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Packaged and Current Accounts - UK - July 2014

Published By :

Mintel

Published Date : Jul 2014

Category :

Banking

No. of Pages : 186 Pages

Tesco Bank has finally launched its current account offering. The account performs strongly in a number of areas, and will offer clients the chance to earn interest on balances. One of the main attractions of the newly launched account is the link to Clubcard points.
Table of Content

Introduction

Report scope and product definitions
Abbreviations

Executive Summary

The market
Number of current accounts remains relatively stable
Figure 1: Estimated number of current accounts and current account holders – UK, 2014
Market factors
Current Account Switch Service gets off to a good start
In-depth current account comparison service to launch in 2015
Complaints about packaged current account surge in 2013/14
Overdraft market under further investigation by the FCA
Companies, brands and innovations
Several firms vying for the top spot in the current account market
Figure 2: Top 10 current account providers, by share of main current account market, May 2014
Co-op Bank’s image suffers due to high-profile issues
Figure 3: Attitudes towards and usage of brands in the packaged and current accounts sector, April 2014
Who’s innovating?
The consumer
Ownership by type of current account
Figure 4: Type of current account held, May 2014
Attitudes towards paid-for current accounts
Figure 5: Attitudes towards premium and packaged accounts, May 2014
Most popular features and benefits of paid-for accounts
Figure 6: Desirable features of paid-for current accounts, May 2014
Current account switching activity
Figure 7: Main current account switching activity, May 2014
Motivation for current account switching activity
Figure 8: Reasons why consumers have moved their current account in the last five years, May 2014
What we think

Issues and Insights

Tesco Bank finally enters the market
The facts
The implications
Offering customers the chance to choose the perks on their account
The facts
The implications
Impact of branch closures on consumers and switching behaviour
The facts
The implications

Trend Application

A la carte current accounts
The human touch
Mintel Futures: Brand Intervention

Market Drivers

Key points
Current Account Switch Service launched in September 2013
Comparing current accounts will become easier in 2015
Complaints about packaged accounts up significantly
Figure 9: Number of new complaints about current accounts to the FOS, 2012/13-2013/14
Banks making changes to their packaged account offerings
Tesco Bank finally launches current account offering…
…with others also set to enter the market
FCA examines the overdraft market with potential measures to be unveiled in late 2014
Overdraft rates remain high despite low BoE base rate
Figure 10: Average monthly overdraft interest rate, three-month LIBOR and official bank rate, January 2009 – March 2014
Retail deposit balances up slightly in 2013
Figure 11: Retail savings balances from households, by sector, 2004-13

Who’s Innovating?

Key points
Club Lloyds part of Lloyds Bank’s new current account offerings
M&S Bank launches its first fee-free current account
Tesco Bank finally enters the fray and will offer Clubcard points on spending
TSB wants customers to try out the re-launched bank
Cashback and rewards launched by several firms

Market Size

Key points
Number of current accounts remains relatively stable
Figure 12: Estimated number of current accounts and current account holders – UK, 2013 and 2014
Only a minority have paid-for packaged/premium accounts
Figure 13: Type of current account held, May 2014

Market Share

Key points
Several brands jostling for top position in the current account market
Figure 14: Current account provider rankings, by share of main current account market, May 2014

Companies and Products

Lloyds Banking Group
Company description
Distribution mix
Recent financial performance
Figure 15: Key annual financial data for Lloyds Banking Group, 2012 and 2013
Recent and marketing activity
Barclays
Company description
Distribution mix
Recent financial performance
Figure 16: Key annual financial data for Barclays Plc, 2012 and 2013
Recent and marketing activity
Nationwide
Company description
Distribution mix
Recent financial performance
Figure 17: Key interim financial data for Nationwide Building Society, 2012/13-2013/14
Recent and marketing activity
HSBC
Company description
Distribution mix
Recent financial performance
Figure 18: Key annual financial data for HSBC Bank Plc, 2012 and 2013
Recent and marketing activity
Santander
Company description
Distribution mix
Recent financial performance
Figure 19: Key annual financial data for Santander UK, 2012 and 2013
Recent and marketing activity
RBS Group
Company description
Distribution mix
Recent financial performance
Figure 20: Key annual financial data for RBS Group, 2012-2013
Recent and marketing activity

