of account held, February 2012
Market factors
Macroeconomic conditions are not currently conducive to saving
Pricing and average returns
Competition from other asset classes
Companies, brands and innovation
Largest providers of savings accounts
Figure 3: Top six providers of savings accounts, by estimated share of ‘main account’ customers, February 2012
Product innovation
Distribution mix favours online
Figure 4: Channel most used to access savings account, by type of account, February 2012
Industry adspend totalled £83 million in 2011
The consumer
An easy-access account is the most widely held savings product
Figure 5: Ownership of cash savings products, February 2012
More than a quarter of adults have investible assets worth over £10,000
Figure 6: Total value of savings and investments, February 2012
Most people have a clear reason for saving – even if it’s just for their peace of mind
Figure 7: Main reasons for saving, February 2012
Many savers are unimpressed by the savings rates currently on offer
Figure 8: Agreement with statements about savings behaviour and attitudes, February 2012
What we think

Issues in the Market
How large is the retail savings market and how has it performed recently?
How competitive is the retail savings landscape?
Which sectors of the market are seeing the greatest inflows of money?
How is the rival equity asset class faring?

Future Opportunities
Develop apps that help people quickly and easily identify the best product for them
Grabbing the attention of the under-35s with the right savings message

Internal Market Environment
Key points
Low base rate is not conducive to saving
Figure 9: Average annual changes in the Bank of England base rate, CPI and RPI – UK, 2003-12
March 2012 budget offered no change to the ISA rules
Regular savings and fixed-term bonds offer the best rates of return
Figure 10: Average monthly quoted deposit interest rates, January 2004-January 2012
Savings ratio has picked up since the financial crisis
Figure 11: Gross household savings and saving ratio, seasonally adjusted and at current prices, 2006 Q1-2011 Q4

Broader Market Environment
Key points
Summary of the main macroeconomic indicators impacting on the consumer credit market
Household income squeeze set to continue into 2012
Figure 12: Monthly change in RPI and average weekly earnings, January 2008-January 2012
Consumer sentiment still very pessimistic
Figure 13: UK consumer confidence, March 1998-February 2012
Both saving and spending confidence remain weak
Figure 14: Saving and spending confidence, March 2001-February 2012
Two fifths of people have ‘added to their savings’ in the past three months
Figure 15: Usage of disposable income – recent past and near future, February 2012

Competitive Context
Key points
Cash ISAs represent the main rival product
Figure 16: Value of new ISA subscriptions, 2003/04-10/11
Ownership of the most common types of saving and investment product
Figure 17: Ownership of savings and investments, by asset type, November 2011
Low returns on cash savings prompt more people to invest in equities
Figure 18: FTSE 100 and FTSE All-Share – daily index movements, January 2003-February 2012

Market SWOT Analysis
Figure 19: Retail savings accounts – SWOT analysis, 2012

Who’s Innovating?
Key points
Virgin Money aims to offer savers “good value”, with the launch of two new accounts
Other new issues in the easy-access domain
New accounts with restrictions on withdrawals
Providers use higher-paying fixed-term bonds to entice savers
Halifax launches monthly prize draw to ‘get Britain saving’
High-paying regular saving accounts

Market Size and Forecast
Key points
Retail deposits worth over £1.1 trillion
Figure 20: Retail savings balances outstanding, by sector, 2003-11
Savers are looking beyond instant access accounts to improve their returns
Figure 21: Volume and value of individual interest-bearing current and deposit accounts (MBBGs only), 2003-10
Retail savings industry serves a large customer base
Figure 22: Estimated number of retail savers in the UK, by type of account, February 2012
Forecast
Figure 23: Forecast of total retail savings balances, at current prices – fan chart, 2006-16
Figure 24: Forecast of total retail savings balances, 2011-16
Forecast methodology
Fan chart explanation

Market Share
Key points
Lloyds Banking Group is number one in the savings account market
Figure 25: Ranking of largest providers of savings accounts, by product sector, February 2012
Provider rankings based on overall retail savings balances
Figure 26: Providers’ total retail savings balances, shown on a group basis – UK, 2010-11

Companies and Products
Lloyds Banking Group
RBS Group
Santander
Barclays
HSBC
Nationwide Building Society

Brand Communication and Promotion
Key points
Greater adspend on cash savings products since 2007
Figure 27: Total advertising expenditure on cash savings products, 2007-11
Cash ISAs accounted for two fifths of sector adspend in 2011
Figure 28: Total advertising expenditure on cash savings products, by product type, 2007-11
The press claim the largest share of sector adspend
Figure 29: Distribution of adspend on cash savings products, by media type, 2009-11
Halifax was the highest-spending advertiser in 2011…
Figure 30: Top ten advertisers of savings accounts (excluding cash ISAs), 2009-11
… and in the cash ISA market too
Figure 31: Top ten advertisers of cash ISAs, 2009-11

Channels to Market
Key points
The branch remains an important sales channel…
Figure 32: UK bank and building society combined branch networks, 1998-2010
but online is now the preferred channel to access a savings account
Figure 33: Channel most used to access savings account, by type of account held, February 2012

Ownership of Savings Accounts
Key points
Survey background
Four in five UK adults have some form of cash savings product
Figure 34: Ownership of cash savings products, February 2012
Over-55s record the highest take-up rates…
Figure 35: Ownership of cash savings products, February 2012
due to their greater asset holdings
Figure 36: Value of investible assets, by age and gender, February 2012
Fixed-rate bonds and notice accounts appeal most to those with substantial assets
Figure 37: Value of investible assets, by type of savings product owned, February 2012

Saving Motivations
Key points
Building up an ‘emergency fund’ is the top reason for saving
Figure 38: Main reasons for saving, February 2012
Retirement is a more pressing concern among the over-55s
Figure 39: Main reasons for saving, by gender and age group, February 2012
Motivations vary depending on the type of account held
Figure 40: Main reasons for saving, by type of account held, February 2012
Wealthier savers are looking for products that offer tax benefits
Figure 41: Main reasons for saving, by value of investible assets, February 2012

Saving Behaviour and Attitudes
Key points
Most savers are disappointed by the rates of returns they are getting
Figure 42: Agreement with statements about savings behaviour and attitudes, February 2012
The over-55s are more likely to scrutinise the savings rates they are getting
Figure 43: Agreement with statements about savings behaviour and attitudes, by gender and age group, February 2012

Appendix – Market Forecast
Figure 44: Forecast of total retail savings balances, best and worst case scenario, 2011-16

Appendix – Market Share
Figure 45: Comparison of customer profiles for the top seven providers of savings accounts, February 2012

Appendix – Ownership of Savings Accounts
Figure 46: Ownership of savings accounts, by product type and demographic sub-group, February 2012
Profile of savings account holders
Figure 47: Demographic profile of savings account holders versus total sample, February 2012
Value of investible assets
Figure 48: Value of savings and investments, by demographic sub-group, February 2012

Appendix – Saving Motivations
Figure 49: Top seven reasons for savings, by demographic sub-group, February 2012

Appendix – Saving Behaviour and Attitudes
Figure 50: Saving behaviour and attitudes, by demographic sub-group, February 2012
Figure 51: Saving behaviour and attitudes, by demographic sub-group continued, February 2012
Figure 52: Saving behaviour and attitudes, by demographic sub-group continued, February 2012

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