Current Accounts: What Drives Customer Loyalty - Ireland - August 2020

Current Accounts: What Drives Customer Loyalty - Ireland - August 2020

  • Mintel
  • August 2020
  • Banking
  • 0 pages

Report Description

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The COVID-19 recession will be as challenging for current account providers as for any consumer-facing brand. Rising unemployment, migration and falling economic activity will all hit demand for new accounts, limit demand for value-added services, and increase the risk of debt defaults. But there are still opportunities for brands that are agile and sensitive enough to respond. The greater emphasis on digital channels creates a new touchpoint for brands, while the economic upheaval gives banks the opportunity to really prove their worth when it comes to supporting their customers.

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Table of Contents

OVERVIEW

What you need to know
Key issues covered in this Report
Issues covered in this Report
Definitions

EXECUTIVE SUMMARY
The market
Figure 1: Total number of active current accounts, actual, estimated, forecasted and projected, IoI, RoI and NI, 2015-20
Market factors
Economic contraction due to COVID-19 for both Irish economies
High level of switching activity in NI, but not in RoI
Cost of current accounts in RoI hampering multiple ownership
Impact of COVID-19 on current accounts
Figure 2: Index of total number of active current accounts, actual, estimated, forecasted and projected, IoI, RoI and NI, 2014-25
Figure 3: Expected impact of COVID-19 on the current account sector, short, medium and long term, July 2020
Companies and innovations
The consumer
Close to universal ownership of current accounts
Figure 4: Ownership of current accounts, NI and RoI, April 2020
Standard current accounts the most popular type of account
Figure 5: Type of current account(s) owned, NI and RoI, April 2020
Eight providers account for 87% of NI's main account market
Figure 6: Where consumers have their main and non-main current account, NI, April 2020
Two providers dominate the RoI main current account market
Figure 7: Where consumers have their main and non-main current account, RoI, April 2020
Digital channels preferred for every banking activity
Figure 8: Methods that consumers prefer to use for selected banking activities, NI and RoI, April 2020
Strong trust in safety of data, but no forgiveness for breaches
Figure 9: Agreement with statement relating to personal data and data breaches, NI and RoI, April 2020
Consumers want more options and greater control over overdrafts
Figure 10: Agreement with statement relating to attitudes and preferences around overdrafts, NI and RoI, April 2020
COVID-19 brings debt into focus
A quarter of consumers have been frustrated by an IT failure
Figure 11: Agreement with statement, 'An IT failure in the last 12 months at my bank has left me unable to access online/mobile services', by age, NI and RoI, April 2020

THE MARKET – WHAT YOU NEED TO KNOW
COVID-19 pandemic to have lasting impact on sector
NI and RoI economies set to contract significantly in 2020
Strong switching activity in NI - but not among RoI consumers
Increasing cost of current accounts hampering multiple ownership

THE IMPACT OF COVID-19 ON CURRENT ACCOUNTS
Short, medium and long-term impact on the industry
Figure 12: Expected impact of COVID-19 on the current account sector, short, medium and long term, July 2020
Opportunities and threats
Risk of unplanned debt as consumers feel financial pinch
Consumers likely to become more price-conscious both during and after the crisis
Leveraging history and heritage in time of crisis
In the midst of crisis, there's a chance to rebuild bridges and loyalty
Impact on the current account market
Figure 13: Index of total number of active current accounts, actual, estimated, forecasted and projected, IoI, RoI and NI, 2014-25
How the crisis will affect the current account sector’s key consumer segments
Consumers not as wary as they once were, but will they return to branches?
Figure 14: How worried consumers are about the risk of being exposed to COVID-19, IoI, March-July 2020
Figure 15: Consumers who are 'extremely worried' about the risk of being exposed to COVID-19, by age, IoI, July 2020
Figure 16: Agreement with statement 'I am trying to limit the time I spend in-store since the start of the COVID-19 outbreak', by gender and age, IoI, July 2020
With cash out of fashion, consumers want more from their current accounts
Figure 17: Agreement with selected statements about payment methods, NI and RoI, October 2019
Figure 18: Agreement with statement 'I am trying avoid using cash since the start of the COVID-19 outbreak', by generation, IoI, July 2020
How a COVID-19 recession will reshape the current accounts sector
Economic growth and strong employment created demand for current accounts
Migration into Ireland generated additional demand for current accounts
Figure 19: Emigration and Immigration, 000s, RoI, All-Ireland, 2013-19
Figure 20: Number of active current accounts, All-Ireland, 2009-18
A COVID-19 recession to precipitate decline in number of active accounts
Figure 21: How consumers feel COVID-19 will make an impact on selected factors, NI and RoI, June 2020
COVID-19: Market context