Brand Communication and Promotion

Key points
Advertising on current account and associated services up by 20% in 2013/14
Figure 21: Overview of expenditure on current accounts and other money-transmission services, 2011/12-2013/14*
Over 40% of advertising expenditure is focused on brand building
Figure 22: Advertising expenditure on personal current accounts and related money-transmission services, by product sub-category, 2011-12 and 2013-14
Top ten advertisers account for majority of adspend
Figure 23: Top ten advertisers of current accounts and related money-transmission services, 2011/12-2013/14*
Television and press dominate advertising expenditure
Figure 24: Share of advertising expenditure on current accounts and related money-transmission services, by media type, 2011/12-2013/14
A note about adspend

Brand Perceptions and Social Media

Brand perceptions
Key brand metrics
Figure 25: Key packaged and current account brand metrics, April 2014
Brand map
Figure 26: Attitudes towards and usage of brands in the packaged and current accounts sector, April 2014
Correspondence analysis
Brand attitudes
Figure 27: Attitudes, by packaged and current accounts brand, April 2014
Brand personality
Figure 28: Packaged and current accounts brand personality – macro image, April 2014
Figure 29: Packaged and current accounts brand personality – micro image, April 2014
Brand experience
Figure 30: Packaged and current accounts brand experience, April 2014
Social media and online buzz
Social media metrics
Figure 31: Social media metrics of selected packaged and current accounts brands, July 2014
Twitter leads social media engagement
Banks with high satisfaction earn fewer mentions
Online mentions
Figure 32: Share of conversation of selected packaged and current accounts brands, 30 June 2013 – 28 June 2014
Co-op Bank’s annus horribilis reflected in online conversation
Barclays leads in share of conversation
Figure 33: Share of conversation of the top four brands by share of conversation, excluding Barclays conversation around football, 30th June 2013 – 28th June 2014
NatWest outage causes biggest spike
Figure 34: Share of conversation of selected packaged and current accounts brands, 30 June 2013 – 28 June 2014
TSB’s initial spin off from Lloyds creates conversation in two stages
Banking issues cause conversations for smaller brands too
Sponsorship helps Santander increase share of conversation
Topics of discussion
Figure 35: Topics of discussion around selected packaged and current accounts brands, April 2014
Consumers preoccupied with accounts
Scandals driven to forefront by The Co-operative Bank
PPI chatter on the wane
Figure 36: Proportion of all banking conversation related to PPI, 27 December 2009 – 28 June 2014
Mobile and apps generate more conversation than branches
Where are people talking
Difference in where the majority of people talk about different brands
Figure 37: Type of site that brands have been mentioned on, 30 June 2013 – 28 June 2014
Brand Twitter activity will become more crucial
Figure 38: Mentions of brands’ Twitter handles, by week, 30 June 2013 – 28 June 2014
Analysis by brand
Barclays
Figure 39: Topic cloud around mentions of Barclays, 30 June 2013 – 28 June 2014
Figure 40: Topic cloud around mentions of Barclays, excluding football-related mentions, 30 June 2013 – 28 June 2014
What we think
Co-operative Bank
Co-operative Bank has seen fall in trust
Figure 41: Shift in perceptions of The Co-operative Bank’s trust and differentiation, July 2012, December 2012, June 2013, January 2014, April 2014*
The Co-operative Bank still has an element of social responsibility and ethicality
What we think
Lloyds Bank
Lloyds has second highest proportion of mentions around scandals
What we think
NatWest
NatWest systems go down on 2 December 2013
Figure 42: Topics of discussion around NatWest systems failure, 1 – 8 December 2013
@NatWest_Help drives customer service
Social media furore dies down after a week
Figure 43: Share of bank brand conversation earned by NatWest, 3 November 2013 – 4 January 2014
What we think
Santander
Figure 44: Topic cloud around mentions of Santander, 30 June 2013 – 28 June 2014
What we think
Halifax and Nationwide
Both Halifax and Nationwide boast long running house price indices
Figure 45: Topic cloud around mentions of Halifax, 30 June 2013 – 28 June 2014
Figure 46: Topic cloud around mentions of Nationwide, 30 June 2013 – 28 June 2014
What we think
TSB
TSB conversation focused around Lloyds and share offer
Figure 47: Topic cloud around mentions of TSB, 30 June 2013 – 28 June 2014
What we think
First Direct
First Direct Arena creates everyday mentions
Figure 48: Topic cloud around mentions of First Direct, 30 June 2013 – 28 June 2014
Other conversation is limited due to lack of scandal and lack of customer complaints
What we think

