United Kingdom (UK) Retail Banking Competitor Benchmarking – Financial Performance, Customer Relationships and Satisfaction

The United Kingdom (UK) Retail Banking Analysis Overview

The report discusses the financial performance of the top 15 banks in the UK, comprising of market shares for key retail banking products and underlying financial ratios. It analyzes the makeup of banks’ customer bases and how successful banks are at cross-selling and upselling products to these customers. Net Promoter Score and customers’ likelihood of using their main bank to achieve financial goals are also considered when establishing the strength of relationships banks have with their customers.

The report compares customer satisfaction across a range of digital and overall metrics to determine where players must improve. These findings form the basis of the actionable steps section, which provides an analysis of the successes and failures of each provider covered in the report and how to address any failings.

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UK Retail Banking – Financial Performance

The key main banks in UK retail banking are Barclays, Lloyds Bank, Natwest, HSBC, Nationwide, and others. In 2024, customers are expected to conduct the majority of their regular financial activities with Barclays.

UK Retail Banking Analysis by Main Bank, 2024 (%)

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UK Retail Banking – Customer Relationships

Monzo has the largest proportion of millennial and Gen Z customers, reflecting its positioning within the market as a digital-only bank primarily aimed at younger customers. Meanwhile, Lloyds Bank stands out as having the most balanced market share among all demographics. Most traditional incumbents have a comparatively even distribution of customers across generations.

UK Retail Banking Analysis by Customer Relationships in Terms of Generation, 2024 (%)

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UK Retail Banking – Customer Satisfaction in terms of Digital Experience

Average net satisfaction is relatively high across the board. It is especially regarding ‘navigation of digital banking platform’ and ‘the login process into my account on the platform/app.’ Banks must now focus on improving back-end infrastructure to facilitate more complex digital tasks.

Primarily, Starling stands out across all digital satisfaction metrics. However, Monzo fails to beat Starling in any metric and only places joint fourth overall. It represents that digital-only banks are not necessarily the best for digital services.

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UK Retail Banking – Actionable Steps

Barclays: Barclays has one of the lowest digital and overall satisfaction rates compared to its competitors despite having the highest market share and second-highest TDA in the UK. It has particularly struggled with competitively priced products and services and loyalty rewards. Moreover, Barclays should aim to improve online and mobile capabilities to address its low digital satisfaction score.

Co-operative Bank: Co-operative Bank is the most successful provider at attracting customers from more affluent demographics though its acquisition of new and younger customers is notably poor. Additionally, it has been successful in upselling premium accounts to customers. Co-operative Bank excels in loyalty rewards, personalized experience, and competitive pricing, contributing to its above-average NPS.

HSBC: HSBC falls short in terms of both digital and overall satisfaction, where particular areas of dissatisfaction for HSBC customers are loyalty rewards and ESG. Primarily, restoring customers’ trust may be hard. However, loyalty schemes are easier to implement and can have positive implications for customer satisfaction.

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Scope

• Incumbents generally saw their credit card market shares decline over 2018–23 as new banks entered the market. Barclays’ drop stands out, with its credit card share falling almost 10 percentage points over the timeframe.

• Lloyds Bank has a relatively low proportion of mass affluent and HNW customers but sells premium accounts to more than one in five customers.

• RBS recorded the lowest NPS in 2024, with 30% of its customers being detractors as per GlobalData’s 2024 Financial Services Consumer Survey.

Key Highlights

• Of the banks covered in this report, Bank of Scotland’s customers are the most likely to switch to another provider, followed by Barclays.
• Lloyds Bank remains the market leader across the four main retail banking products although it has been steadily losing market share.
• The top four UK banks continue to account for over 50% of the current account market.
• Loyalty reward programs and competitive pricing are the most important attributes determining NPS, despite loyalty rewards having the lowest net satisfaction.
• UK banks have done well coming out of the COVID-19 pandemic, with all of them either maintaining or increasing their TDA levels and all but one bank reducing their costs in 2021.

Reasons to Buy

• Develop an understanding of the composition of the UK retail banking market.
• Learn which banks are succeeding and which are failing across various metrics, ranging from profitability to Net Promotor Score.
• Identify the actionable steps that need to be taken by UK banks to address their biggest shortcomings.