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CURRENT ACCOUNTS - UK - JULY 2018

Published By :

Mintel

Published Date : Jul 2018

Category :

Banking

No. of Pages : N/A

The Open Banking initiative, which launched in January 2018, has the potential to massively increase competition in the market. To realise this, however, providers and regulators need to convince consumers of the benefits of opting-in, while product innovation needs to be developed with customer needs in mind.
Table of contents
OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Number of current accounts increases by 2%
Figure 1: Estimated number of current accounts in the UK, 2015-18
Mobile banking usage rising rapidly
Figure 2: Adults using online, mobile and telephone banking (millions), 2007-17
Recent activity indicates an increase in switching
Figure 3: Number of switches per month using the CASS, August 2014-April 2018
Companies and brands
Lloyds Banking Group remains dominant
Figure 4: Current account providers (banking groups), by share of main and other current accounts, may 2018
Total adspend increased by 21% in the last 12 months
Figure 5: Total above-the-line, online display and direct mail advertising expenditure on current accounts and other related money-transmission services, 2013/14-2017/18
The consumer
98% own a current account
Figure 6: Number of current accounts owned, May 2018
Large majority of consumers own a standard current account
Figure 7: Type of current account owned, May 2018
Almost 70% havent switched in the last five years
Figure 8: Current account switching activity, by age, May 2018
18% say they are likely to switch in the next year
Figure 9: Likelihood to switch current account in the next 12 months, May 2018
72% are confident that they have the right account
Figure 10: Agreement with the statement I am confident that I have the best current account(s) for my needs, May 2018
Less than a third interested in automated chat services
Figure 11: Attitudes towards current accounts, May 2018
What we think
ISSUES AND INSIGHTS
Mobile banking set to grow and grow, but may not benefit new challengers
The facts
The implications
Open Banking can drive reduction in overdraft fees
The facts
The implications
Developments required for chatbots to be a success
The facts
The implications
THE MARKET WHAT YOU NEED TO KNOW
Number of current accounts increases by 2%
Online banking the most popular channel
Recent activity indicates an increase in switching
Open Banking era begins
FCA refrains from capping overdraft fees
MARKET SIZE
Current account market increases with population
Figure 12: Estimated number of current accounts in the UK, 2015-18
CHANNELS TO MARKET
Online banking the favoured channel
Figure 13: Preferred channels for different banking activities, May 2018
Branch services still have role to play
...particularly for the older generation
Figure 14: Preferred method of opening a current account, by generation, May 2018
Use of mobile banking more than doubled between 2013 and 2017
Figure 15: Adults using online, mobile and telephone banking (millions), 2007-17
MARKET DRIVERS
UK population continues to grow
Figure 16: United Kingdom population mid-year estimate, 2009-17
Current account switches peak at highest level since March 2016
Figure 17: Number of switches per month using the CASS, August 2014-April 2018
Overdraft rates remain steady over the past 12 months
Figure 18: Monthly interest rate of UK monetary financial institutions sterling overdraft for households Not seasonally adjusted, January 2013-April 2018
Current account interest rates continue to fall
Figure 19: Monthly average of UK resident banks' sterling weighted average interest rate Interest bearing current account deposits from individuals and individual trusts, not seasonally adjusted, January 2016-April 2018
REGULATORY AND LEGISLATIVE CHANGES
Open Banking comes into force
System functionality the issue for major banks
FCA publishes new services standards
Current account immigration checks reduced by Home Office
FCA conducts review of retail banking business models
FCA stops short of capping overdraft fees
Ring-fencing initiative to isolate individual and small business operations
COMPANIES AND BRANDS WHAT YOU NEED TO KNOW
Lloyds Banking Group remains dominant
First Open Banking solutions hit the market
Total adspend increased by 21% in last 12 months
MARKET SHARE
Lloyds Banking Group continues to dominate current account market
Figure 20: Current account providers (banking groups), by share of main and other current accounts, May 2018
