United Kingdom (UK) Retail Banking Market Sizing and Opportunities 2022

Powered by

All the vital news, analysis, and commentary curated by our industry experts.

United Kingdom (UK) Retail Banking Market Overview

The UK retail banking sector has been resilient despite COVID-19. Residential mortgages and retail deposits showed weaker compound annual growth rates (CAGR) than comparable markets, although consumer credit lending recorded stronger CAGRs for both credit cards and personal loans than comparable markets (with the exception of Germany). The UK has witnessed a double threat to the economy in the form of uncertainty and external shocks caused by the 2016 Brexit referendum and the COVID-19 pandemic.

The UK retail banking market research report explores the key trends in the UK retail banking sector and offers insight into consumer preferences and changes in behavior regarding financial services providers. It also examines channel preferences and covers overall satisfaction and importance levels of the main banking attributes. In addition, the report analyzes cross-selling opportunities by looking at customer tenures and areas of dissatisfaction.

Key providers ·        Traditional Banks & Building Societies

·        Digital-Only Banks

·        Digital Wallets

·        Big Tech Companies

·        Digital Investment Platforms

Key disruptors ·        Starling Bank

·        Monzo

·        Revolut

Enquire & Decide Discover the perfect solution for your business needs. Enquire now and let us help you make an informed decision before making a purchase.

UK Retail Banking Market – COVID-19 Impact

Since 2015 only Barclays, NatWest, and The Co-operative Bank have been able to decrease their cost/income ratios. All other providers covered saw costs rise relative to income. This was particularly true in 2020 due to the impact of non-performing loans, losses, and provisions as a result of COVID-19 as well as increased investment in digital channels and technology as bank operating models underwent one of the most significant periods of evolution they have ever faced.

COVID-19 and associated lockdown measures accelerated the shift in use and preference for digital channels as branch closures were implemented. In the UK these effects were particularly pronounced, specifically during Q1 and Q2 2020, as branch services closed or began operating on a reduced-hours basis. As customers had no option but to switch to using digital banking channels, many likely realized how antiquated incumbent legacy channels and products are. In recent years, a digital gap has been emerging between digital challengers and incumbent banks. The ease of signup and functionality offered by alternative providers showcased a new type of banking to UK customers – a factor that has likely contributed to preference rates moving away from traditional banks in favor of alternative providers. While the strong shift in preference can be attributed to the pandemic, it is likely that such trends will persist over the long term as rates of internet and smartphone penetration in the UK continue to rise, favoring digital providers.

Buy the Full Report for More COVID-19 Impact Insights on the UK Retail Banking Market, Download A Free Report Sample

UK Retail Banking Market - Key Providers

The key providers in the UK retail banking market are traditional banks & building societies, digital-only banks, digital wallets, big tech companies, digital investment platforms, telecommunications companies, new digital service providers, retailers/supermarkets, and a financial intermediary.

Traditional banks and building societies have seen a significant shift in preference for their services, such gains have not been taken advantage of by digital-only banks, digital wallet providers, and big tech companies, which are widely considered the three most likely types of provider to challenge incumbents for the primary account relationship. Despite being the best resourced and positioned challengers to threaten incumbents, preference for their services has not increased as many would have expected.

Key Providers in the UK Retail Banking Market

Key Providers in the UK Retail Banking Market

Buy the Full Report for More Insights on the Key UK Retail Banking Providers, Download A Free Report Sample

UK Retail Banking Market – Key Disruptors

The key disruptors in the UK retail banking market are Starling Bank, Monzo, and Revolut.

Starling Bank: Starling Bank was founded in 2014 by Anne Boden, a veteran banker with around 40 years of experience in the industry. Starling’s main aim is to create the best current account in the world – a consequence of the founder deciding she could offer a better service to customers and beat incumbents at the same time. Unlike Monzo, which has moved towards a big tech approach to branding, Starling has placed greater emphasis on generating a degree of respectability in line with incumbents.

Monzo: Monzo was originally founded as Mondo in 2015 by Tom Blomfield and a team who met while working at Starling Bank. In February 2016,

Revolut: Headquartered in London, Revolut was founded in 2015 by Nikolay Storonsky and Vlad Yatsenko. It has shifted from being a fintech that predominantly focused on offering currency exchange to a financial super app now offering debit cards, virtual cards, Apple Pay, interest-bearing Vaults, commission-free stock trading, cryptocurrency trading, commodities, and other services, with a full retail banking suite expected to be available within the next 24 months.

Key Disruptors in the UK Retail Banking Market

Key Disruptors in the UK Retail Banking Market

Buy the Full Report for More Disruptor Insights on the UK Retail Banking Market, Download A Free Report Sample

Scope

  • GlobalData’s 2021 Financial Services Consumer Survey found that the preference for current accounts from traditional providers in the UK declined by 12 percentage points (pp) compared to the previous year.
  • Banks have prioritized the elements of service customers rank as most important, but greater attention should be paid to offering competitive prices and loyalty rewards as these are areas digital challengers thrive in.
  • Between 2020 and 2021 online channels saw a 3pp decrease in use, while mobile channels saw a 3pp increase.

