Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Insights and Opportunities
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- Emphasising safety
- Boosting uptake amongst DEs
- Waiving penalty fees to boost loyalty
- Boosting penetration in non-mainstream areas
- Migrating customers online to increase cross-sales
Market in Brief
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- Cross-selling is key to increasing customer value
- A deteriorating economy presents its own challenges
- Lloyds TSB and RBS lead the current account market
- The savings market may do well in the economic downturn…
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- Figure 1: Savings balances and market shares, 2002-07
- …whereas personal loans are likely to suffer
- The mortgage market continues to decline
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- Figure 2: Gross mortgage lending, by type of advance (monthly data), Jan 2007-Jun 2008
- Barclaycard leads the credit card market
- Banks have a 16% share of the general insurance market
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- Figure 3: General insurance retail sales, 2007
- Online banking is booming
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- Figure 4: Number of registered customers, and number of online/telephone banking transactions, by transaction type (MBBG only), 2002 and 2007
- The industry is rapidly reshaping
- Current accounts are key to cross-selling
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- Figure 5: Cross-holding of other financial products with main current account provider, April 2008
- Most people are happy with their bank
Fast Forward Trends
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- Trend 1: Rethinking Business, Capitalism and Consumerism
- The new era of responsible lending
- Integrating with the consumer on a more personal level
- Promoting sound principles and financial stability
- Trend 2: Rebuilding Trust
- Trust is required on two fronts
- Banks need customers’ support
Internal Market Environment
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- Key points
- Expanding the product range and increasing customer value…
- …using increasingly sophisticated methods
- A shift has occurred in income streams
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- Figure 6: Sources of bank income, net interest and net non-interest (MBBG only), 2002-07
- Opportunities arising in niche segments
- PPI under the spotlight…
- …along with overdraft charges
- The new Banking Code
- Issues with fundraising
- A dramatic rescue package for UK banks
Broader Market Environment
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- Key points
- The economy and consumer confidence is suffering
- House prices are falling…
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- Figure 7: Average UK house prices, Jan 2007-Aug 2008
- …as is the BoE’s base rate
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- Figure 8: Base rate, Jan 2000-Oct 2008
- Growth is expected in the employed population…
- …although the UK has an ageing population…
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- Figure 9: UK population, by lifestage, 2003-13
- …with growth expected in one-person households
Consumer Environment
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- Key points
- Consumer confidence is falling…
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- Figure 10: UK Consumer confidence major indices (not seasonally adjusted), Jun 2004-Aug 2008
- …across all household income bands
- More people are beginning to struggle
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- Figure 11: UK households’ financial position, August 2007, July 2008 and August 2008
- Growing fears over unemployment
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- Figure 12: Unemployment expectations* in next 12 months, Jan 2001-Aug 2008
- Overall spending and saving intentions are down…
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- Figure 13: Spending and savings intentions (3-month moving average), Mar 2000-Aug 2008
- …although the FAB Cash Index has picked up slightly
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- Figure 14: Intended cash-based activities, Q3/Q4 2002-Q2/Q3 2008
- Consumer borrowing may increase in the short term…
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- Figure 15: Intended consumer credit activities, Q3/Q4 2002-Q2/Q3 2008
- …while the mortgage market looks set to decline further
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- Figure 16: Expected mortgage and property purchase activity, Q3/Q4 2002-Q2/Q3 2008
- Barclays considered as main financial services provider
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- Figure 17: Leading main financial services provider brands, June 2008
SWOT Analysis
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- Figure 18: Retail banking market SWOT analysis
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Who’s Innovating?
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- Key points
- Segmentation is key
- Value derived from the high net worth sector
- Green banking has become a hot issue
- The future of contactless payment systems
- Advances in mobile banking
- Aggregator sites
Trade Perspective
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- Consumers are concerned about safety…
- …but are also more value-orientated
- The mortgage market is in turmoil…
- …along with the lending market in general
- Borrowing rates are rising
- Banks compete for savings deposits
- Cross-selling is more important than ever
- No shedding of ‘low net worth’ individuals
- There are few incentives for loyal customers
- Bad debts are expected to rise
- The end of an era of cheap credit?
- What about the future for building societies?