Channels to Market

Key points
Branch networks continue to decline
Figure 49: UK bank and building society branch networks, 2002-12
Almost 60% of adults use online banking at least once a week
Figure 50: Channels used to access banking service provided by current account providers, May 2014
Mobile banking much more pronounced among 16-34-year-olds

Current Account Ownership

Key points
Current account ownership is almost universal
Figure 51: Current account ownership, May 2014
Affluent people more likely to have several accounts
Joint account ownership is higher among the over-55s
Figure 52: Joint account ownership, May 2014
Adults with multiple accounts more likely to have a joint account
Figure 53: Joint account ownership, by current account ownership, May 2014

Ownership by Type of Current Account

Key points
Some 70% of current account holders have a standard account
Figure 54: Type of current account held, May 2014
Affluent consumers significantly more likely to own a packaged/premium account
Packaged/premium account holders more likely to cite Santander as their main current account provider
Figure 55: Main current account provider, by type of current account held, May 2014

Attitudes towards Paid-for Current Accounts

Key points
Two fifths of adults are not prepared to pay for a current account…
Figure 56: Attitudes towards premium and packaged accounts, May 2014
…with older adults even more against paying for additional features
Figure 57: Attitudes towards premium and packaged accounts, by age, May 2014
Affluent clients are more likely to be considering premium/packaged accounts
: Figure 58: Agreement with the statement ‘I am considering taking out a packaged/premium account in the next 12 months^^^’, by gross annual household income, May 2014
Allowing people to pick their own benefits could help attract customers and increase fees
Figure 59: Agreement with the statement ‘I would be willing to pay/pay more for a packaged/premium account if I could select the benefits that are included’, by type of current account held, May 2014
Reduced hassle in arranging products appeals to premium/packaged account customers
Figure 60: Select attitudes towards premium and packaged accounts, by type of current account held, May 2014

Most Popular Features and Benefits of Paid-for Accounts

Key points
Market developments reflect consumers’ preferences
Figure 61: Desirable features of paid-for current accounts, May 2014
Over-65s more likely to want higher interest rates on their current account holdings
Household income influences desirable features
Better savings rates appeal to those who feel paid-for accounts are a waste of money
Figure 62: Agreement with the statement ‘Current accounts where you pay a monthly fee for additional benefits are a waste of money, by desire for a higher interest on savings products in paid-for accounts, May 2014
Branch access and counter services relatively low on list of priorities

Current Account Switching Activity

Key points
One in two adults have never switched their main current account provider
Figure 63: Main current account switching activity, May 2014
Santander is benefiting from its 1|2|3 account
Figure 64: Main account provider, by main current account switching activity, May 2014
Difficult to find an angle to convince non-switchers
Figure 65: Desirable features of paid-for accounts, by main current account switching behaviour, May 2014

Motivation for Current Account Switching

Key points
Switching activity more likely to be driven by pull factors
Figure 66: Reasons why consumers have moved their current account in the last five years, May 2014
Local branch closures pushing away a minority
Higher interest on in-credit balances a big reason why consumers move to Santander
Figure 67: Main current account provider, by select reasons why consumers have moved their current account in the last 5 years, May 2014
Packaged/premium account holders are much more likely to have moved for cashback and interest on balances
Figure 68: Consumers who have moved their current account in the last five years to get higher interest on balances or cashback on spending, by standard and packaged/premium account ownership, May 2014

