Retail Savings in the UK – Key Trends and Opportunities to 2019

Interest rates on all savings accounts are at record lows in the UK, and are failing to entice customers despite improving economic conditions.

Growth has been slow for all savings accounts, with the exception of ISAs which have mainly seen growth as a result of the upper limits being raised every year since 2010, not because their interest rates are particularly attractive.

With the central bank rate remaining low, banks have had access to extremely cheap funds and therefore have not needed to compete for savings accounts. This has made borrowing from banks cheaper, meaning taking on debt for high-value purchases or moving house has been relatively inexpensive throughout the review period. As a result, investing and paying off debt has been more appealing than depositing cash in savings accounts.

Average pay, including bonuses, increased by 3.0% in May to July 2015, compared to the same period in the previous year, which marked the largest rise in six years. This combined with record low inflation means that real wages have grown substantially throughout 2015: something not seen since before the financial crash. Furthermore, UK unemployment fell to a seven-year low of 5.4% in the three months to August, with 79,000 more people in work than in the previous quarter.

Despite more people being in work, and those in work seeing growth in real wages, people are saving a smaller percentage of their wage than at any time since 2008. People generally became very wary of debt in the immediate aftermath of the financial crash, which encouraged saving and saw the saving rate rise to 11.4%. A recent surge in consumer confidence though, has largely seen people lose that fear, as the rate plummeted to 4.6%, with people looking towards spending more – spending on hotels and restaurants was up 8% in 2015 up to October, for example – or paying off debt with higher interest rates than savings accounts can offer.

Scope

• Detailed market analysis, intelligence and insights into the UK retail savings industry

• A breakdown of the types of savings product offered in the UK

• An analysis of the key drivers and outlook for the UK retail savings market

• Insight into the main banks in the UK retail savings industry, detailing market shares and innovations

• Current news and regulatory developments affecting the UK retail savings industry

• Forecasts for the retail savings industry in the UK over the next five years

Key Highlights

What was the balance (in GBP trillion) of total deposits held by households in the UK at the end of 2010?

By how much had this figure increased at the end of 2014?

What increase in percentage and CAGR terms does this figure represent?

By how much had the outstanding balance risen at the end of July 2015?

Reasons to buy

• Gain an understanding of the UK retail savings industry. Identify current trends and assess market potential through an assessment of the market's outlook.

• Assess data on every aspect of the market.

• Develop products that offer the chance to gain a competitive advantage.

• Investigate what has been happening in the UK retail savings industry. Identify differentiation in the market, and market products efficiently and cost-effectively.

• Evaluate the practices of individual banks and building societies in terms of innovation and effect on market share. Emulate best practice to increase returns on investment.

• Analyze changing regulations and their impact on the UK retail savings industry.

• Identify opportunities arising from new policy, while remaining compliant to avoid any unnecessary financial implications on operations.

