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UK Savings 2018: Review, Forecasts, and Future Opportunities

  • ID: 4761015
  • Report
  • Region: United Kingdom, Great Britain
  • 18 pages
  • GlobalData
1h Free Analyst Time

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FEATURED COMPANIES

  • Barclays
  • HSBC
  • Lloyds Bank
  • Marcus
  • Nationwide
  • NatWest
  • MORE
UK Savings 2018: Review, Forecasts, and Future Opportunities

Summary

The UK savings market has been characterized by low returns since the financial crisis. The UK's decision to leave the EU, the resultant rate cut, and the deployment of supportive monetary policy tools to alleviate the uncertainty delayed intentions to tighten monetary policy. However, two subsequent 0.25 basis point increases to the base rate raised it to its highest level since February 2009, and the withdrawal of monetary policy tools, namely the Term Funding Scheme (TFS), has had a similar effect to a rate rise as banks have had to compete more for deposits by paying higher interest rates.

The UK's slower macroeconomic performance and close-to-target inflation suggest further tightening of monetary policy may be postponed. Consumer confidence continues on a downward trend despite record low unemployment levels, which will provide some support for deposit growth given that future economic conditions have a strong bearing upon consumers' propensity to save. At the same time, a decade of low interest rates has led some consumers to re-evaluate the amount of wealth held in cash deposits, transferring funds into high-yielding investments.

After years of moderate growth in deposits it is expected to slow over the forecast period (2018-22). Cash ISAs are set to underperform relative to non-ISA deposits with a compound annual growth rate of 2.9% during 2018-22. Growth in total retail deposits over the forecast period will be 1% slower than the preceding five years.

The report "UK Savings 2018: Review, Forecasts, and 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.

Key Findings
  • The recent growth in real wages is improving consumers' ability to save, but low unemployment levels and stable (albeit slow) economic growth are hindering their willingness to save.
  • Pension liberalization is benefiting deposit-takers as retirees choose security over returns.
  • Smaller savings providers gained 4.1% market share between 2010 and 2017, but mostly at the expense of the mid-ranking incumbents. The big four have not experienced a significant challenge to their dominance, mainly due to consumer inertia.
  • 53% of consumers chose their savings provider because they already had another product with them, while 73% did not use a price comparison website when conducting research.
Scope

This report provides analysis of the factors driving the UK savings market. The report offers insight into -
  • The macroeconomic factors affecting the market for deposits.
  • Consumers' attitudes and behavior towards saving and savings providers.
  • Level of demand for personal financial management saving tools.
  • Key new entrants in the market.
Reasons to buy
  • Learn about the factors that will drive growth in deposits over the next few years.
  • Understand how consumers are responding to regulatory and tax changes.
  • See changes in market share since 2010.
Note: Product cover images may vary from those shown
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FEATURED COMPANIES

  • Barclays
  • HSBC
  • Lloyds Bank
  • Marcus
  • Nationwide
  • NatWest
  • MORE
1. EXECUTIVE SUMMARY
1.1. Competition and returns in the UK savings space are finally increasing
1.2. Key findings
1.3. Critical success factors

2. MARKET ENVIRONMENT
2.1. Total deposit growth over the forecast period will be 1% slower than the preceding five years
2.2. The Personal Savings Allowance has sapped demand for ISAs
2.3. Interest rates on all the main savings products continue to climb
2.4. Pension freedoms have led many consumers to opt for secure but low interest rate cash options
2.5. Change is occurring slowly, mainly due to consumer inertia
2.6. Demand for assisted savings tools is growing
2.7. Two new challengers will make their presence felt in the market
2.7.1. Raisin
2.7.2. Marcus

3. APPENDIX
3.1. Abbreviations and acronyms
3.2. Methodology
3.2.1. 2018 Retail Banking Insight Survey
3.2.2. Secondary sources
3.3. Further reading

List of Figures
Figure 1: Non-ISA deposits will grow faster than cash ISAs over 2018-22
Figure 2: For 10 consecutive quarters, consumers have made net withdrawals or transfers from cash ISAs
Figure 3: The rate advantages offered by fixed-term accounts are steadily returning
Figure 4: Rising real wage growth has reduced the need to set aside income
Figure 5: The big four’s dominance remains undiminished
Figure 6: Assisted savings tools have broad appeal among consumers
Figure 7: Assisted savings tools are most appealing to customers likely to switch provider
Figure 8: Marketing to specific life events will boost adoption and engagement
Note: Product cover images may vary from those shown
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  • Barclays
  • HSBC
  • Lloyds Bank
  • Nationwide
  • NatWest
  • Raisin
  • RBS
  • Marcus
Note: Product cover images may vary from those shown
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