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Published by: Mintel International Group Ltd.
Published: May. 1, 2009 - 79 Pages
Table of Contents
- ISSUES IN THE MARKET
- Main findings of the research
- Abbreviations
- MARKET IN BRIEF
- Economic downturn will impact on consumers’ savings habits
- Retail savings balances totalled £1.1 billion at the end of 2008
- Lloyds Banking Group is the dominant force in the savings market
- Trade perspective: Low rates create the principal challenge
- Mintel’s research findings: Product ownership
- Mintel’s research findings: Favoured account providers
- Mintel’s research findings: Attitudes towards saving
- INTERNAL MARKET ENVIRONMENT
- Key points
- Base rates have been reduced to an historically low level
- Figure 1: Bank of England base rate, end of quarter, Q1 1972-Q1 2009
- Savings rates have tumbled in the last few months
- Figure 2: Average quoted deposit interest rates at banks and building societies, January 2004-February
- 2009
- The low-interest-rate environment creates a number of challenges
- Wholesale market turmoil has driven up demand for retail funds
- The banking crisis will continue to impact on consumer sentiment
- Raising the protection limits will have eased consumer fears
- BROADER MARKET ENVIRONMENT
- Key points
- The economic downturn will impact on consumers’ ability to save
- Debt repayment will increasingly become a priority
- Precautionary saving may stimulate the savings habit
- The savings ratio has actually increased in recent quarters
- Figure 3: Household savings ratio, seasonally adjusted, Q1 2004-Q4 2008
- Rising ISA allowances will provide a boost to the savings market
- Population trends will impact on demand for savings accounts
- Figure 4: UK population, by age bracket, 1992-2016
- COMPETITIVE CONTEXT
- Key points
- Deposit accounts compete with investments and everyday spending
- Stockmarket decline has hit equity-based investments
- Figure 5: FTSE 100 Index, end of month, January 1994-March 2009
- Property market downturn makes housing a less attractive option
- Figure 6: Average UK house price, seasonally adjusted, January 2006-March 2009
- STRENGTHS AND WEAKNESSES IN THE MARKET
- Figure 7: Strengths and weaknesses in the deposit-based savings account market
- Strengths
- Weaknesses
- MARKET SIZE AND FORECAST
- Key points
- Retail savings balances totalled £1.1 billion at the end of 2008
- Figure 8: Retail savings balances outstanding, 2004-09
- A number of factors will constrain future growth in balances…
- …but a rise in precautionary saving could stimulate the market
- The value of deposits in time accounts has grown in recent years
- Figure 9: Number and value of individual interest-bearing sight and time accounts (MBBG only), 2003-08
- More than 30 million adults hold a deposit or savings account
- Figure 10: Ownership of deposit or savings accounts and NS&I products, December 2008
- Cash ISAs are a key segment of the deposit-based savings market
- Figure 11: Cash ISA balances outstanding, 2003-08
- Sales of cash ISAs increased by 10% in 2008
- Figure 12: Number of mini cash ISAs receiving subscriptions and the value of gross subscriptions, 2002/03-
- 2007/08
- FORECAST
- Balances to rise as individuals shore up savings
- Figure 13: Forecast of retail savings balances outstanding, 2004-14
- Factors used in the forecast
- MARKET SHARE
- Key points
- Lloyds Banking Group is the dominant force in the savings market
- Figure 14: Estimated deposit-based savings account volume market share, by savings brands, December
- 2008
- Market concentration has increased in the last couple of years
- Figure 15: Combined volume market share of top five deposit-based savings account providers, by financial
- services group, 2006 and 2008
- COMPANIES AND PRODUCTS
- Key points
- There have been significant changes to the operating landscape
- The Lloyds/HBOS merger has created a savings colossus
- A number of leading banks are now partly, or wholly, in state hands
- Santander has increased its presence within the UK savings market
- Nationwide has driven consolidation in the building society sector
- Co-operative Bank and Britannia are set to form a mutual alliance
- BRAND COMMUNICATION AND PROMOTION
- Key points
- Savings account providers invest heavily in advertising
- Total industry adspend amounted to £100 million in 2008
- Figure 16: Advertising expenditure on savings accounts, 2004-08
- Instant-access and regular savings accounts are heavily promoted
- Figure 17: Advertising expenditure on savings accounts, by product categories, 2007 and 2008
- The press is the main advertising medium used by savings providers
- Figure 18: Advertising expenditure on savings accounts, by media type, 2007 and 2008
