UK Savings 2017: Forecasts & Future Opportunities
"UK Savings 2017: Forecasts & Future Opportunities", provides a comprehensive analysis of the factors driving the UK savings market. This report is based on interviews with industry figures and secondary research.
The UK retail savings market has been characterized by low levels of competition and low returns for several years, with the low base rate and access to cheap funding from state-backed schemes leading to downside pressure on interest rates. However, the prospect of rising rates and the end of subsidized funding will lead to a more competitive environment, with banks having to increase their reliance upon deposits.
The report offers insight into -
- The macroeconomic factors affecting the market for deposits.
- Consumers attitudes and behavior towards saving and savings providers.
- The impact of the latest savings-related products and innovations.
- The current low growth in real wages is expected to continue for several years, which will limit consumers ability to save. However, rising rates will create an added incentive to save, and pension liberalization will lead to greater inflows of funds into fixed-rate accounts.
- Savers reasons for choosing their provider differ significantly across the market. Nationwide is more likely to be chosen on the basis of its rates and reputation, while savers with Barclays, HSBC, Lloyds Bank, and NatWest opt for those banks on the back of existing relationships.
- A growing number of fintech providers are targeting younger consumers with services that help them save without making a conscious effort by, for example, moving funds into a savings account whenever a purchase is transacted.
Reasons to buy
- Learn about the factors that will drive growth in deposits over the next few years.
- Understand what consumer are saving for, and why they chose their savings provider.
- Discover more about the latest savings-related products, how they will improve consumer outcomes, and their long-term prospects.
Table of Contents
1. EXECUTIVE SUMMARY 2
1.1. Market summary 2
1.2. Key findings 2
1.3. Critical success factors 2
2. MARKET ENVIRONMENT 7
2.1. Deposits growth is forecast to slow over the next few years 7
2.2. Cash ISAs have lost ground to competing products 8
2.2.1. Competition in the cash ISA market may be set to grow 9
2.3. Wage pressure will continue to limit consumers savings capacity 9
2.4. The base rate may rise more quickly than expected 11
2.4.1. The prospect of a hard Brexit may prompt higher interest rates 12
2.5. Pension freedoms may boost the fixed-rate deposits market 12
2.6. The closure of cheap funding schemes will lead to added rate pressure 12
2.6.1. New funding under the FLS ended in January 2018 13
2.6.2. The TFS will close to new business at the end of February 2018 13
2.6.3. Lloyds Banking Groups reaction to scheme closures will drive the market response 14
3. CONSUMER BEHAVIOR 15
3.1. Reasons for saving vary by age and provider 15
3.1.1. Younger consumers are primarily saving for feel-good reasons 16
3.1.2. Older savers are planning for unforeseen events and retirement 17
3.1.3. Nationwide customers are the most engaged savers 18
3.2. Nationwide savers are the most motivated by rate 18
3.3. Online is now the most popular application channel 19
3.4. NatWest and Barclays are using mobile as an acquisition channel 20
4. COMPETITIVE ENVIRONMENT 22
4.1. Product rates on longer-term fixed and new accounts are edging up 22
4.2. Lloyds Banking Group is the unassailable market leader 23
4.2.1. The biggest providers have seen a decline in their overall share of the market 24
4.3. Challenger brands are competing aggressively for new business 24
4.4. Nationwide and TSB outperform on customer advocacy 26
5. INNOVATION 28
5.1. Raisin is bringing its savings marketplace to the UK 28
5.2. Oval Money helps consumers save with each purchase 29
5.3. Chip assumes responsibility for saving on behalf of its users 31
5.4. Moneybox allows consumers to save as they spend 32
6. APPENDIX 34
6.1. Abbreviations and acronyms 34
6.2. Supplementary data 34
6.3. Bibliography 41
6.4. Further reading 42
List of Tables
Table 1: 10 biggest users of FLS, ranked by total outstanding drawings, September 2017 13
Table 2: 10 biggest users of TFS, ranked by total outstanding drawings, September 2017 14
Table 3: Best rates for one-year fixed-rate bonds, February 2018 25
Table 4: Effective interest rates for new time deposits, February 2016-December 2017 34
Table 5: Annual growth in average weekly earnings and household savings ratio, March 2014-2021 35
Table 6: Forecast for Bank of England base rate, February 2018-March 2021 37
Table 7: Average quoted rates on savings accounts, February 2016-January 2018 38
Table 8: Total retail savings deposits, top five deposit-takers, 2012-16 39
Table 9: Chip: forecast bank connections and total customer savings, December 2017-December 2020 40
List of Figures
Figure 1: Retail deposits will rise at a diminishing rate over the forecast period to reach 1,499.2bn by 2021 7
Figure 2: Cash ISA deposits at UK high-street banks have fallen for five successive quarters 8
Figure 3: Interest rates on new cash ISAs became more competitive in Q4 2017 9
Figure 4: The reduction in the savings ratio has mirrored the decline in wage growth 10
Figure 5: Markets now expect the base rate to rise at a faster rate than they did in late 2017 11
Figure 6: Younger consumers save for a mix of pleasurable and serious goals 16
Figure 7: New providers like Starling Bank are making it easier for their customers to save for specific goals 17
Figure 8: Nationwide customers are the most likely to be saving with a specific objective in mind 18
Figure 9: Nationwide is chosen by savers on the strength of its interest rates, reputation, and innovation 19
Figure 10: Branches remain a vital acquisition channel despite being overtaken by online 20
Figure 11: Halifax and Nationwide are leading the way on digital acquisition of savings customers 21
Figure 12: Rates on longer-term bonds and new accounts have been rising since February 2017 22
Figure 13: Lloyds Banking Group holds nearly twice as much in deposits as its closest rival 23
Figure 14: Nationwide and TSB outperform the market with respect to NPS by a considerable margin 26
Figure 15: Raisin acts as a one-stop shop for savings products from across the EU 29
Figure 16: Oval Money lets users set purchase-based rules for saving 30
Figure 17: Chip is forecasting rapid consumer adoption up to 2020 31
Figure 18: Moneybox offers API-integrated purchase-based saving 32
Make an enquiry before buying this Report
Please fill the enquiry form below.