United Kingdom (UK) Retail Banking 2020 - Review, Forecasts, and Future Opportunities

United Kingdom (UK) Retail Banking 2020 - Review, Forecasts, and Future Opportunities

Summary

Growth in the UK retail banking sector has been consistent over the past decade following the global financial crisis, although COVID-19 will significantly alter trajectories and forecasts in 2020 and 2021. A V-shaped recovery is expected and could potentially see growth post-COVID-19 follow similar trends and rates to those pre-COVID-19. Following a decade of austerity, a return to this policy to reduce the deficit and debt incurred during the COVID-19 period is unlikely due to the political consequences for the government. Plans to level up and rebalance the economy are expected to continue on track, while tax cuts and the relaxation of regulation and red tape are expected to boost growth and kick-start the economy.

This report explores trends in the retail banking sector and offers insight into consumer preferences and behaviors. It highlights some of the most important data points available on the performance of the sector comparable to other markets, as well as the performance and perception of firms within the industry. New trends and innovations are also noted, as are the implications of COVID-19 for the sector.

Scope

  • The largest five providers of credit cards have seen their share of the UK credit card market remain at 69% over the last eight years.
  • Barclays and Bank of Scotland consistently rank lowest of all competitors measured with regards to digital channel usage while ranking highly for branch usage.
  • Nationwide and First Direct have invested heavily in digital infrastructure and consequently rank highest across primary activities such as checking current account balances or sending money to others.
  • Younger and more affluent users prefer and are open to using a wider range of service providers than older and less affluent users.
Reasons to Buy
  • Identify factors affecting growth prospects across the deposit, credit card, personal loan, and mortgage markets.
  • Track competitor gains and losses in market share, as well as consumer perceptions of competitors’ performance.
  • Learn about how channel preferences have evolved in recent years.
  • Discover changes in attitudes towards digital-only banks.
  • Explore the importance placed on the various attributes of financial service providers analyzed by age and income.


  • Executive Summary
  • Growth Prospects
    • UK retail deposits and mortgage balances have continued to grow, although the UK's CAGRs trail comparable markets
    • UK credit card balances and personal loans continue to grow, with UK CAGRs above several comparable markets
    • Declining market concentration indicates the UK financial services market has become more competitive due to new entrants
  • Macroeconomic Outlook
    • Uncertainty caused by Brexit and the impact of COVID-19 will hamper growth, but recovery provides opportunity to rebalance and level up the economy
  • Survey Insights
    • Users favor digital channels when checking a main current account, with mobile usage likely to continue to grow at an accelerated pace
    • Branch-based services have held their own despite the introduction of new channels
      • Table What would be your preferred channel when conducting these activities?
    • Use of online channels has declined as mobile has become more popular • UK customers migrated to digital channels
      • Table What would be your preferred channel when conducting these activities?
    • Market segmentation by age demonstrates the varying levels of importance placed on different elements of service
      • Table What is the most important attribute you look for in financial services companies?
    • Market segmentation by affluence also highlights the varying levels of importance placed on different elements of service
      • Table What is the most important attribute for a financial services provider?
    • Bank of Scotland, TSB, and Barclays customers are most dissatisfied with their mobile channels
    • Almost two thirds of UK customers want the speed and simplicity of mobile banking to be improved
    • Concerns surrounding privacy have the majority of UK consumers cautious about open banking
    • Customer perceptions of incumbents and digital-only banks have shifted considerably since 2018
    • Different life events present opportunities for non-incumbents to increase their market share
      • Table Preference of transaction/savings account provider by event
      • Table Preference of currency provider by event
      • Table Preference of non-mortgage credit provider by event
  • Competitor Update
    • Competitor Update
  • Appendix
    • Definitions
    • Supplementary Data
      • Table Supplementary Data
    • Methodology

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