MARKET SIZE AND FORECAST
Marginal increase in number of active current accounts in Ireland in 2020
Figure 22: Total number of active current accounts, actual, estimated, forecasted and projected, IoI, RoI and NI, 2014-25
Moderate growth in current account market in coming years
Figure 23: Index of total number of active current accounts, actual, estimated, forecasted and projected, IoI, RoI and NI, 2014-25

MARKET DRIVERS
RoI's GDP expected to contract by 8.5% in 2020
NI economy set to contract by 7.5% in 2020 as a result of COVID-19
Low and declining level of switching among RoI consumers
Figure 24: Annual current account switching volumes, RoI, 2014-18
Number of current account switches down in NI due to COVID-19
Figure 25: Monthly current account switching volumes, UK (including NI), October 2019-June 2020
In Q1 2020, NI-based providers lost 1,600 accounts to account switching
Figure 26: Current account switching, net gains/losses, UK (including NI), Q2 2020
Majority of consumers who switch current account provider are glad they did
Majority of UK (including NI) consumers aware of current account switching service
Figure 27: Consumer awareness of Current Account Switch Service, UK (including NI), October 2019-June 2020
Cost of current accounts continuing to increase for RoI consumers
Figure 28: Current account maintenance fees per annum, RoI, March 2020
Figure 29: Current account fees per transaction/activity, RoI, March 2020

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
COVID-19 affecting banks across NI/RoI
Monzo offers new current account
Competition enters the RoI market
Understanding how artificial intelligence can support banking

WHO’S INNOVATING?
Banks across the IoI competing for customers during COVID-19
Halifax Reward’s
Committing to help the local community during COVID-19
Monzo offers new current account
Artificial intelligence in banking
Figure 30: Consumers who feel AI will have a positive impact on society, by age, Canada, October 2019
Bunq enters Irish market

COMPANIES AND BRANDS
Allied Irish Bank
Key facts
Product portfolio
Recent developments
An Post (RoI only)
Key facts
Product portfolio
Recent developments
Bank of Ireland
Key facts
Product portfolio
Recent developments
Danske Bank (NI only)
Key facts
Product portfolio
Recent developments
EBS (RoI only)
Key facts
Product portfolio
Recent developments
Halifax (NI only)
Key facts
Product portfolio
Recent developments
HSBC (NI only)
Key facts
Product portfolio
Recent developments
KBC Ireland (RoI only)
Key facts
Product portfolio
Recent developments
Nationwide (NI only)
Key facts
Product portfolio
Recent developments
Permanent TSB (RoI only)
Key facts
Product portfolio
Recent developments
Santander (NI)
Key facts
Product portfolio
Recent developments
Ulster Bank (NI only)
Key facts
Product portfolio
Recent developments
 

THE CONSUMER – WHAT YOU NEED TO KNOW
Almost every Irish consumer has at least one current account
Most consumers have a standard current account
Most NI consumers obtain main account from one of eight providers
RoI main current account market dominated by Big Two providers
Consumers prefer mobile or online banking over branches
Consumers trust providers to protect data, but won't tolerate breaches
Give us more options and control over overdrafts, say consumers
A quarter of consumers have experienced disruptive IT failure

