Market Research Logo

Deposit and Savings Accounts - UK - April 2015

“Although most savers say they are prepared to switch savings provider to receive a better rate, less than a third actually did so in the last year or so. With interest rates so low across the board, the cash benefit of switching accounts is usually marginal for all but the heaviest savers.”

– Chryso Kolakkides, Senior Financial Services Analyst

This report covers the following issues:

PFM apps have growth potential in the UK
Low switching in the savings market gives banks the opportunity to compete on non-price factors


OVERVIEW
Report scope and definitions
EXECUTIVE SUMMARY
The market
Figure 1: Forecast of retail savings balances, fan chart at current prices, 2009-19
Figure 2: Total value of retail savings deposits from UK households and % change year on year, 2005-14
Figure 3: Activities relating to savings, by channel preference, February 2015
Key players
The consumer
Figure 4: Value of savings and investments, February 2015
Figure 5: Ownership of savings products, February 2015
Figure 6: Number of saving product types held, February 2015
Figure 7: Savers’ future saving plans, February 2015
Figure 8: Non-savers’ future saving plans, February 2015
Figure 9: Reasons for saving, February 2015
Figure 10: Consumer saving habits, February 2015
Figure 11: Savers’ interest in the market, February 2015
Figure 12: Savers’ attitudes and switching behaviour, February 2015
ISSUES & INSIGHTS
PFM apps have growth potential in the UK
Low switching in the savings market gives banks the opportunity to compete on non-price factors
THE MARKET
What you need to know
Retail deposits reached a total of nearly £1.3 trillion in 2014
Market forecasts a steady growth in retail deposits over the next five years
Gap between inflation and wage growth has disappeared…
…but economic recovery will take time to feed through into consumer financial wellbeing
Rates of return continue to suffer
Equity-based products are becoming a more appealing option
Online beats all other channels in the savings market
Market size and segmentation
Retail deposits reached a total of nearly £1.3 trillion in 2014
Figure 13: Total value of retail savings deposits from UK households and % change year on year, 2005-14
Value of sight accounts is steadily increasing
Figure 14: Volume and value of individual interest-bearing Sterling accounts (high street retail banks only), 2009-13
Market forecast
Figure 15: Forecast of retail savings balances, fan chart at current prices, 2009-19
Figure 16: Forecast of total retail savings balances, 2009-19
Economic environment
Gap between inflation and wage growth has disappeared
Figure 17: Monthly change in RPI and average weekly earnings (regular pay, excluding bonuses), January 2009-January 2015
Economic recovery will take time to feed through into consumer financial wellbeing…
…but consumer confidence edged upwards in January 2015
Figure 18: Financial confidence index, January 2009-15
No major change in the savings ratio in 2014
Figure 19: Gross household savings and savings ratio, seasonally adjusted at current prices, 2004-14* (est)
Market conditions
Rates of return continue to suffer
Figure 20: Average monthly quoted interest rates of UK monetary financial institutions (excluding Central Bank), not seasonally adjusted,
January 2011-15
Equity-based products are becoming a more appealing option
Figure 21: Value of new adult ISA subscriptions, 2009/10 – 2013/14
Budget 2015: New personal savings allowance and cash ISA flexibility
FCA probe into the cash savings market
NS&I Pensioner Bonds: a savings gift to the over-65s
Channels to market
Online beats all other channels in the savings market
Figure 22: Activities relating to savings, by channel preference, February 2015
Providers increasingly promote digital channels
KEY PLAYERS
What you need to know
Lloyds Banking Group reports the highest overall retail savings balances
NS&I grew savings balances significantly in 2014
Adspend on cash savings products down by 38% in 2014
Greater focus on brand building in 2014
High street players are embracing a multi-channel approach
All eyes on current accounts
Providers target loyalty
A look towards their customers with disabilities
Market share
NS&I holds less than 10% of the savings market share
Figure 23: Retail savings balances from households and market share, by sector, 2010-14
Lloyds Banking Group reports the highest overall retail savings balances
Figure 24: Big providers’ total retail savings balances, shown on a group basis – UK, 2013-14
Lloyds Banking Group holds leading position in the easy-access savings account market
Figure 25: Ranking of the largest group providers of each savings product, by proportion of customers, February 2015
Advertising spend
Greater focus on brand building in 2014
Figure 26: Total advertising expenditure on cash savings products, by product type, 2010-14
Halifax remains the highest-spending advertiser in the savings account market
Figure 27: Top ten advertisers of cash savings products (excluding cash ISAs and children’s saving products), 2012-14
TV and press claimed 88% of sector adspend in 2014
Figure 28: Total advertising expenditure on cash savings products (excluding cash ISAs and children’s saving products), by media type, 2014*
35
A note on adspend
Competitive strategies – Channel evolution
High street players continue to develop their multi-channel capabilities
Digital-only banks are on the way…
…while the big high street players are developing their digital services
Competitive strategies – Product development
