Premium and Mass-affluent Banking - UK - November 2015

Premium and Mass-affluent Banking - UK - November 2015

“Banks still have their work cut out to convince most in the affluent and HNW markets that premium accounts are worthwhile or value for money. Affluent consumers are most interested in a competitive interest rate and customer service, with comparatively few looking for more exclusive premium services.”

Deborah Osguthorpe, Head of UK Financial Services Research

This report looks at the following areas:

The switching market for affluent consumers is growing
Affluent consumers are not convinced by premium banking services


OVERVIEW
What you need to know
Scope of the report
EXECUTIVE SUMMARY
The market
Figure 1: Net financial wealth pyramid (investable assets), GB population, 2015
Figure 2: Type of current account owned by those in the wealth target market, August 2015
Figure 3: Current financial situation compared to a year ago, by gross annual household income, August 2015
Companies and brands
Figure 4: Main current account provider, by wealth target market, for top 8 providers, August 2015
The consumer
Figure 5: Current account switching behaviour, by wealth tier (investible assets), August 2015
Figure 6: Current account switching behaviour, by age, August 2015
Figure 7: factors that consumers are looking for in a new current account, August 2015
What it means
ISSUES & INSIGHTS
The switching market for affluent consumers is growing
Affluent consumers are not convinced by premium banking services
THE MARKET
What you need to know
Only a minority of affluent consumers have a premium account
Affluent consumer priorities remain conservative
Large retail banks face a number of key challenges
Market size
12% of the UK population are Mass Affluent, Affluent or HNW
Figure 8: Net financial wealth pyramid (investable assets), GB population, 2015
Only a minority of the target wealth market have a premium account
Figure 9: Type of current account owned, by wealth tier (investible assets), August 2015
Market drivers – Consumer context
Consumers are keen to provide themselves with a financial cushion
Figure 10: Current Financial Situation, by gross annual household income, August 2015
45% of higher earners are feeling better-off than they did a year ago
Figure 11: Current financial situation compared to a year ago, by gross annual household income, August 2015
Protecting assets remains the main priority for savings
Figure 12: Consumers’ saving and investment priorities over the next 12 months, August 2015
High income households use a wider range of banking services
Figure 13: Any use of banking services, by household income, May 2015
Regulatory and legislative changes
The CMA publishes its findings on retail banking competitiveness
Branch closure consultation period introduced
Ring-fencing could push up costs for customers
Moving away from a sales culture
COMPANIES AND BRANDS
What you need to known
Large retail banks dominate the affluent current account market
More competitors are entering the race for affluent switchers
Banks turn attention back to advice services
Market share
Major high street banks continue to dominate the market
Figure 14: Main current account provider, by wealth tier (investible assets), August 2015
Former challenger banks have the largest share of secondary accounts
Figure 15: Provider of main current account and other/secondary accounts, August 2015
Affluent investors are looking for innovative options
Figure 16: Top 15 wealth managers, by assets under management and number of client accounts, UK, 2013 and 2014
Competitive strategies
Main retail banks are trying to shore up their affluent consumer base
Challenger banks look to attract affluent clients
Innovation and launch activity
Retail banks relaunch advisory services
Britain’s first mobile app only bank launches
Social media banking arrives with Fidor Bank
Private bank Hampden & Co opens its doors
Challenger banks introduce new loyalty schemes
Advertising and marketing activity
Advertising spend on Premium accounts doubles
Figure 17: Total above-the line, online display and direct mail advertising expenditure on banking and asset management products and
services, by product category, 2010/11-2014/15
Advertising spend by the top seven doubled over the last year
Figure 18: Top seven advertisers of packaged/premium accounts and mass-market wealth management services, 2010/11-2014/15
TV spend accounts for two thirds of adspend
Figure 19: Share of advertising expenditure on packaged/premium accounts and mass-market wealth management, by media type, 2012/13-
2014/15
Search and social media strategies enhance brand perception
Nielsen Media Research coverage
THE CONSUMER
What you need to know
The majority are not prepared to pay fees for current accounts
Switching levels remain low
Younger consumers are the most likely switchers
In-credit interest rates and customer service are most important factors in choosing an account
Account ownership
Nearly three quarters of the market have a non-fee charging account
Figure 20: Type of current account owned, by wealth tier(investible assets), August 2015
Nearly half of premium account holders also have a standard current account
Figure 21: Type of current account owned, by top three most popular types of account, August 2015
45-64-year-olds are the least likely to own a premium account
Figure 22: Type of current account owned, by age, August 2015
Barclays, HSBC and NatWest lead the way on premium accounts
Figure 23: Main current account provider, by top three most popular types of account held, August 2015
Cash-based products are universally popular
Figure 24: Ownership of savings and investment products, by wealth tier (investible assets),, August 2015
Switching behaviour
Only 22% of the market have switched their account in the last 5 years
Figure 25: Current account switching behaviour, August 2015
Switching levels are similar across the wealth target market
Figure 26: Current account switching behaviour, by wealth tier (investible assets), August 2015
Younger consumers are more likely to switch
Figure 27: Current account switching behaviour, by age, August 2015
Packaged account holders are more likely to have switched
Figure 28: Current account switching behaviour, by top three most popular types of account, August 2015
Only 7% of the wealth target market plan to switch in the next 12 months
Figure 29: Current account switching intentions, August 2015
Figure 30: Current accounts switching intentions, by wealth tier (investible assets), August 2015
Once a customer has switched they are more likely to do so again in future
Figure 31: Current accounts switching intentions, by previous switching behaviour, August 2015
Attitudes towards premium accounts
Two thirds are happy with basic current accounts
Figure 32: Attitudes to premium or fee-paying services, August 2015
Over half of HNW individuals believe that private banking is more about status than service
Figure 33: Attitudes to premium or fee-paying services, by wealth tier (investible assets), August 2015
Features sought in a new account
Interest rates are the most important factor in choosing a new account
Figure 34: What consumers are looking for in a new current account, August 2015
Premium account holders are looking for a wider range of services
Figure 35: What consumers are looking for in a new current account, by type of account held, August 2015
Aspirational consumers want better rates on other products
Figure 36: What consumers are looking for in a new current account, by wealth tier (investible assets), August 2015
APPENDIX
Data sources, abbreviations and supporting information
Abbreviations
Consumer research methodology
Key sources
RESEARCH METHODOLOGY
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

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