Current Accounts and Overdrafts
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- Key points
- A possible decline in multiple current account ownership…
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- Figure 19: Number of current accounts held by individuals and estimated total number of current accounts in the UK, Jan 2006-Sep 2007
- …causing the total number of accounts to drop in 2007
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- Figure 20: Estimated number of current accounts in the UK, 2002-07
- Packaged accounts are now big business
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- Figure 21: Type of (main) current account held by consumers, April 2008
- Growth seen in the number of basic bank accounts
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- Figure 22: Number of basic bank accounts in operation in the UK, 2003-07
- Overdraft lending has increased over the last six years
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- Figure 23: Overdraft advances to individuals and individual trusts (MBBG only), 2002-07
- RBS is catching Lloyds TSB in the current account market
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- Figure 24: Current account market share, August 2007
- A word on overdraft fees
Savings Accounts and ISAs
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- Key points
- Two thirds of adults own some kind of savings product
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- Figure 25: Number of savers, by type of account, November 2007
- Cash ISA deposits have grown by a third since 2002/03
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- Figure 26: Cash* and stocks and shares** component subscriptions into ISAs, 2002/03-2007/08
- Building societies’ share of the market increased in 2007
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- Figure 27: Savings balances and market shares, 2002-07
- Safety is a prime concern at the moment
- Halifax is the leading savings provider
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- Figure 28: Estimated volume share of savings acount market, November 2007
- Issues in the market and other developments
Unsecured Personal Loans
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- Key points
- Non-credit card lending has fallen since 2004
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- Figure 29: Total gross lending and net amounts outstanding of other consumer credit lending* (monthly data, seasonally adjusted), Jan 2003-Jul 2008
- Lending on unsecured personal loans has fallen since 2004
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- Figure 30: Estimated gross lending for unsecured personal loans, 2002-07
- Lloyds TSB leads the field
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- Figure 31: Personal loan market share, by provider, August 2007
- The outlook for personal loans and other developments
Mortgages
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- Key points
- The mortgage market is in a bad way…
- Approvals for house purchase have fallen to record lows
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- Figure 32: Approvals for house purchase (monthly data), Jan 2000-Jul 2008
- Gross mortgage lending has increased over the last five years…
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- Figure 33: Gross mortgage lending, by type of advance, 2002-07
- …but the situation looks very different in 2008
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- Figure 34: Gross mortgage lending, by type of advance (monthly data), Jan 2007-Jun 2008
- Specialist mortgage lenders’ share of the market has grown…
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- Figure 35: Gross advances (£ billion), by type of lender, 2002-07
- …but banks still hold the greatest liabilities
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- Figure 36: Balances outstanding, by type of lender, 2002-07
- HBOS leads the pack, but change is expected in 2008
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- Figure 37: Market share of top ten providers, by gross mortgage lending, 2007
Credit Cards
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- Key points
- Borrowing on credit cards has decreased slightly
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- Figure 38: Total gross lending and net amounts outstanding on credit card lending (monthly data, seasonally adjusted), Jan 2003-Jul 2008
- The number of credit cards in issue has increased…
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- Figure 39: Number of credit cards in issue, transaction volumes and value of UK purchases, 2002-07
- …but they are being used less often
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- Figure 40: Credit card usage frequency, 2002-07
- Barclaycard leads the market
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- Figure 41: Credit card market share, by brand, April 2008
- PPI revenue could be hit
- Contactless payment cards the next big thing?
General Insurance
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- Key points
- Gross written premium has slowly increased…
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- Figure 42: UK general insurance annual business, gross written premium, by category, 2002-07
- …although net written premium fell sharply in 2007
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- Figure 43: UK net written premium, by class of business, 2002-07
- Bancassurance represents one sixth of the market
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- Figure 44: General insurance retail sales, 2007
- RBS is the top bancassurer in the insurance market
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- Figure 45: Total GWP of top 20 companies, 2006 and 2007
- Where next for banks and general insurance?