CYBG acquires Virgin Money
Barclays remains the biggest individual provider
Digital challengers remain niche providers
Figure 21: Current account providers, by share of main and other current accounts, may 2018
Nationwide gained the most customers through the CASS in 2017
Figure 22: Net gains of full account switches using CASS between 2016 and 2017*, selected brands
COMPETITIVE STRATEGIES
First Open Banking solutions hit the market
HSBC launches first Open Banking app
Yolt integrates with RBS Group
Current account interest rates remain low
Nationwide and TSB the anomalies in the market
Brands take differing approaches to switching incentives
Cash bonuses the selling point for HSBC, NatWest and RBS
Rewards the key for Barclays
Free gifts the motivation for First Direct
New challengers continue to push boundaries
Monzo looking to expand its reach
Foreign exchange specialist Revolut launches current account
Use of chatbots set to increase
ADVERTISING AND MARKETING ACTIVITY
Total adspend increased by 21% in the last 12 months
Figure 23: Total above-the-line, online display and direct mail advertising expenditure on current accounts and other related money transmission services, 2013/14-2017/18
Nationwide is the biggest spender on advertising
Figure 24: Top 10 advertisers of current accounts and related money transmission services, 2015/16-2017/18
Brand building accounts for over 50% of total adspend
Figure 25: Advertising expenditure on current accounts and other related money transmission services, 2015/16-2017/18
TV advertising increases to 70% of total adspend
Figure 26: Share of advertising expenditure on current accounts and related money transmission services, by media type, 2017/18
Nielsen Ad Intel coverage
THE CONSUMER WHAT YOU NEED TO KNOW
98% own a current account
Large majority of consumers own a standard current account
Almost 70% havent switched in the last five years
18% say they are likely to switch in the next year
72% are confident that they have the right account
Less than a third interested in automated chat services
Likely switchers more receptive to Open Banking features
CURRENT ACCOUNT OWNERSHIP
Vast majority own at least one current account
Figure 27: Number of current accounts owned, 2014-18
Over 70% hold all accounts in their name only
Figure 28: Joint account ownership, May 2018
OWNERSHIP BY TYPE OF CURRENT ACCOUNT
Three quarters of consumers own a standard current account
Number of reward accounts continues to increase
Figure 29: Type of current account owned, May 2018
Half of those who pay for banking own a reward account
Figure 30: Type of fee-paying account owned, May 2018
SWITCHING ACTIVITY
Almost 70% have had the same current account for at least five years
Under-25s are more likely to have switched
Figure 31: Current account switching activity, by age, May 2018
along with multiple account holders
Figure 32: Switching activity, by number of current accounts held, May 2018
LIKELIHOOD TO SWITCH
18% say they are likely to switch in the next year
Figure 33: Likelihood to switch current account in the next 12 months, May 2018
Recent switchers more likely to switch again
Figure 34: Likelihood to switch current account in the next 12 months, by time since last current account holders last switched provider, May 2018
CONFIDENCE IN CURRENT ACCOUNT SELECTION
72% are confident that they have the right account
Figure 35: Agreement with the statement I am confident that I have the best current account(s) for my needs, May 2018
Recent switchers have more confidence that their account is suitable
Figure 36: Agreement with the statement I am confident that I have the best current account(s) for my needs, by switching activity, May 2018
ATTITUDES TOWARDS CURRENT ACCOUNTS
Less than a third interested in automated chat services
Figure 37: Attitudes towards current accounts, May 2018
City-based Millennials most receptive to automated customer service
Figure 38: Current account behaviours CHAID Tree output, May 2018
Likely switchers are more receptive to Open Banking features
Figure 39: Attitudes towards current accounts, by likelihood to switch current accounts in the next 12 months, May 2018
and competitive overdrafts
Figure 40: Response to the statement It's important for me to have a current account with competitive overdraft charges, by likelihood to switch, May 2018
APPENDIX DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID Methodology

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