UK Savings 2019: Review, Forecasts, and Future Opportunities

1.1. Market summary
1.2. Key findings
1.3. Critical success factors

2.1. Economic conditions have led consumers to save more in spite of falling APRs
2.2. Total deposit growth over the forecast period will be half that of the preceding five years
2.3. Increased uncertainty has led to a small renaissance for cash ISAs
2.4. The cash ISA market is forecast to outperform non-cash ISAs
2.5. The outcome of Brexit will heavily influence interest rate policy
2.6. The mortgage price war has also led to falling APRs for depositors
2.7. Real wage growth has generated higher levels of saving
2.8. UK consumers are actively trying to save
2.9. Stringent rules and complexity have led banks to avoid lifetime ISAs
2.9.1. LISAs will need to change for incumbent banks to take up the product
2.10. Innovative finance ISAs face a similar fate to LISAs as P2P lenders experience a difficult year
2.10.1. Caution around P2P lending has led to low take-up of innovative finance ISAs
2.11. Pension freedom withdrawals remain popular
2.11.1. A cocktail of factors has caused the decline of annuities
2.11.2. Customers prefer the freedom and liquidity of cash savings over a pension
2.11.3. The FCA believes older consumers are being too cautious with their pension savings
2.11.4. Banks should explore a gap in the pension savings market

3.1. The market share of the main providers continues to fall
3.2. Challenger brands are competing aggressively for new business
3.2.1. OakNorth Bank
3.2.2. Atom Bank
3.2.3. Charter Savings Bank
3.2.4. Shawbrook Bank
3.2.5. Al Rayan Bank
3.2.6. PCF Bank
3.2.7. Marcus

4.1. Incumbent banks have closed a third of UK branches in five years
4.1.1. Older consumers are least likely to change provider or behavior when affected by closures
4.2. First Direct leads customer sentiment while TSB flounders
4.2.1. Nationwide is first among the incumbent providers but its NPS has fallen 17 points in two years
4.2.2. Support for TSB has collapsed in 2019
4.2.3. Low channel satisfaction drags down Santander and Halifax
4.3. Assisted saving tools lack support from even keen savers
4.4. There are early signs that mobile and IM saving are set to grow

5.1. The FCA believes savers are being penalized for loyalty
5.1.1. A basic savings rate is likely to be detrimental to the savings market
5.1.2. Savers and banks could both benefit from a savings account switching service

6.1. Budgeting and auto-saving features can help consumers save without conscious effort
6.1.1. Innovators are using a simple combination of open banking, customer transaction data, and contemporary banking infrastructure
6.1.2. Selling financial and other products to customers is innovators' main revenue source
6.2. Cleo has grown the fastest of the innovators
6.2.1. As well as its level of insight, Cleo's big advantage is its social media savvy
6.3. Plum has positioned itself for users who want to save without economizing
6.3.1. Plum Plus is mandatory for the investment features
6.4. Chip customers can earn up to 5% interest
6.5. Oval Money offers behavioral budgeting and saving
6.5.1. Oval Money's rules are unlikely to help customers accumulate large, regular savings
6.6. Squirrel caters for a niche market
6.7. Tally Money threatens banks' easy access deposits with older, affluent consumers
6.7.1. A decade of low interest rates has spawned inflation-protection products
6.8. Raisin is expanding across multiple physical and online markets
6.9. Incumbent providers have already begun to copy the innovators
6.9.1. Santander Wallet
6.9.2. Lloyds Banking Group's Save The Change
6.9.3. NatWest's Mimo
6.10. Other innovative news
6.10.1. Nationwide PayDay SaveDay
6.10.2. Monzo offers salary sorter and budgeting tools

7.1. Abbreviations and acronyms
7.2. Methodology
7.2.1. 2019 Banking and Payments Survey
7.3. Secondary sources
7.4. Further reading

Figure 1: Cash ISAs are forecast to grow faster than non-ISA deposits over the forecast period
Figure 2: For the last 18 months, consumers have made neutral or positive deposits in cash ISAs
Figure 3: As both ISA and non-ISA APRs fall, the gap between them widens
Figure 4: Cash ISA and non-ISA deposit growth is set to slow over the forecast period
Figure 5: Market expectations have varied significantly due to the perceived likelihood of a no-deal Brexit
Figure 6: Rates on easy access and fixed-rate bonds have fallen since January 2019
Figure 7: Rising real wages and weak growth will lead consumers to save more
Figure 8: Low inflation, rising wages, and heightened uncertainty have assisted consumers' ability to save
Figure 9: Skipton Building Society holds the lion's share of LISA accounts
Figure 10: Several P2P lenders have ceased operations in the last few years after their business model failed
Figure 11: Lloyds remains dominant, but it has lost 4.4pp market share over the review period
Figure 12: Al Rayan Bank offers the best rate for one-year fixed-rate bonds
Figure 13: Most incumbent banks have closed hundreds of branches since 2015
Figure 14: The majority of customers use digital channels to manage their savings
Figure 15: First Direct and Nationwide lead in terms of consumer sentiment
Figure 16: Customers exclusively choosing a bank for saving is a useful proxy for a good savings provider
Figure 17: Money saving tools are the most popular of the savings features, but still lack support
Figure 18: Online banking remains the dominant method for managing a savings account
Figure 19: Supply and demand side propositions from the FCA
Figure 20: Potential savings account switchers are the same demographic as potential current account switchers
Figure 21: The Cleo chatbot has been designed to be witty, informative, and appealing to 20-30 year olds
Figure 22: Consumer reviews said they were put off by the constant memes and notifications from Chip
Figure 23: Consumers investing in cash have faced a decade of almost constant negative real returns