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Retail Savings in the UK - Key Trends and Opportunities to 2019

Synopsis

Interest rates on all savings accounts are at record lows in the UK and are failing to entice customers, despite improving economic conditions. Growth has been slow across all savings accounts, apart from ISAs, which have seen growth due to the upper limits being raised every year since 2010, not because of attractive interest rates.

Summary

Interest rates on all savings accounts are at record-lows in the UK and are failing to entice customers despite improving economic conditions. Growth has been slow across all savings accounts, apart from ISAs, which have seen growth due to the upper limits being raised every year since 2010, not because of attractive interest rates.

The central bank rate remaining so low has meant that banks have had access to extremely cheap funds and therefore have not needed to compete for savings accounts from consumers. This in turn has made borrowing from banks cheaper, meaning taking on debt for high-value purchases or moving house has been cheaper throughout the review period, so investing and paying off debt has been more appealing than stashing cash away in savings accounts

Average pay, including bonuses, increased by 3.0% in May to July 2015, compared to the same period in the previous year, which marked the largest rise in six years. This, combined with record ow inflation – hasn’t been above 0.1% since January 2015, and dropped back to -0.1% in September 2015 – means that real wages have grown substantially throughout 2015, something not seen since before the financial crash. Furthermore, UK unemployment fell to a seven-year low of 5.4% in the three months to August, with 79,000 more people in work than the previous quarter.

Despite more people being in work, and those in work seeing growth in real wages, people are saving a smaller percentage of their wage than at any time since 2008. People generally became very wary of debt in the immediate aftermath of the financial crash, which encouraged saving and saw the saving rate rise to 11.4%. A recent surge in consumer confidence though, has largely seen people lose that fear, as the rate plummeted to 4.6%, with people looking towards spending more – spending on hotels and restaurants was up 8% in 2015 up to October, for example – or paying off debt with higher interest rates than savings accounts can offer.

The extremely uncompetitive savings account market, in terms of interest rates, has clearly been a factor in the savings rate, as consumers haven’t been tempted to lock money away. Two million customers have switched current account providers in the two years since the Payments Council Current Account Switch Service for individuals, small companies and charities was introduced to make the process easier. The scheme is also known as the 7-day switch aimed to promote competition in the market and allow consumers more choice.

This suggests that despite record-low savings rates being offered in a very uncompetitive market, banks can still attract customers on mass with a relatively good offer. Santander has been a perfect example of this in 2015, who despite charging GBP2.0 per month for its 123 account, has attracted 98,400 new customers this year due to a more competitive interest rates and cashback on household bills.

Scope

  • This report provides market analysis, information and insights into the UK retail savings industry
  • It provides a breakdown of the types of savings products offered in the UK
  • It analyzes drivers and the outlook for the market
  • It provides information on the main banks in the UK market
  • It covers news and regulatory developments
  • It forecasts the future of the retail savings industry in the UK over the next five years
Reasons To Buy
  • Gain an understanding of the UK retail savings industry.
  • See monthly and annual statistics on every aspect of the market, both in written form and shown in graphs and tables.
  • Read analysis of the relevant market statistics, indicating what has been happening in the retail savings market, why it has been happening, and what to expect over the coming years.
  • Read about all the economic factors impacting the industry.
  • Read about how individual banks and building societies are affecting the market, in terms of market share and innovation.
Key Highlights

The outstanding balance of total deposits held by households increased from GBP1.10 trillion at the end of 2010 to GBP1.28 trillion at the end of December 2014, an increase of 16.74% and a CAGR of 3.74%. The outstanding balance rose by a further 2.7% to GBP1.31 billion at the end of July 2015, since the start of the year.


