UK Savings: Forecasts & Future Opportunities

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Retail deposits for 2016 are expected to be 6% higher than in 2015. However, market conditions over the next few years are predicted to dampen prospects for future growth. UK retail deposits will increase at a CAGR of 3.3% during 2016–20 to reach £1,606bn by the end of the forecast period.

GlobalData Financial’s “UK Savings: 2016 Review, Forecasts & Future Opportunities” looks at how the personal savings market will develop up to 2020, analyzes the factors that will determine this outlook, and examines savers’ intentions and behavior. It forecasts personal savings deposits up to 2020, analyzes the factors determining the outlook of the savings market, and looks at what providers are doing to improve their performance. The report concludes with analysis of drivers of provider choice and how banks can harness the personal goals of consumers and encourage them to save.

Scope

– Personal deposits are expected to grow slowly as the economic outlook remains fragile.

– The rate advantages offered by fixed-term accounts are steadily falling, making long-term saving less attractive to consumers.

– Low savings rates will impact consumers’ inclination to save.

Reasons to Buy

– Understand the developments shaping the UK retail savings market.

– Inform your future plans with our five-year forecast for retail deposits.

– Discover how market forces will influence customers' ability and willingness to save.

– Discover what impact new products, innovations, and strategies will have on the savings market.

– Learn how to respond to consumers' attitudes towards saving and personal finance.

FCA
Lloyds Banking Group
RCI Bank
Chip
Mobility
MySpend
Savedroid
Squirrel
HSBC
Nationwide
Paragon Bank
Barclays
Halifax
TSB
Bank of Scotland
Santander
Metro Bank
Aldermore
Virgin Money
Leeds Building Society
Charter savings bank
NatWest
Royal Bank of Scotland
Metro Bank
Tesco Bank

Table of Contents

EXECUTIVE SUMMARY

1.1. Key findings

1.2. Critical success factors

2 RETAIL DEPOSITS ARE SET FOR SLOW GROWTH

2.1. Deposit accounts are expected to remain the UK's preferred asset class for saving

2.2. Declining consumer confidence has increased the imperative to save

2.3. Wage growth and declining unemployment will encourage saving

2.4. Falling interest rate differentials between instant-access and fixed-term accounts deter consumers from saving

3 REGULATIONS AIM TO CHANGE THE UK SAVINGS MARKET

3.1. PSA was implemented in April 2016 and is helping boost the savings market

3.1.1. The PSA has reduced the relative appeal of ISAs

3.1.2. The cash ISA allowance will rise to £20,000 in April 2017

3.2. New Lifetime ISA being launched from April 2017

3.3. The BoE has extended FLS in an attempt to support the economy after the Brexit vote

3.4. Brexit will have a short-term adverse impact on the savings market

3.4.1. Savings rates will remain depressed, impacting consumers' inclination to save

3.4.2. Inflation is expected to rise, squeezing wages and slowing the economy

4 SAVINGS PROVIDERS CAN ACQUIRE CUSTOMERS DESPITE POOR MARKET CONDITIONS

4.1. Lloyds Banking Group led the UK retail savings market in 2016

4.2. New challenger banks are boosting the savings market with competitive rates

4.3. PFM apps are aiming to drive savings behavior

4.3.1. Chip makes automatic savings decisions for its users

4.3.2. The MySpend app helps consumers spend wisely

4.3.3. Savedroid converts everyday activities into savings

4.3.4. Mobility analyzes bills for potential savings

4.3.5. Squirrel helps consumers save by removing the temptation to spend

5 RATE AND REPUTATION WILL HELP DRIVE SAVINGS

5.1. Goal-based saving will motivate consumers to save

5.2. Online will overtake branches for savings account customer acquisition

5.3. An existing relationship and rate influence consumers taking out a savings account

5.4. Nationwide and Halifax have the best NPS among the main savings providers

6 APPENDIX

6.1. Abbreviations and acronyms

6.2. Definitions

6.2.1. CAGR

6.2.2. Consumer segments as per our 2016 RBI Survey

6.2.3. Savings ratio

6.3. Methodology

6.3.1. GlobalData's 2016 RBI Survey

6.3.2. Future Sentiment Index

6.3.3. Present Sentiment Index

6.4. Bibliography

6.5. Further reading

Figures

Figure 1: Retail deposits will grow only slightly over the forecast period

Figure 2: Retail deposits will experience slow growth up to 2020

Figure 3: Consumer confidence dropped sharply in Q2 2016, but quickly recovered after July 2016

Figure 4: Real wage growth will boost the savings market

Figure 5: The rate advantages offered by fixed-term accounts are steadily diminishing

Figure 6: Savers have suffered in recent years with a continual rate reduction on cash ISAs

Figure 7: New Lifetime ISA will encourage younger people to save

Figure 8: The FLS incentivizes banks to boost their lending by reducing their funding costs

Figure 9: A further cut in interest rates will reduce the rewards of saving

Figure 10: Lloyds Banking Group holds a quarter of all retail deposit balances in the UK

Figure 11: Challenger banks offer the best easy-access deals

Figure 12: Chip uses a proprietary chatbot and meets a clear consumer need

Figure 13: MySpend can play a significant role in helping consumers control their spending

Figure 14: Savedroid encourages regular savings behavior

Figure 15: Mobility offers a level of sophistication above price comparison sites

Figure 16: Squirrel is likely to be an effective savings tool

Figure 17: Covering unforeseen events is the most popular reason for saving

Figure 18: Branches remain the most popular acquisition channel for savings accounts

Figure 19: Older consumers are the most rate-focused

Figure 20: All savings providers have seen an improvement in NPS over the last 12 months

Frequently asked questions

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