- One in five (20%) British consumers are considering switching their savings account provider in the next 12 months.
- Consumers with different current and savings account providers are twice as likely to switch their savings account (30%) as their current account (16%) in the next year.
- Just 35% of respondents say they are likely to buy from their primary bank when taking out a new financial product, suggesting many are open to change.
London, 21. July 2020. New research by fintech company Deposit Solutions suggests that the country’s largest retail banking brands’ ascendency in the savings account market could be under threat. According to Deposit Solutions’ analysis, a fifth (20%) of British consumers are considering switching savings account provider in the next 12 months.
The findings have been published today in Deposit Solutions’ latest report – ‘The Future of Big British Banks: The Battleground for The Deposit Market’ – which argues that losing a customer’s savings account could be the first domino to fall in the loss of the entire customer relationship.
The research shows that customers are willing to shop around a lot more when it comes to savings accounts compared to their current accounts. British consumers report changing savings account provider (which includes overnight, term-deposit and notice accounts) every seven years – significantly more often than their current account provider, which they change every 12 years. This lower loyalty displayed towards savings account providers suggests that this market can be a key access point to large retail banks’ consumers, which challenger brands can exploit.
When it comes to customer retention, the report shows that the six biggest British retail banking brands – Barclays, HSBC, NatWest, Lloyds Bank, RBS and Santander – still enjoy a high degree of latent loyalty, with customers holding an account with them for 11 years on average. However, there are signs that customers in the savings account market could be easily swayed towards their competitors. When considering switching savings accounts specifically, consumers are far more likely to make a practical decision, with two thirds (63%) identifying getting the highest interest rate as a key motivator. This provides challenger banks and other providers the opportunity to market aggressively in order to gain customers at the expense of other institutions.
Meanwhile a bank’s reputation – an area upon which the larger brands have classically focused a lot of their marketing efforts – ranks fourth, with just 13% identifying it as a key factor when choosing a savings account provider. Furthermore, the research also shows British consumers appear increasingly to be more likely to shop around between banks for new financial products. Just over a third (35%) of respondents agreed they are more likely to buy from their primary bank rather than looking elsewhere. This greater natural propensity to switch could lead to increased volumes of bigger banks’ customers moving to other brands.
The report goes on to show that British consumers report feeling a stronger emotional connection to their current, savings and investment accounts than other types of financial products. On a 0 – 10 scale of how positively people feel about their banks, two thirds (63%) of respondents feel a high degree of emotional connection with providers where they hold funds – either for current, savings or investment accounts. This is compared to only 53% for providers they use for lending accounts (e.g. loans, mortgages and credit cards), pointing to the great importance of savings products for building and maintaining long-term customer relationships.
Mark Davison, Managing Director for UK & Ireland commented: “Sticking with a big high street bank for savings accounts has been the go-to option for Brits historically, but change is in the air. The protracted period of low interest rates, coupled with challengers increasingly adding attractive products to their offerings, means UK customers will be increasingly keen to shop around for the best deals.
“Bigger retail banking brands have made their reputation for safety and security a cornerstone of their marketing initiatives for years. However, the research shows that the purchasing decision is driven primarily by the interest rate on offer, and in order to ensure they remain competitive and retain their customer base, large banks need to think about how they can maintain an attractive offering against competitors’ promotional pricing.. Rate pricing is an important part of this, and where banks cannot offer attractive rates themselves, they should consider third-party products”.
About the analysis:
This research is based on a survey of 2,000 UK adults, drawn from nationally representative sample weighted on age, gender, region, social grade and employment status. The research has been conducted by Opinium, and the analysis performed by Deposit Solutions, unless otherwise stated.
Average bank account figures in the UK and EU have been compiled using data points from the ECB, Office of Fair Trading, Financial Conduct Authority, Competition & Markets Authority, Current Account Switch Service.
The Future of Big British Banks
About Deposit Solutions:
Deposit Solutions is a globally recognized FinTech company that operates the first open banking platform for savings. With its technology, the company has developed a new infrastructure for the $50 trillion deposit market worldwide, from which banks as well as investors benefit. Deposit Solutions has already connected over 150 banks and 20 countries to its platform. In addition, the company markets selected deposit products from its partner banks directly to savers through the ZINSPILOT and Savedo sales channels. Founded by Tim Sievers, Deposit Solutions has offices in Berlin, London, Zurich and New York in addition to its headquarters in Hamburg. Deposit Solutions’ partners include leading tech investors such as e.ventures, Vitruvian Partners, Greycroft, FinLab, Kinnevik, Peter Thiel, Top Tier Capital Partners and angel investor Stefan Wiskemann and Deutsche Bank AG. You can find more information at: http://www.deposit-solutions.com
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