  • Executive Summary
  • Introduction
    • What is this Report About?
    • Definitions
      • Table Banking Industry Definitions
    • Methodology
  • Market Analysis
    • Market Size
      • Monetary and Financial Institutions
      • National Savings & Investments (NS&I)
      • Sight and Time Deposits
      • ISAs
        • Table The UK - ISA Subscription Limits, FY1999-2000 to FY2014-2015
        • Table The UK - Cash ISA Market Summary, FY20010-2015
    • Interest Rates
    • Funding for Lending Scheme
  • Consumers
    • Economic Backdrop
      • Real GDP Growth
      • Labor Market Conditions
      • Disposable Income
      • Inflation
      • Central Bank Rate
      • House Prices
      • Energy Bills
      • Household Debt
    • Saving Behavior
      • Saving Ratio
  • Competitive Landscape
    • Savings Account Interest Rates
      • Table The UK Retail Saving - Competitor Interest Rates (%), Financial Year 2015/16
    • Product Innovation
    • Switching Banks
  • Market Outlook
  • Regulation and Compliance
    • Recent Changes
      • Recent ISA changes
      • Bank of England Stress Testing
      • Funding for Lending Scheme
      • Financial Services Compensation Scheme
      • Capital Requirements Directive IV (CRD IV)
      • Financial Services (Banking Reform) Act 2013
    • Upcoming Regulations
      • Basel III
        • Table Recent and Upcoming Regulatory Changes, 2012-2018
  • News
  • Deals
  • UK Retail Banks
    • Barclays Plc - Company Overview
      • Barclays Plc - Profile
        • Table Barclays Plc, Key Facts
      • Barclays PLC - Main Savings Products
        • Table Barclays Plc, Main Savings Products
      • Barclays Plc - Main Competitors
      • Barclays Plc- Board of Directors
        • Table Barclays Plc, Board of Directors
    • HSBC Plc - Company Overview
      • HSBC Bank Plc - Profile
        • Table HSBC Bank Plc, Key Facts
      • HSBC Bank Plc- Main Savings Products
        • Table HSBC Bank Plc, Main Savings Products
      • HSBC Bank Plc - Main Competitors
      • HSBC Bank Plc - Board of Directors
        • Table HSBC Bank Plc, Board of Directors
    • Lloyds Banking Group Plc - Company Overview
      • Lloyds Banking Group Plc - Profile
        • Table Lloyds Banking Group Plc, Key Facts
      • Lloyds Banking Group Plc - Main Savings Products
        • Table Lloyds Banking Group Plc, Main Products
      • Lloyds Banking Group Plc - Main Competitors
      • Lloyds Banking Group - Board of Directors
        • Table Lloyds Banking Group Plc, Board of Directors
    • National Savings and Investments - Company Overview
      • National Savings and Investments - Profile
        • Table National Savings and Investments, Key Facts
      • National Savings and Investments - Main Savings Products
        • Table National Savings and Investments, Main Products
      • National Savings and Investments - Main Competitors
      • National Savings and Investments - Board of Directors
        • Table National Savings and Investments, Board of Directors
    • Nationwide Building Society - Company Overview
      • Nationwide Building Society - Profile
        • Table Nationwide Building Society, Key Facts
      • Nationwide Building Society - Main Savings Products
        • Table Nationwide Building Society, Main Products
      • Nationwide Building Society - Main Competitors
      • Nationwide Building Society - Board of Director
        • Table Nationwide Building Society, Board of Directors
    • Santander UK Plc - Company Overview
      • Santander UK Plc - Profile
        • Table Santander UK Plc, Key Facts
      • Santander UK Plc - Main Savings Products
        • Table Santander UK Plc, Main Products
      • Santander UK Plc - Main Competitors
      • Santander UK Plc - Board of Directors
        • Table Santander UK Plc, Board of Directors
    • The Royal Bank of Scotland Group - Company Overview
      • The Royal Bank of Scotland Group Plc - Profile
        • Table The Royal Bank of Scotland Group Plc, Key Facts
      • The Royal Bank of Scotland Group Plc - Main Savings Products
        • Table The Royal Bank of Scotland Group Plc, Main Products
      • The Royal Bank of Scotland Group Plc - Main Competitors
      • The Royal Bank of Scotland Group Plc - Board of Directors
        • Table The Royal Bank of Scotland Plc, Board of Directors
  • Appendix
    • Methodology
    • Contact Timetric
    • About Timetric
    • Timetric's Services
    • Disclaimer

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