Appendix – Market Share

Figure 69: Main current account market share (top seven providers), by demographics, May 2014
Figure 70: Main current account market share (top seven providers), by demographics, May 2014 (continued)

Appendix – Brand Research

Figure 71: Brand usage, April 2014
Figure 72: Brand usage, April 2014 (continued)
Figure 73: Brand commitment, April 2014
Figure 74: Brand commitment, April 2014 (continued)
Figure 75: Brand diversity, April 2014
Figure 76: Brand diversity, April 2014 (continued)
Figure 77: Brand satisfaction, April 2014
Figure 78: Brand satisfaction, April 2014 (continued)
Figure 79: Brand recommendation, April 2014
Figure 80: Brand recommendation, April 2014 (continued)
Figure 81: Brand attitude, April 2014
Figure 82: Brand attitude, April 2014 (continued)
Figure 83: Brand image – macro image, April 2014
Figure 84: Brand image – macro image, April 2014 (continued)
Figure 85: Brand image – micro image, April 2014
Figure 86: Brand image – micro image, April 2014 (continued)
Figure 87: Share of conversation of selected packaged and current accounts brands, by week, 30 June 2013 – 28 June 2014
Figure 88: Share of conversation of selected packaged and current accounts brands, by week, 30 June 2013 – 28 June 2014 (continued)
Figure 89: Topics of discussion around selected packaged and current account brands, 30 June 2013 – 28 June 2014

Appendix – Channels to Market

Figure 90: Usage of online banking, by demographics, May 2014
Figure 91: Usage of online banking, by demographics, May 2014 (continued)
Figure 92: Usage of mobile banking, by demographics, May 2014
Figure 93: Usage of mobile banking, by demographics, May 2014 (continued)
Figure 94: Usage of in-branch counter services, by demographics, May 2014
Figure 95: Usage of in-branch counter services, by demographics, May 2014
Figure 96: Usage of telephone banking, by demographics, May 2014
Figure 97: Usage of telephone banking, by demographics, May 2014 (continued)
Figure 98: Usage of in-branch advice services, by demographics, May 2014
Figure 99: Usage of in-branch advice services, by demographics, May 2014 (continued)

Appendix – Current Account Ownership

Figure 100: Current account ownership, by demographics, May 2014
Figure 101: Joint account ownership, by demographics, May 2014

Appendix – Ownership by Type of Current Account

Figure 102: Type of current held, May 2014
Figure 103: Type of current held continued, May 2014

Appendix – Attitudes towards Paid-for Current Accounts

Figure 104: Most popular attitudes towards premium and packaged accounts, by demographics, May 2014
Figure 105: Most popular attitudes towards premium and packaged accounts, by demographics, May 2014 (continued)
Figure 106: Less popular attitudes towards premium and packaged accounts, by demographics, May 2014
Figure 107: Attitudes towards premium and packaged accounts, by demographics, May 2014

Appendix – Most Popular Features and Benefits of Paid-for Accounts

Figure 108: Most desirable features of paid-for current accounts, by demographics, May 2014
Figure 109: Desirable features of paid-for current accounts, by demographics, May 2014
Figure 110: Least desirable features of paid-for current accounts, by demographics, May 2014

Appendix – Current Account Switching Activity

Figure 111: Main current account switching behaviour, by demographics, May 2014
Figure 112: Main current account switching behaviour continued, by demographics, May 2014

Appendix – Motivation for Current Account Switching

Figure 113: New providers’ offerings (pull factors) which motivated consumers to switch accounts, by demographics, May 2014
Figure 114: New providers’ offerings (pull factors) which motivated consumers to switch accounts, by demographics, May 2014 (continued)
Figure 115: Old providers’ failings (push factors) which motivated consumers to switch accounts, by demographics, May 2014
Figure 116: Old providers’ failings (push factors) which motivated consumers to switch accounts, by demographics, May 2014 (continued)

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