Reasons to Buy

  • Understand and analyze UK mortgage, deposit, and lending market trends based on present and forecast growth up to 2025.
  • Analyze data from GlobalData’s 2021 Financial Services Consumer Survey by looking at consumer preferences and behaviors in the UK retail banking market.
  • Identify critical data points for customer retention and acquisition through three core areas in banking: financial services provider preference and movements, digital and alternative channel preferences, and cross-selling opportunities based on tenure and satisfaction levels.

HSBC
Barclays
NatWest
Nationwide
Santander
Lloyds
Monzo
Starling Bank
Revolut
Virgin Money
Coventry Building Society
TSB
Metro Bank
The Co-Operative Bank
Clydesdale Bank

Table of Contents

Table of Contents

1. Executive Summary

1.1 Growth in consumer credit balances has slowed

1.2 UK consumers’ preference for incumbents has decreased

2. Key Facts

3. Market Environment

3.1 Market balances

4. Macroeconomic Environment

4.1 GDP and unemployment

5. Competitor Environment

5.1 Retail deposits: The market share held by the top five decreased from 66% in 2010 to 58% in 2020

5.2 Residential mortgages: Market share concentration among the top five decreased from 69% in 2010 to 65% in 2020

5.3 Credit cards: Market share concentration among the top five increased from 56% in 2010 to 57% in 2020

5.4 Personal loans: Market share among the top five settled at 36% in 2020 – the same as in 2010

5.5 COVID-19 has made it possible for banks to make efficiencies, but these have increased short-term costs

6. Survey Insights

6.1 Retail banking provider preference is beginning to shift from incumbents to alternative providers

6.2 UK consumers prefer traditional providers due to their better levels of service and branch networks

6.3 The preference for alternatives is driven by better rates/ rewards and superior digital banking functionality

6.4 The COVID-19 pandemic drove an increase in fraud

6.5 UK banks have attempted to prioritize the attributes of service that customers rank as most important

6.6 UK banks must perfect the ability to resolve minor and regular banking problems

6.7 Cross-selling is correlated with high rates of customer satisfaction and tenure

7. Disruptors

7.1 Starling Bank

7.2 Monzo

7.3 Revolut

8. Appendix

8.1 Abbreviations and acronyms

8.2 Methodology

8.3 Further reading

About GlobalData

Contact Us

Figures

List of Figures

Figure 1: Residential mortgage and retail deposit balances have increased year on year since 2010, with deposits increasing most in 2020 due to COVID-19

Figure 2: Consumer credit balances have followed a similar trajectory since 2010, although personal loan balances far exceed credit card balances

Figure 3: Retail deposit and residential mortgage growth will be lower than in comparable markets

Figure 4: GDP is set to have grown in 2021 as vaccination programs allowed for reopening and recovery

Figure 5: Inflation is expected to increase and peak in 2022, with forecasted wage growth unlikely to keep up

Figure 6: Retail deposits market share quarterly growth, 2017-21

Figure 7: Residential mortgages market share quarterly growth, 2017-21

Figure 8: Credit cards market share quarterly growth, 2017-21

Figure 9: Personal loans market share quarterly growth, 2017-21

Figure 10: Cost/income ratios, 2015-20

Figure 11: Preference for a transaction/savings account from financial intermediaries and retailers/supermarkets grew most in the UK between 2020 and 2021

Figure 12: A decline in preference for traditional providers has been seen globally

Figure 13: In terms of transaction/savings accounts from traditional providers, a decline in preference was witnessed across all UK age groups – especially 18-24-year-olds

Figure 14: Better overall levels of service is the top reason for choosing a traditional provider, but trust in incumbents is also a key factor

Figure 15: Better rates and rewards is the top reason for preferring alternatives across all age groups

Figure 16: The key reason consumers prefer alternative providers is better rates and rewards

Figure 17: Card details being stolen online is the most likely reason for being a victim of fraud

Figure 18: Satisfaction across attributes shows that banks in the UK have not been entirely successful in prioritizing the attributes that matter most to customers

Figure 19: Regular branch users are most likely to want an omnichannel experience

Figure 20: When applying for a mortgage, preference for branches is lower in the UK than comparable markets

Figure 21: Proportion of consumers who have been with their financial services provider less than five years

Figure 22: A tenure of five years or longer is when customers are most receptive to cross-selling

Figure 23: Higher rates of cross-selling correlate with higher customer satisfaction across all attributes

Frequently asked questions

United Kingdom (UK) Retail Banking Market Sizing and Opportunities 2022 thematic reports
Currency USD
$5,250

Can be used by individual purchaser only

$15,750

Can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company


Undecided about purchasing this report?

Enquire Before Buying Request a Free Sample

Get in touch to find out about multi-purchase discounts

reportstore@globaldata.com
Tel +44 20 7947 2745

Every customer’s requirement is unique. With over 220,000 construction projects tracked, we can create a tailored dataset for you based on the types of projects you are looking for. Please get in touch with your specific requirements and we can send you a quote.

