UK Savings 2018: Review, Forecasts, and Future Opportunities

The UK retail savings market has been characterized by low levels of competition and low returns for several years. However, both competition and returns are increasing, albeit incrementally. Interest differentials between sight and time deposits are now diverging after a period of convergence. The end of cheap funding for banks has led to a steady increase in interest rates, but consumer inertia still prevails to the benefit of the big four banks (Barclays, HSBC, Lloyds Banking Group, and RBS Group).

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.

Scope

– 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.

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.

Companies mentioned

Barclays

HSBC

Lloyds Bank

Nationwide

NatWest

Raisin

RBS

Marcus

Table of Contents

Table of Contents

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. GlobalData’s 2018 Retail Banking Insight Survey

3.2.2. Secondary sources

3.3. Further reading

List of Figures

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

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