Channels to Market
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- Key points
- A multi-channel approach
- Lloyds TSB has the largest branch network
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- Figure 46: Number of UK branches of selected providers, 2003, 2005 and 2007
- Growth in the number of privately operated ATMs
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- Figure 47: Number of ATMs in the UK of selected providers, by location, 2007
- Online banking has grown very popular
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- Figure 48: Number of registered customers, and number of online/telephone banking transactions, by transaction type (MBBG only), 2002 and 2007
- Mobile banking is poised to do better
Companies and Products
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- A highly fragmented market…
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- Figure 49: Selected retail banking parent and subsidiary brands, 2008
- …which has changed a lot of late
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- Figure 50: Estimated market shares of the major banking groups in the main retail banking sectors
- The top six company profiles
- Abbey
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- Figure 51: Abbey company profile, 2004-07
- Barclays
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- Figure 52: Barclays company profile, 2004-07
- HBOS
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- Figure 53: HBOS company profile, 2004-07
- HSBC
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- Figure 54: HSBC company profile, 2004-07
- Lloyds TSB
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- Figure 55: Lloyds TSB company profile, 2004-07
- RBS Group
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- Figure 56: RBS Group company profile, 2004-07
Brand Communication and Promotion
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- Key points
- Consumer credit and mortgage adspend has plummeted
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- Figure 57: Top 15 advertising categories within financial services, 2006/07-2007/08
- Barclays and Lloyds TSB are the biggest advertisers
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- Figure 58: Retail banking adspend of selected providers, 2006/07-2007/08
- Mass media channels are effective at reaching a large audience
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- Figure 59: Retail banking* adspend, by media type, 2006/07-2007/08
Brand Elements
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- Brand Map
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- Figure 60: Attitudes and usage of retail bank brands, September 2008
- Alliance & Leicester
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 61: Attitudes towards the Alliance & Leicester brand, September 2008
- Barclays
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 62: Attitudes towards the Barclays brand, September 2008
- The Co-operative Bank
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 63: Attitudes towards The Co-operative Bank brand, September 2008
- Halifax
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 64: Attitudes towards the Halifax brand, September 2008
- Nationwide
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 65: Attitudes towards the Nationwide brand, September 2008
- Brand Qualities of Retail Bank brands
- Nationwide is regarded as the most helpful brand
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- Figure 66: Personality of various retail bank brands, September 2008
- Nationwide a consumer favourite
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- Figure 67: Commitment to various retail bank brands, September 2008
- Halifax has the highest level of usage…
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- Figure 68: Consumer usage of various retail bank brands, September 2008
- …and most people will continue using it
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- Figure 69: Consideration of various retail bank brands, September 2008
- Lloyds TSB is thought to be gaining ground
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- Figure 70: Momentum of various retail bank brands, September 2008
- Nationwide leads on motivation for savings and mortgages
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- Figure 71: Motivation of various retail bank brands, September 2008
- Abbey and Barclays have very poor brand satisfaction
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- Figure 72: Satisfaction of various retail bank brands, September 2008
- Round up
The Consumer: Product Ownership and Cross-holdings
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- Key points
- Around 41 million people have a bank account – a huge market
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- Figure 73: Ownership of financial products, April 2008
- Savings account and credit card penetration is also high
- Less educated people own fewer financial products…
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- Figure 74: Ownership of financial products, by gender, age, socio-economic group and education level, April 2008
- …as do the lower socio-economic groups
- Savings accounts and credit cards are easily cross-sold…
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- Figure 75: Cross-holding of other financial products with main current account provider, April 2008
- Reducing the impact of rate tarts
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- Figure 76: Ownership of financial products with main current account provider, by gender, age, gross annual household income and newspaper readership, April 2008
- Potential to boost penetration in non-mainstream insurance
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- Figure 77: Relative cross-selling penetration of financial products, April 2008
- Only a quarter of mortgage holders have this with their main bank
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- Figure 78: Proportion of product holders who hold financial products with their main current account provider, April 2008
- Protection products may present a good opportunity
- Online bankers are likely to own more financial products…
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- Figure 79: Overall product ownership, by online banking usage, April 2008
- …and have more cross-holdings
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- Figure 80: With-brand product ownership, by online banking tendancy, April 2008
- ABs are likely to have more cross-holdings
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- Figure 81: Total number of additional products held with main current account provider, by socio-economic group, April 2008
The Consumer: Switching Behaviour
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- Key points
- A word on multiple current account ownership
- Inertia is a big factor in switching
- Most are happy with their bank and are not considering switching…
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- Figure 82: Customer satisfaction and attitudes towards switching provider, April 2008
- …which is largely due to good customer service…
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- Figure 83: Factors encouraging consumers to switch their current account, April 2008
- …though interest rates are also important
- For a third of people, nothing would prompt them to switch
- Older people are less prone to switching…