OWNERSHIP OF CURRENT ACCOUNTS
Near universal ownership of current accounts among Irish consumers
Figure 31: Ownership of current accounts, NI and RoI, April 2020
More than a third have multiple current accounts
Figure 32: Consumers who own more than one current account, by socio-economic background and household income, NI and RoI, April 2020
Slight decline in multiple account ownership between 2019 and 2020
Figure 33: Consumers who own more than one current account, NI and RoI, June 2019 and April 2020
Majority of consumers have accounts only in their own name
Figure 34: Whether consumers hold account in own name, jointly, or both, NI and RoI, April 2020

TYPE OF CURRENT ACCOUNT OWNED
Most consumers content with standard current account
Figure 35: Type of current account(s) owned, NI and RoI, April 2020
Few consumers opt for fee-paying reward or packaged accounts
Standard accounts have across-the-board universal appeal

WHERE CURRENT ACCOUNTS ARE HELD
Eight providers account for bulk of NI's main account market
Figure 36: Where consumers have their main current account, NI, April 2020
No dominant provider in NI's non-main current account market
Figure 37: Where consumers have their non-main current account, NI, April 2020
RoI main account market dominated by just two providers
Figure 38: Where consumers have their main current account, RoI, April 2020
Slightly more competition in RoI's non-main account market
Figure 39: Where consumers have their non-main current account, RoI, April 2020

PREFERRED METHODS FOR BANKING ACTIVITIES
Consumers prefer digital channels for every banking activity
Figure 40: Methods that consumers prefer to use for selected banking activities, NI and RoI, April 2020
Figure 41: Preferred method of conducting selected banking activities, internet (online and mobile) vs. in-branch counter service, RoI, April 2020
Figure 42: Preferred method of conducting selected banking activities, internet (online and mobile) vs. in-branch counter service, NI, April 2020
Mobile banking apps now the go-to method for most activities
Figure 43: Consumers who prefer to use mobile banking (ie app/website) for selected banking activities, NI and RoI, April 2020
Online banking trailing mobile banking for all activities
Figure 44: Consumers who prefer to use online banking (using a desktop/laptop) for selected banking activities, NI and RoI, April 2020
Branches still valued where guidance or advice may be needed
Figure 45: Consumers who prefer to use in-branch counter services for selected banking activities, NI and RoI, April 2020

PERSONAL DATA AND DATA BREACHES
Consumers trust providers to protect data, but a breach could be costly
Figure 46: Agreement with statement relating to personal data and data breaches, NI and RoI, April 2020
Trust in providers broadly consistent across all demographics
Figure 47: Agreement with statement that 'I trust my current account provider to protect my personal data', by age and socio-economic background, NI and RoI, April 2020
Younger consumers and ABC1s most likely to switch if trust broken
Figure 48: Agreement with statement that 'Data breaches would prompt me to change current account provider', by age and socio-economic background, NI and RoI, April 2020

ATTITUDES AND PREFERENCES AROUND OVERDRAFTS
Consumers would like more leeway and greater control over overdrafts
Figure 49: Agreement with statement relating to attitudes and preferences around overdrafts, NI and RoI, April 2020
Big majority want banks to offer free 'buffer' for minor overdrafts
One in three would like option to turn their overdraft into a loan
Majority of consumers want more control over overdraft limits
Around a third expect to need overdraft due to pandemic
Figure 50: Agreement with statement, 'I expect the coronavirus outbreak might see me needing to use an overdraft', by age, NI and RoI, April 2020
Figure 51: Agreement with statement, 'I expect the coronavirus outbreak might see me needing to use an overdraft', by income level and socio-economic background, NI and RoI, April 2020

FRUSTRATION WITH IT FAILURES
Around a quarter of all consumers have been affected by an IT failure
Younger consumers most likely have experienced IT failure
Figure 52: Agreement with statement, 'An IT failure in the last 12 months at my bank has left me unable to access online/mobile services', by age, NI and RoI, April 2020

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Abbreviations

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