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Student Finance - UK - May 2017

Published By :

Mintel

Published Date : May 2017

Category :

Banking

No. of Pages : N/A

Students can be a demanding group. Young, educated and tech-savvy students want engaging online and mobile banking services. The innovative platforms offered by digital challengers are therefore a threat to major banks with less interactive services. High street banks need to ensure that they focus efforts to improve in this area, as well as continuing to offer popular perks.

Table of Content

OVERVIEW
What you need to know
Report coverage

EXECUTIVE SUMMARY
The market
The student population returned to growth in 2015/16
Figure 1: Size of total student population, and first-year student population, undergraduate and postgraduate, 2005/06-2015/16
Companies and brands
Santander leads the current account market among students
Figure 2: Main current account provider, March 2017
The consumer
Ownership of credit cards and home insurance is low among students
Figure 3: Financial products ownership, March 2017
Two thirds of students have a specialist account
Figure 4: Type of current account owned, March 2017
Free overdrafts and digital channels are key
Figure 5: Features looked for when choosing a student or graduate account, March 2017
Students are averse to using credit …
Figure 6: Attitudes towards credit and money management, March 2017
… and exhibit responsible traits in financial management
Figure 7: Financial activity and concerns, March 2017
What we think

ISSUES AND INSIGHTS
Students need to be educated about the positive uses of credit
The facts
The implications
Offering more useful apps will produce more financially-literate customers
The facts
The implications
Open Banking: a threat to the student banking model?
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
The student population returned to growth in 2015/16
Tuition fees are set for further rises, while grants have been abolished
Students are fairly comfortable with their current finances and confident for the future

THE BRITISH STUDENT
Around a million new students start university every year
Figure 8: Size of total student population, and first-year student population, undergraduate and postgraduate, 2005/06-2015/16
Undergraduates make up three quarters of the student population
Figure 9: Student population, by level of study, 2015/16
Part-time study has fallen dramatically since 2009
Figure 10: First-year student population, by mode of study, undergraduate and postgraduate, 2005/06-2015/16

THE STUDENT FINANCE ENVIRONMENT
Tuition fees to rise to £9,250 a year in September 2017
Maintenance grants have been replaced by a means-tested loan
Figure 11: Maintenance loan entitlement for full-time undergraduate students, 2017/18
43% work around their studies
Figure 12: Student employment, March 2017
80% of students live away from their parents during term-time
Figure 13: Term-time accommodation, March 2017
Figure 14: Index of private housing rental prices, January 2011-March 2017
Student accounts can set up long-term customer/bank relationships
Figure 15: Current account tenure, May 2016

STUDENT FINANCIAL OUTLOOK
Most students feel pretty good about their finances
Figure 16: Current financial situation, April 2017
There has been little change in financial wellbeing over the last year
Figure 17: Current financial situation compared to a year ago, April 2017
Students are generally a confident group
Figure 18: Financial confidence, April 2017

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Providers compete on overdrafts and other perks …
… but innovation in digital channels comes mostly from new challengers
Santander leads the current account market among students

COMPETITIVE STRATEGIES
Overdrafts are the main point of comparison between providers …
… but non-financial perks can be more enticing
Premiumisation can raise revenues but is unlikely to have mass appeal
Digital disruptors

MAIN CURRENT ACCOUNT PROVIDER
Santander leads the current account market among students …
Figure 19: Main current account provider, March 2017
… driven by an impressive hold on the student account market
Figure 20: Main current account provider, by type of current account owned, March 2017

THE CONSUMER – WHAT YOU NEED TO KNOW
Ownership of credit cards and home insurance is low among students
Two thirds of students have a specialist account
Free overdrafts and digital channels are key
Students are averse to using credit …
… and exhibit responsible traits in financial management

FINANCIAL PRODUCT OWNERSHIP
Only a fifth of students have a credit card
Figure 21: Financial products ownership, March 2017
Ownership, or awareness, of home insurance is low
Figure 22: Ownership of home insurance, by residential situation during term time, March 2017
ISAs become more common as students prepare to graduate
Figure 23: Ownership of savings accounts and ISAs, by year of study, March 2017
Most students only have one or two financial products
Figure 24: Number of financial products currently owned, March 2017
Figure 25: Financial products ownership, by number of financial products currently owned, March 2017

PENETRATION OF STUDENT CURRENT ACCOUNTS
Two thirds of students have a specialist account …
Figure 26: Type of current account owned, March 2017
… but first-years can be slow to switch
Figure 27: Type of current account owned, by year of study, March 2017
Most students only have one account
Figure 28: Number of types of current account owned, March 2017

DESIRABLE ACCOUNT FEATURES
Digital features are highly regarded by students
Figure 29: Features looked for when choosing a student or graduate account, March 2017
Student account holders would rather have a free overdraft than a large one
Non-financial perks are more popular than financial offers …
... and are key to Santander and NatWest
Figure 30: Features looked for when choosing a student or graduate account, by main current account provider, March 2017

ATTITUDES TOWARDS CREDIT AND MONEY MANAGEMENT
Students are averse to using credit
Figure 31: Attitudes towards credit and money management, March 2017
Budgeting can be problematic
45% consider student loans to be ‘real’ debt

FINANCIAL ACTIVITY AND CONCERNS
Almost all check their balance regularly …
Figure 32: Financial activity and concerns, March 2017
… but they could still be missing out
Lenders need to carefully introduce the idea of responsible borrowing
Figure 33: Financial activity and concerns, by year of study, March 2017
Almost half plan to save for retirement immediately

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

List of Table

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