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Premium and Mass-affluent Banking - UK - November 2015

Published By :

Mintel

Published Date : Nov 2015

Category :

Banking

No. of Pages : N/A

Banks still have their work cut out to convince most in the affluent and HNW markets that premium accounts are worthwhile or value for money. Affluent consumers are most interested in a competitive interest rate and customer service, with comparatively few looking for more exclusive premium services.

Table of Content

Overview

What you need to know
Scope of the report

Executive Summary

The market
Figure 1: Net financial wealth pyramid (investable assets), GB population, 2015
Only a minority of the wealth target market have a premium account
Figure 2: Type of current account owned by those in the wealth target market, August 2015
The affluent have weathered the downturn well
Figure 3: Current financial situation compared to a year ago, by gross annual household income, August 2015
The market needs to do more to help companies compare accounts
Large retail banks face a number of key challenges
Companies and brands
The biggest retail banks dominate the affluent current account market
Figure 4: Main current account provider, by wealth target market, for top 8 providers, August 2015
Challenger banks are targeting affluent consumers
Banks turn attention back to advice services
The consumer
Affluent consumers switch more often than the average
Figure 5: Current account switching behaviour, by wealth tier (investible assets), August 2015
Figure 6: Current account switching behaviour, by age, August 2015
Credit interest and customer service are key for affluent consumers
Figure 7: factors that consumers are looking for in a new current account, August 2015
What it means

Issues and Insights

The switching market for affluent consumers is growing
The facts
The implications
Affluent consumers are not convinced by premium banking services
The facts
The implications

The Market – What You Need to Know

Only a minority of affluent consumers have a premium account
Affluent consumer priorities remain conservative
Large retail banks face a number of key challenges

Market Size

12% of the UK population are Mass Affluent, Affluent or HNW
Figure 8: Net financial wealth pyramid (investable assets), GB population, 2015
Only a minority of the target wealth market have a premium account
Figure 9: Type of current account owned, by wealth tier (investible assets), August 2015

Market Drivers – Consumer Context

Consumers are keen to provide themselves with a financial cushion
Figure 10: Current Financial Situation, by gross annual household income, August 2015
45% of higher earners are feeling better-off than they did a year ago
Figure 11: Current financial situation compared to a year ago, by gross annual household income, August 2015
Protecting assets remains the main priority for savings
Figure 12: Consumers’ saving and investment priorities over the next 12 months, August 2015
High income households use a wider range of banking services
Figure 13: Any use of banking services, by household income, May 2015

Regulatory and Legislative Changes

The CMA publishes its findings on retail banking competitiveness
Branch closure consultation period introduced
Ring-fencing could push up costs for customers
Moving away from a sales culture

Companies and Brands – What You Need to Know

Large retail banks dominate the affluent current account market
More competitors are entering the race for affluent switchers
Banks turn attention back to advice services

Market Share

Major high street banks continue to dominate the market
Figure 14: Main current account provider, by wealth tier (investible assets), August 2015
Former challenger banks have the largest share of secondary accounts
Figure 15: Provider of main current account and other/secondary accounts, August 2015
Affluent investors are looking for innovative options
Figure 16: Top 15 wealth managers, by assets under management and number of client accounts, UK, 2013 and 2014

Competitive Strategies

Main retail banks are trying to shore up their affluent consumer base
Challenger banks look to attract affluent clients

Innovation and Launch Activity

Retail banks relaunch advisory services
Britain’s first mobile app only bank launches
Social media banking arrives with Fidor Bank
Private bank Hampden & Co opens its doors
Challenger banks introduce new loyalty schemes

Advertising and Marketing Activity

Advertising spend on Premium accounts doubles
Figure 17: Total above-the line, online display and direct mail advertising expenditure on banking and asset management products and services, by product category, 2010/11-2014/15
Advertising spend by the top seven doubled over the last year
Figure 18: Top seven advertisers of packaged/premium accounts and mass-market wealth management services, 2010/11-2014/15
TV spend accounts for two thirds of adspend
Figure 19: Share of advertising expenditure on packaged/premium accounts and mass-market wealth management, by media type, 2012/13-2014/15
Search and social media strategies enhance brand perception
Nielsen Media Research coverage

The Consumer – What You Need to Know

The majority are not prepared to pay fees for current accounts
Switching levels remain low
Younger consumers are the most likely switchers
In-credit interest rates and customer service are most important factors in choosing an account

Account Ownership

Nearly three quarters of the market have a non-fee charging account
Figure 20: Type of current account owned, by wealth tier(investible assets), August 2015
Nearly half of premium account holders also have a standard current account
Figure 21: Type of current account owned, by top three most popular types of account, August 2015
45-64-year-olds are the least likely to own a premium account
Figure 22: Type of current account owned, by age, August 2015
Barclays, HSBC and NatWest lead the way on premium accounts
Figure 23: Main current account provider, by top three most popular types of account held, August 2015
Cash-based products are universally popular
Figure 24: Ownership of savings and investment products, by wealth tier (investible assets),, August 2015

Switching Behaviour

Only 22% of the market have switched their account in the last 5 years
Figure 25: Current account switching behaviour, August 2015
Switching levels are similar across the wealth target market
Figure 26: Current account switching behaviour, by wealth tier (investible assets), August 2015
Younger consumers are more likely to switch
Figure 27: Current account switching behaviour, by age, August 2015
Packaged account holders are more likely to have switched
Figure 28: Current account switching behaviour, by top three most popular types of account, August 2015
Only 7% of the wealth target market plan to switch in the next 12 months
Figure 29: Current account switching intentions, August 2015
Figure 30: Current accounts switching intentions, by wealth tier (investible assets), August 2015
Once a customer has switched they are more likely to do so again in future
Figure 31: Current accounts switching intentions, by previous switching behaviour, August 2015

Attitudes towards Premium Accounts

Two thirds are happy with basic current accounts
Figure 32: Attitudes to premium or fee-paying services, August 2015
Over half of HNW individuals believe that private banking is more about status than service
Figure 33: Attitudes to premium or fee-paying services, by wealth tier (investible assets), August 2015

Features Sought in a New Account

Interest rates are the most important factor in choosing a new account
Figure 34: What consumers are looking for in a new current account, August 2015
Premium account holders are looking for a wider range of services
Figure 35: What consumers are looking for in a new current account, by type of account held, August 2015
Aspirational consumers want better rates on other products
Figure 36: What consumers are looking for in a new current account, by wealth tier (investible assets), August 2015

Appendix – Data Sources, Abbreviations and Supporting Information

Abbreviations
Consumer research methodology
Key sources

List of Table

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