All eyes on current accounts
Providers target loyalty
A look towards customers with disabilities
Brand research
What you need to know
Brand map
Figure 29: Attitudes towards and usage of selected financial services brands, December 2014
Key brand metrics
Figure 30: Key metrics for selected financial services brands, December 2014
Figure 31: Attitudes, by brand, December 2014
Figure 32: Brand personality – Macro image, December 2014
Figure 33: Brand personality – Micro image, December 2014
Brand analysis
Figure 34: User profile of Nationwide, December 2014
Figure 35: User profile of First Direct, December 2014
Figure 36: User profile of NS&I, December 2014
Figure 37: User profile of Yorkshire Building Society, December 2014
Figure 38: User profile of Halifax, December 2014
Figure 39: User profile of Clydesdale Bank, December 2014
Figure 40: User profile of The Co-operative Bank, December 2014
Figure 41: Demographic breakdown of consumers aware of Aldermore, December 2014
THE CONSUMER
What you need to know
Over one quarter with no savings or investments in 2014
Easy-access savings accounts: the most popular savings product
More than half of adult savers own multiple savings products
Bank branches are still alive and kicking
Almost two fifths of savers expect to increase their savings…
…while fewer than one in five non-savers expect to start saving
Peace of mind and protection against the unexpected are the main reasons for saving
Over one third of savers keep savings in their current accounts
Personal financial management mobile apps mostly used by younger savers
Price comparison sites used by over half of savers
Consumers split over confusion in the savings market
Nearly one third have switched savings accounts in the last year
Value of savings and investments
Over one quarter of over-18s have no savings or investments
Figure 42: Value of savings and investments, February 2015, January 2014, January 2013
Value of savings increases with age…
Figure 43: Value of savings and investments, by Age, February 2015
…and income
Figure 44: Value of savings and investments, by gross annual household income, February 2015
But the lower end of the market should not be ignored
Ownership of savings products
Easy-access savings accounts: the most popular savings product
Figure 45: Ownership of savings products, February 2015
Higher-value savers attracted to tax-exempt savings products…
…but also to fixed-rate/notice savings accounts
Figure 46: Ownership of savings products, by value of savings and investments, February 2015
Number of saving products held
More than half of adult savers own multiple savings products
Figure 47: Number of saving product types held, February 2015
Figure 48: Ownership of savings products, by number of saving product types held, February 2015
Over-55s and higher earners most likely to have multiple savings products
Consumer channel preferences
Online dominates across all ages, but particularly Millennials…
Figure 49: Activities relating to savings, by channel preference, February 2015
Figure 50: Activities relating to savings by channel preference, by generations, February 2015
…but Millennials also value personal contact when applying for a savings product
Bank branches are still alive and kicking
Figure 51: Agreement with the statement ‘I wouldn’t want to save with a company that doesn’t have high street branches’, February 2015
Consumer saving plans
Almost two fifths of savers expect to increase their savings
Figure 52: Savers’ future saving plans, January 2014 and February 2015
Fewer than one in five non-savers expect to start saving
Figure 53: Non-savers’ future saving plans, January 2014 and February 2015
Millennials are confident about the next six months
Figure 54: Savers’ future saving plans, by age, February 2015
Figure 55: Non-savers’ future saving plans, by age, February 2015
Reasons for saving
Peace of mind and protection from the unexpected are the main reasons for saving
Figure 56: Reasons for saving, February 2015
Consumers’ financial confidence affects their motivations to save
Millennials most likely to save towards a deposit to buy a home
Individuals with savings of £100,000 or more look towards retirement
Figure 57: Reasons for saving, by value of savings and/or investments, February 2015
Consumer saving habits
Over one third of savers keep savings in their current accounts
Figure 58: Consumer saving habits, February 2015
Intentions may be good, but actions speak louder than words
Regular savings account holders are more disciplined
Figure 59: Consumer saving habits, by savings product ownership, February 2015
Personal financial management mobile apps mostly used by younger savers
Savers’ interest in the market
More than two fifths of savers say that they regularly check the market
Figure 60: Savers’ interest in the market, February 2015
Price comparison sites used by over half of savers
Consumers split over confusion in the savings market
Engagement is greatest among adults with higher savings
Figure 61: Savers’ interest in the market, by value of savings and investments, February 2015
Savers’ attitudes and switching behaviour
Nearly one third have switched savings accounts in the last year
Figure 62: Savers’ attitudes and switching behaviour, February 2015
Accounts with introductory bonuses are considered by 75% of savers
APPENDIX
Abbreviations
UK Research Methodology
Sampling and weighting
Face to Face Surveys
Definitions
Brand & Social Media Research
Trade research
Desk research
Statistical Forecasting
The Mintel fan chart

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report