Sample Report

United Kingdom (UK) Retail Banking Market Sizing and Opportunities 2022 was curated by the best experts in the industry and we are confident about its unique quality. However, we want you to make the most beneficial decision for your business, so we offer free sample pages to help you:

  • Assess the relevance of the report
  • Evaluate the quality of the report
  • Justify the cost

Download your copy of the sample report and make an informed decision about whether the full report will provide you with the insights and information you need.

Below is a sample report to understand what you are buying

See what our customers are saying

“The GlobalData platform is our go-to tool for intelligence services. GlobalData provides an easy way to access comprehensive intelligence data around multiple sectors, which essentially makes it a one-for-all intelligence platform, for tendering and approaching customers.

GlobalData is very customer orientated, with a high degree of personalised services, which benefits everyday use. The highly detailed project intelligence and forecast reports can be utilised across multiple departments and workflow scopes, from operational to strategic level, and often support strategic decisions. GlobalData Analytics and visualisation solutions has contributed positively when preparing management presentations and strategic papers.”

Business Intelligence & Marketing Manager, SAL Heavy Lift

“COVID-19 has caused significant interference to our business and the COVID-19 intelligence from GlobalData has helped us reach better decisions around strategy. These two highlights have helped enormously to understand the projections into the future concerning our business units, we also utilise the project database to source new projects for Liebherr-Werk to use as an additional source to pitch for new business.”

Market Analyst & Management, Liebherr-Werk

Your daily news has saved me a lot of time and keeps me up-to-date with what is happening in the market, I like that you almost always have a link to the source origin. We also use your market data in our Strategic Business Process to support our business decisions. By having everything in one place on the Intelligence Center it has saved me a lot of time versus looking on different sources, the alert function also helps with this.

Head of Key Accounts, Saab AB

Having used several other market research companies, I find that GlobalData manages to provide that ‘difficult-to-get’ market data that others can’t, as well as very diverse and complete consumer surveys.

Marketing Intelligence Manager, Portugal Foods

Our experience with GlobalData has been very good, from the platform itself to the people. I find that the analysts and the account team have a high level of customer focus and responsiveness and therefore I can always rely on. The platform is more holistic than other providers. It is convenient and almost like a one stop shop. The pricing suite is highly competitive and value for our organisation.

I like reports that inform new segments such as the analysis on generation Z, millennials, the impact of COVID 19 to our banking customers and their new channel habits. Secondly the specialist insight on affluent sector significantly increases our understanding about this group of customers. The combination of those give us depth and breadth of the evolving market.

I’m in the business of answering and helping people make decisions so with the intelligence center I can do that, effectively and efficiently. I can share quickly key insights that answer and satisfy our country stakeholders by giving them many quality studies and primary research about competitive landscape beyond the outlook of our bank. It helps me be seen as an advisory partner and that makes a big difference. A big benefit of our subscription is that no one holds the whole data and because it allows so many people, so many different parts of our organisation have access, it enables all teams to have the same level of knowledge and decision support.

Head of Customer Insight and Research, Standard Chartered

“I know that I can always rely on Globaldata’s work when I’m searching for the right consumer and market insights. I use Globaldata insights to understand the changing market & consumer landscape and help create better taste & wellbeing solutions for our customers in food, beverage and healthcare industries.

Globaldata has the right data and the reports are of very high quality compared to your competitors. Globaldata not only has overall market sizes & consumer insights on food & beverages but also provides insights at the ingredient & flavour level. That is key for B2B companies like Givaudan. This way we understand our customers’ business and also gain insight to our unique industry”

Head of Consumer Sensory Insights, Givaudan

GlobalData provides a great range of information and reports on various sectors that is highly relevant, timely, easy to access and utilise.  The reports and data dashboards help engagement with clients; they provide valuable industry and market insights that can enrich client conversations and can help in the shaping of value propositions. Moreover, using GlobalData products has helped increase my knowledge of the finance sector, the players within it, and the general threats and opportunities.

I find the consumer surveys that are carried out to be extremely beneficial and not something I have seen anywhere else. They provided an insightful view of why and which consumers take (or don’t) particular financial products. This can help shape conversations with clients to ensure they make the right strategic decisions for their business.

One of the challenges I have found is that data in the payments space is often piecemeal. With GD all of the data I need is in one place, but it also comes with additional market reports that provide useful extra context and information. Having the ability to set-up alerts on relevant movements in the industry, be it competitors or customers, and have them emailed directly to me, ensures I get early sight of industry activity and don’t have to search for news.

Senior Account Manager, TSYS
Go even deeper with GlobalData Intelligence Center

Every Company Report we produce is powered by the GlobalData Intelligence Center.

Subscribing to our intelligence platform means you can monitor developments at United Kingdom (UK) Retail Banking Market Sizing and Opportunities 2022 in real time.

  • Access a live United Kingdom (UK) Retail Banking Market Sizing and Opportunities 2022 dashboard for 12 months, with up-to-the-minute insights.
  • Fuel your decision making with real-time deal coverage and media activity.
  • Turn insights on financials, deals, products and pipelines into powerful agents of commercial advantage.