- ING Direct tops the savings account adspend table
- Figure 19: Advertising expenditure on savings accounts, by organisation, 2007 and 2008
- CHANNELS TO MARKET
- Key points
- Combined branch network has declined by a fifth in the last decade
- Figure 20: UK bank and building society combined branch networks, 1997-2007
- Telephone and internet continue to gain in popularity
- Figure 21: Number of personal customers registered to access accounts, by telephone and computer
- (MBBG only), 2002-07
- The branch will retain a key position in the distribution mix…
- …although the trend to multichannel strategies will continue
- THE CONSUMER - PRODUCT OWNERSHIP
- Key points
- Survey background
- More than six in ten adults hold a deposit or savings account
- Figure 22: Ownership of savings and investment products, December 2008
- Almost eight in ten ABC1 over-55s own a savings account
- Figure 23: Savings and investment ownership, by gender, age and socio-economic group, December 2008
- A large proportion of homeowners hold a deposit account
- Figure 24: Savings and investment ownership, by marital status, lifestage, ACORN group, working status,
- income and household tenure, December 2008
- Most M&S and Waitrose customers own a savings account
- Figure 25: Savings and investment ownership, by TV region, technology users, newspaper readership and
- supermarket usage, December 2008
- Six in ten 35-44-year-olds hold an instant-access account
- Figure 26: Deposit-based savings ownership, by gender, age and socio-economic group, December 2008
- A third of consumers hold more than one type of savings account
- Figure 27: Number of types of deposit-based savings account held, by consumers, December 2008
- A quarter of the single-product group hold a cash ISA
- Figure 28: Ownership of deposit-based savings accounts, by number of types of deposit-based savings
- account held, December 2008
- Almost half of instant-access account holders also own a cash ISA
- Figure 29: Ownership of deposit-based savings accounts, by deposit-based savings products, December
- 2008
- THE CONSUMER - FAVOURED ACCOUNT PROVIDERS
- Key points
- A fifth of savers hold an account with Halifax
- Figure 30: Proportion of adult savers who hold a deposit account with each savings provider, December
- 2008
- HSBC has a comparatively young customer profile
- Figure 31: Proportion of adult savers who hold a deposit account with the leading players, by gender, age
- and socio-economic group, December 2008
- Nationwide has a strong bias towards ABC1 third age savers
- Figure 32: Proportion of adult savers who hold a deposit account with the leading players, by marital status,
- lifestage, Mintel’s Special Groups, ACORN group and TV region, December 2008
- A fifth of broadsheet readers hold a savings account with Barclays
- Figure 33: Proportion of adult savers who hold a deposit account with the leading players, by working
- status, income, household tenure, technology users and newspaper readership, December 2008
- Almost three in ten ‘wealthy’ savers hold an account with Halifax
- Figure 34: Proportion of adult savers who hold a deposit account with the leading players, by total value of
- savings and investments, December 2008
- APPENDIX: RESEARCH METHODOLOGY
AbstractThe deposit-based savings industry has experienced the most turbulent period in its history during the course of the past 18 months. Indeed, the credit crunch and global banking crisis has precipitated the sad demise of several high-profile and long-established savings institutions including Bradford & Bingley, Northern Rock and the Dunfermline Building Society, while a number of eminent banks have been forced to rely on billions of pounds of taxpayers’ money in order to stay afloat.
However, in spite of the current turmoil, the savings account market remains a key sector within the wider financial services industry. This partly relates to the fact that deposit-based savings accounts are among the most widely held of all the different financial products. Indeed, around 31 million adults currently hold a deposit or savings account, which clearly represents a sizeable customer base.
This report provides an assessment of recent trends within this sector. It analyses market data, considers the prospects for future growth and reports industry views on a range of issues. In addition, it provides analysis of Mintel’s independently commissioned consumer research, which identifies the proportion of adults who own a deposit account; establishes the penetration of savings accounts by brand; and considers attitudes towards a number of salient saving-related issues.
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