United Kingdom (UK) Retail Banking Market Sizing and Opportunities 2022
Description
United Kingdom (UK) Retail Banking Market Sizing and Opportunities 2022
Summary
The UK retail banking sector has been resilient despite COVID-19. The UK has witnessed a double threat to the economy in the form of uncertainty and external shocks caused by the 2016 Brexit referendum and the COVID-19 pandemic. Concerns about the UK’s status within global finance remain as financial services providers look to move roles abroad. Meanwhile, the threat posed by high inflation and a cost-of-living crisis have become more pronounced in early 2022. As a result, the likelihood of a post-COVID boom has dissipated. Savings built up over the COVID period are likely to lose value due to inflation and be spent on necessities, as energy prices in particular increase by an average of over 50%.
This report explores the key trends in the UK retail banking sector and offers insight into consumer preferences and changes in behavior regarding financial services providers. It also examines channel preferences and covers overall satisfaction and importance levels of the main banking attributes. In addition, the report analyzes cross-selling opportunities by looking at customer tenures and areas of dissatisfaction.
Scope
Summary
The UK retail banking sector has been resilient despite COVID-19. The UK has witnessed a double threat to the economy in the form of uncertainty and external shocks caused by the 2016 Brexit referendum and the COVID-19 pandemic. Concerns about the UK’s status within global finance remain as financial services providers look to move roles abroad. Meanwhile, the threat posed by high inflation and a cost-of-living crisis have become more pronounced in early 2022. As a result, the likelihood of a post-COVID boom has dissipated. Savings built up over the COVID period are likely to lose value due to inflation and be spent on necessities, as energy prices in particular increase by an average of over 50%.
This report explores the key trends in the UK retail banking sector and offers insight into consumer preferences and changes in behavior regarding financial services providers. It also examines channel preferences and covers overall satisfaction and importance levels of the main banking attributes. In addition, the report analyzes cross-selling opportunities by looking at customer tenures and areas of dissatisfaction.
Scope
- GlobalData’s 2021 Financial Services Consumer Survey found that the preference for current accounts from traditional providers in the UK declined by 12 percentage points (pp) compared to the previous year.
- Banks have prioritized the elements of service customers rank as most important, but greater attention should be paid to offering competitive prices and loyalty rewards as these are areas digital challengers thrive in.
- Between 2020 and 2021 online channels saw a 3pp decrease in use, while mobile channels saw a 3pp increase.
- Understand and analyze UK mortgage, deposit, and lending market trends based on present and forecast growth up to 2025.
- Analyze data from GlobalData’s 2021 Financial Services Consumer Survey by looking at consumer preferences and behaviors in the UK retail banking market.
- Identify critical data points for customer retention and acquisition through three core areas in banking: financial services provider preference and movements, digital and alternative channel preferences, and cross-selling opportunities based on tenure and satisfaction levels.
Table of Contents
40 Pages
- Growth in consumer credit balances has slowed
- UK consumers’ preference for incumbents has decreased
- Figure 1: Average cost/income ratio, Average return on assets & Average net interest margin 2015-20
- Figure 2: Current account market share and channel visitation daily/weekly 2017-21
- Figure 3: Mobile wallet users in the past 12 months.
- Market balances
- GDP and unemployment
- Retail deposits: The market share held by the top five decreased from 66% in 2010 to 58% in 2020
- Residential mortgages: Market share concentration among the top five decreased from 69% in 2010 to 65% in 2020
- Credit cards: Market share concentration among the top five increased from 56% in 2010 to 57% in 2020
- Personal loans: Market share among the top five settled at 36% in 2020 - the same as in 2010
- COVID-19 has made it possible for banks to make efficiencies, but these have increased short-term costs
- Retail banking provider preference is beginning to shift from incumbents to alternative providers
- UK consumers prefer traditional providers due to their better levels of service and branch networks
- The preference for alternatives is driven by better rates/ rewards and superior digital banking functionality
- The COVID-19 pandemic drove an increase in fraud
- UK banks have attempted to prioritize the attributes of service that customers rank as most important
- UK banks must perfect the ability to resolve minor and regular banking problems
- Cross-selling is correlated with high rates of customer satisfaction and tenure
- Starling Bank
- Monzo
- Revolut
- Abbreviations and acronyms
- Methodology
- Further reading
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