"UK Savings 2017: Forecasts & Future Opportunities", provides a comprehensive analysis of the factors driving the UK savings market. This report is based on interviews with industry figures and secondary research.
The UK retail savings market has been characterized by low levels of competition and low returns for several years, with the low base rate and access to cheap funding from state-backed schemes leading to downside pressure on interest rates. However, the prospect of rising rates and the end of subsidized funding will lead to a more competitive environment, with banks having to increase their reliance upon deposits.
The report offers insight into:
- The macroeconomic factors affecting the market for deposits.
- Consumers’ attitudes and behavior towards saving and savings providers.
- The impact of the latest savings-related products and innovations.
- The current low growth in real wages is expected to continue for several years, which will limit consumers’ ability to save. However, rising rates will create an added incentive to save, and pension liberalization will lead to greater inflows of funds into fixed-rate accounts.
- Savers’ reasons for choosing their provider differ significantly across the market. Nationwide is more likely to be chosen on the basis of its rates and reputation, while savers with Barclays, HSBC, Lloyds Bank, and NatWest opt for those banks on the back of existing relationships.
- A growing number of fintech providers are targeting younger consumers with services that help them save without making a conscious effort by, for example, moving funds into a savings account whenever a purchase is transacted.
- Learn about the factors that will drive growth in deposits over the next few years.
- Understand what consumer are saving for, and why they chose their savings provider.
- Discover more about the latest savings-related products, how they will improve consumer outcomes, and their long-term prospects.
1.1. Market summary
1.2. Key findings
1.3. Critical success factors
2. MARKET ENVIRONMENT
2.1. Deposits growth is forecast to slow over the next few years
2.2. Cash ISAs have lost ground to competing products
2.2.1. Competition in the cash ISA market may be set to grow
2.3. Wage pressure will continue to limit consumers’ savings capacity
2.4. The base rate may rise more quickly than expected
2.4.1. The prospect of a hard Brexit may prompt higher interest rates
2.5. Pension freedoms may boost the fixed-rate deposits market
2.6. The closure of cheap funding schemes will lead to added rate pressure
2.6.1. New funding under the FLS ended in January 2018
2.6.2. The TFS will close to new business at the end of February 2018
2.6.3. Lloyds Banking Group’s reaction to scheme closures will drive the market response
3. CONSUMER BEHAVIOR
3.1. Reasons for saving vary by age and provider
3.1.1. Younger consumers are primarily saving for feel-good reasons
3.1.2. Older savers are planning for unforeseen events and retirement
3.1.3. Nationwide customers are the most engaged savers
3.2. Nationwide savers are the most motivated by rate
3.3. Online is now the most popular application channel
3.4. NatWest and Barclays are using mobile as an acquisition channel
4. COMPETITIVE ENVIRONMENT
4.1. Product rates on longer-term fixed and new accounts are edging up
4.2. Lloyds Banking Group is the unassailable market leader
4.2.1. The biggest providers have seen a decline in their overall share of the market
4.3. Challenger brands are competing aggressively for new business
4.4. Nationwide and TSB outperform on customer advocacy
5.1. Raisin is bringing its savings marketplace to the UK
5.2. Oval Money helps consumers save with each purchase
5.3. Chip assumes responsibility for saving on behalf of its users
5.4. Moneybox allows consumers to save as they spend
6.1. Abbreviations and acronyms
6.2. Supplementary data
6.4. Further reading
List of Tables
Table 1: 10 biggest users of FLS, ranked by total outstanding drawings, September 2017
Table 2: 10 biggest users of TFS, ranked by total outstanding drawings, September 2017
Table 3: Best rates for one-year fixed-rate bonds, February 2018
Table 4: Effective interest rates for new time deposits, February 2016-December 2017
Table 5: Annual growth in average weekly earnings and household savings ratio, March 2014-2021
Table 6: Forecast for Bank of England base rate, February 2018-March 2021
Table 7: Average quoted rates on savings accounts, February 2016-January 2018
Table 8: Total retail savings deposits, top five deposit-takers, 2012-16
Table 9: Chip: forecast bank connections and total customer savings, December 2017-December 2020
List of Figures
Figure 1: Retail deposits will rise at a diminishing rate over the forecast period to reach £1,499.2bn by 2021
Figure 2: Cash ISA deposits at UK high-street banks have fallen for five successive quarters
Figure 3: Interest rates on new cash ISAs became more competitive in Q4 2017
Figure 4: The reduction in the savings ratio has mirrored the decline in wage growth
Figure 5: Markets now expect the base rate to rise at a faster rate than they did in late 2017
Figure 6: Younger consumers save for a mix of pleasurable and serious goals
Figure 7: New providers like Starling Bank are making it easier for their customers to save for specific goals
Figure 8: Nationwide customers are the most likely to be saving with a specific objective in mind
Figure 9: Nationwide is chosen by savers on the strength of its interest rates, reputation, and innovation
Figure 10: Branches remain a vital acquisition channel despite being overtaken by online
Figure 11: Halifax and Nationwide are leading the way on digital acquisition of savings customers
Figure 12: Rates on longer-term bonds and new accounts have been rising since February 2017
Figure 13: Lloyds Banking Group holds nearly twice as much in deposits as its closest rival
Figure 14: Nationwide and TSB outperform the market with respect to NPS by a considerable margin
Figure 15: Raisin acts as a one-stop shop for savings products from across the EU
Figure 16: Oval Money lets users set purchase-based rules for saving
Figure 17: Chip is forecasting rapid consumer adoption up to 2020
Figure 18: Moneybox offers API-integrated purchase-based saving