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- Figure 84: Customer satisfaction and attitudes towards switching provider, by age, socio-economic group, working status, ACORN group and newspaper readership, April 2008
- …while broadsheet readers are harder to please (and retain)
- Wealthy consumers are highly influenced by customer service
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- Figure 85: Switching propensity, by gross annual household income, April 2008
- Women and elderly customers are more loyal
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- Figure 86: Factors encouraging consumers to switch their current account, by gender, age, socio-economic group, lifestage, gross annual household income and household tenure, April 2008
- Young people are tempted by cash incentives
- DEs can’t be bothered to switch
- Safety is likely to be a growing concern
- Happy customers are more likely to have cross-holdings…
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- Figure 87: With-brand cross-holdings, by customer satisfaction and switching intentions, April 2008
- …but safety is also crucial at the moment
The Consumer: Consumer Attitudes and Behaviour
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- Key points
- Consumers tend to stick with the same bank
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- Figure 88: General attitudes and consumer behaviour in retail banking, April 2008
- Personal recommendation is highly effective
- Women are better brand advocates…
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- Figure 89: General attitudes and consumer behaviour in retail banking, by gender, age, socio-economic group, marital status and special group, April 2008
- …while ABC1 pre-/no family have high cross-holdings
- Couples living as married have overdraft issues
- Those that have paid penalty fees are more likely to switch
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- Figure 90: Attitudes towards retail banking, by potential reasons for switching, April 2008
- Others are susceptible in different areas
The Consumer: Further Analysis
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- Key points
- Attitudinal groups
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- Figure 91: Proportional splits of attitudinal groups, April 2008
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- Figure 92: Sample sizes of attitudinal groups, April 2008
- Overview of the different groups’ characteristics
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- Figure 93: Headline characteristics of attitudinal groups, April 2008
- The consumer’s dilemma
- Likely switchers
- Predominant trends
- Product ownership
- Loyalty profile
- Demographic profile
- Apathetics
- Predominant trends
- Product ownership
- Loyalty profile
- Demographic profile
- A potential switcher group?
- Super loyals
- Predominant trends
- Product ownership
- Loyalty profile
- Demographic profile
- Happy customers
- Predominant trends
- Product ownership
- Loyalty profile
- Demographic profile
- Super Loyals tend to be older customers
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- Figure 94: Attitudinal groups, by gender, age, socio-economic group, marital status and lifestage, April 2008
- Apathetics own more financial products…
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- Figure 95: Attitudinal groups, by number of financial products owned, April 2008
- …and also have more cross-holdings
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- Figure 96: Attitudinal groups, by number of products held with main current acount provider, April 2008
- Repertoire analysis
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- Figure 97: Number of products held with main current acount provider, April 2008
- High earners own more financial products overall
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- Figure 98: Number of financial products held, by repertoire of products owned, April 2008
- With-brand mortgages more for people with high cross-holdings
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- Figure 99: Type of financial products held, by repertoire of with-brand product ownership, April 2008
- Men have more cross-holdings
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- Figure 100: Number of products held with main current account provider, by gender, age, socio-economic group and lifestage, April 2008
- Products offering the best and least cross-selling potential
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- Figure 101: With-brand cross-selling penetration of financial products, April 2008
Appendix – Market and Product Data
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- Figure 102: Total gross unsecured consumer lending split, by product category, 2002-07
- Figure 103: Number of current accounts held by individuals and estimated total number of current accounts in the UK, Jan 2006-Sep 2007
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Appendix – Product Ownership and Cross-selling
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- Figure 104: Type of current account held by consumers, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008
- Figure 105: Ownership of financial products, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, (part 1)
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- Figure 106: Ownership of financial products, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, (part 2)
- Figure 107: Ownership of financial products with main current account provider, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008
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Appendix – Switching Behaviour
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- Figure 108: Customer satisfaction and attitudes towards switching provider, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008
- Figure 109: Factors encouraging consumers to switch their current account, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, (Table 1 of 2)
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- Figure 110: Factors encouraging consumers to switch their current account, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, (Table 2 of 2)
- Figure 111: General attitudes and consumer behaviour in retail banking, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, (Table 1 of 2)
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- Figure 112: General attitudes and consumer behaviour in retail banking by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008, (Table 2 of 2)
- Figure 113: Attitudes towards retail banking, by potential reasons for switching, April 2008, (table 1 of 2)
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- Figure 114: Attitudes towards retail banking, by potential reasons for switching, April 2008, (table 2 of 2)
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Appendix – Further Analysis
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- Figure 115: Attitudinal groups, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008
- Figure 116: Attitudinal groups, by overall product ownership, April 2008
- Figure 117: Attitudinal groups, by type of current account owned, April 2008
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- Figure 118: Attitudinal groups, by products held with main current acount provider, April 2008
- Figure 119: Repertoire analysis of customer cross-holdings, April 2008
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- Figure 120: Number of financial products held, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and education level, April 2008
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