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UK Savings: 2016 Review, Forecasts & Future Opportunities

UK Savings: 2016 Review, Forecasts & Future Opportunities

Summary

Retail deposits for 2016 are expected to be 6% higher than in 2015. However, market conditions over the next few years are predicted to dampen prospects for future growth. UK retail deposits will increase at a CAGR of 3.3% during 2016–20 to reach £1,606bn by the end of the forecast period.

GlobalData Financial’s “UK Savings: 2016 Review, Forecasts & Future Opportunities” looks at how the personal savings market will develop up to 2020, analyzes the factors that will determine this outlook, and examines savers’ intentions and behavior. It forecasts personal savings deposits up to 2020, analyzes the factors determining the outlook of the savings market, and looks at what providers are doing to improve their performance. The report concludes with analysis of drivers of provider choice and how banks can harness the personal goals of consumers and encourage them to save.

Scope

  • Personal deposits are expected to grow slowly as the economic outlook remains fragile.
  • The rate advantages offered by fixed-term accounts are steadily falling, making long-term saving less attractive to consumers.
  • Low savings rates will impact consumers’ inclination to save.
Reasons to buy
  • Understand the developments shaping the UK retail savings market.
  • Inform your future plans with our five-year forecast for retail deposits.
  • Discover how market forces will influence customers' ability and willingness to save.
  • Discover what impact new products, innovations, and strategies will have on the savings market.
  • Learn how to respond to consumers' attitudes towards saving and personal finance.


  • Executive Summary
    • Key findings
    • Critical success factors
  • Retail Deposits are Set for Slow Growth
    • Deposit accounts are expected to remain the UK’s preferred asset class for saving
      • Table Figure 1: Retail deposits will grow only slightly over the forecast period
      • Table Figure 2: Retail deposits will experience slow growth up to 2020
    • Declining consumer confidence has increased the imperative to save
      • Table Figure 3: Consumer confidence dropped sharply in Q2 2016, but quickly recovered after July 2016
    • Wage growth and declining unemployment will encourage saving
      • Table Figure 4: Real wage growth will boost the savings market
    • Falling interest rate differentials between instant-access and fixed-term accounts deter consumers from saving
      • Table Figure 5: The rate advantages offered by fixed-term accounts are steadily diminishing
  • Regulations Aim to Change the UK Savings Market
    • PSA was implemented in April 2016 and is helping boost the savings market
      • The PSA has reduced the relative appeal of ISAs
        • Table Figure 6: Savers have suffered in recent years with a continual rate reduction on cash ISAs
      • The cash ISA allowance will rise to £20,000 in April 2017
    • New Lifetime ISA being launched from April 2017
      • Table Figure 7: New Lifetime ISA will encourage younger people to save
    • The BoE has extended FLS in an attempt to support the economy after the Brexit vote
      • Table Figure 8: The FLS incentivizes banks to boost their lending by reducing their funding costs
    • Brexit will have a short-term adverse impact on the savings market
      • Savings rates will remain depressed, impacting consumers’ inclination to save
        • Table Figure 9: A further cut in interest rates will reduce the rewards of saving
      • Inflation is expected to rise, squeezing wages and slowing the economy
  • Savings Providers Can Acquire Customers Despite Poor Market Conditions
    • Lloyds Banking Group led the UK retail savings market in 2016
      • Table Figure 10: Lloyds Banking Group holds a quarter of all retail deposit balances in the UK
    • New challenger banks are boosting the savings market with competitive rates
      • Table Figure 11: Challenger banks offer the best easy-access deals
    • PFM apps are aiming to drive savings behavior
      • Chip makes automatic savings decisions for its users
        • Table Figure 12: Chip uses a proprietary chatbot and meets a clear consumer need
      • The MySpend app helps consumers spend wisely
        • Table Figure 13: MySpend can play a significant role in helping consumers control their spending
      • Savedroid converts everyday activities into savings
        • Table Figure 14: Savedroid encourages regular savings behavior
      • MoBILLity analyzes bills for potential savings
        • Table Figure 15: MoBILLity offers a level of sophistication above price comparison sites
      • Squirrel helps consumers save by removing the temptation to spend
        • Table Figure 16: Squirrel is likely to be an effective savings tool
  • Rate and Reputation Will Help Drive Savings
    • Goal-based saving will motivate consumers to save
      • Table Figure 17: Covering unforeseen events is the most popular reason for saving
    • Online will overtake branches for savings account customer acquisition
      • Table Figure 18: Branches remain the most popular acquisition channel for savings accounts
    • An existing relationship and rate influence consumers taking out a savings account
      • Table Figure 19: Older consumers are the most rate-focused
    • Nationwide and Halifax have the best NPS among the main savings providers
      • Table Figure 20: All savings providers have seen an improvement in NPS over the last 12 months
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • CAGR
      • Consumer segments as per our 2016 RBI Survey
      • Savings ratio
    • Methodology
      • GlobalData’s 2016 RBI Survey
      • Future Sentiment Index
      • Present Sentiment Index
    • Bibliography
    • Further reading

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