Companies mentioned

Santander UK Plc

Royal Bank of Scotland Group Plc

HSBC Bank Plc

Barclays Plc

Lloyds Banking Group Plc

HSBC

Nationwide

Table of Contents

1 Executive Summary

2 Introduction

2.1 What is this Report About?

2.2 Definitions

2.3 Methodology

3 Market Analysis

3.1 Market Size

3.1.1 Monetary and Financial Institutions

3.1.2 National Savings & Investments (NS&I)

3.1.3 Sight and Time Deposits

3.1.4 ISAs

3.1.4.1 Cash ISAs

3.1.4.2 Cash ISA Breakdown

3.1.4.3 Stocks and Shares ISAs

3.1.4.4 ISAs by Region

3.1.4.5 ISAs by Income Group

3.1.4.6 Junior ISAs

3.1.4.7 ISAs by Age and Gender

3.2 Interest Rates

3.3 Funding for Lending Scheme

4 Consumers

4.1 Economic Backdrop

4.1.1 Real GDP Growth

4.1.2 Labor Market Conditions

4.1.3 Disposable Income

4.1.4 Inflation

4.1.5 Central Bank Rate

4.1.6 House Prices

4.1.7 Energy Bills

4.1.8 Household Debt

4.2 Saving Behavior

4.2.1 Saving Ratio

5 Competitive Landscape

5.1 Savings Account Interest Rates

5.2 Product Innovation

5.3 Switching Banks

6 Market Outlook

7 Regulation and Compliance

7.1 Recent Changes

7.1.1 Recent ISA changes

7.1.2 Bank of England Stress Testing

7.1.3 Funding for Lending Scheme

7.1.4 Financial Services Compensation Scheme

7.1.5 Capital Requirements Directive IV (CRD IV)

7.1.6 Financial Services (Banking Reform) Act 2013

7.2 Upcoming Regulations

7.2.1 Basel III

8 News

9 Deals

10 UK Retail Banks

10.1 Barclays Plc – Company Overview

10.1.1 Barclays Plc – Profile

10.1.2 Barclays Plc – Main Savings Products

10.1.3 Barclays Plc – Main Competitors

10.1.4 Barclays Plc – Board of Directors

10.2 HSBC Plc – Company Overview 58

10.2.1 HSBC Bank Plc – Profile

10.2.2 HSBC Bank Plc – Main Savings Products

10.2.3 HSBC Bank Plc – Main Competitors

10.2.4 HSBC Bank Plc – Board of Directors

10.3 Lloyds Banking Group Plc – Company Overview

10.3.1 Lloyds Banking Group Plc – Profile

10.3.2 Lloyds Banking Group Plc – Main Savings Products

10.3.3 Lloyds Banking Group Plc – Main Competitors

10.3.4 Lloyds Banking Group – Board of Directors

10.4 National Savings and Investments – Company Overview

10.4.1 National Savings and Investments – Profile

10.4.2 National Savings and Investments – Main Savings Products

10.4.3 National Savings and Investments – Main Competitors

10.4.4 National Savings and Investments – Board of Directors

10.5 Nationwide Building Society – Company Overview

10.5.1 Nationwide Building Society – Profile

10.5.2 Nationwide Building Society – Main Savings Products

10.5.3 Nationwide Building Society – Main Competitors

10.5.4 Nationwide Building Society – Board of Director

10.6 Santander UK Plc – Company Overview

10.6.1 Santander UK Plc – Profile

10.6.2 Santander UK Plc – Main Savings Products

10.6.3 Santander UK Plc – Main Competitors

10.6.4 Santander UK Plc – Board of Directors

10.7 The Royal Bank of Scotland Group – Company Overview

10.7.1 The Royal Bank of Scotland Group Plc – Profile

10.7.2 The Royal Bank of Scotland Group Plc – Main Savings Products

10.7.3 The Royal Bank of Scotland Group Plc – Main Competitors

10.7.4 The Royal Bank of Scotland Group Plc – Board of Directors

11 Appendix

11.1 Methodology

11.2 Contact GlobalData

11.3 About GlobalData

11.4 GlobalData’s Services

11.5 Disclaimer

List of Tables

Table 1: Banking Industry Definitions

Table 2: The UK – ISA Subscription Limits, FY1999–2000 to FY2014–2015

Table 3: The UK – Cash ISA Market Summary, FY20010–2015

Table 4: The UK Retail Saving – Competitor Interest Rates (%), Financial Year 2015/16

Table 5: Recent and Upcoming Regulatory Changes, 2012–2018

Table 6: Barclays Plc, Key Facts

Table 7: Barclays Plc, Main Savings Products

Table 8: Barclays Plc, Board of Directors

Table 9: HSBC Bank Plc, Key Facts

Table 10: HSBC Bank Plc, Main Savings Products

Table 11: HSBC Bank Plc, Board of Directors

Table 12: Lloyds Banking Group Plc, Key Facts

Table 13: Lloyds Banking Group Plc, Main Products

Table 14: Lloyds Banking Group Plc, Board of Directors

Table 15: National Savings and Investments, Key Facts

Table 16: National Savings and Investments, Main Products

Table 17: National Savings and Investments, Board of Directors

Table 18: Nationwide Building Society, Key Facts

Table 19: Nationwide Building Society, Main Products

Table 20: Nationwide Building Society, Board of Directors

Table 21: Santander UK Plc, Key Facts

Table 22: Santander UK Plc, Main Products

Table 23: Santander UK Plc, Board of Directors

Table 24: The Royal Bank of Scotland Group Plc, Key Facts

Table 25: The Royal Bank of Scotland Group Plc, Main Products

Table 26: The Royal Bank of Scotland Plc, Board of Directors

List of Figures

Figure 1: UK – Household Cash Deposits – Balances Outstanding (GBP Million), 2010-2015

Figure 2: UK – Household Cash Deposits – Balances Outstanding (GBP Million), 2010-2015

Figure 3: UK – Balances Outstanding on Household Deposits at MFIs (GBP Million), 2010-2015

Figure 4: UK – Balances Outstanding on Household Deposits at MFIs (GBP Million), 2010-2015

Figure 5: UK – % of Household Deposit Balances Held at MFIs, 2009-2015

Figure 6: UK – Balances Outstanding on Household Deposits in NS&Is (GBP Million), 2010-2015

Figure 7: UK – Balances Outstanding on Household Deposits in NS&Is (GBP Million), 2010-2015

Figure 8: UK – Time and Sight Deposit Outstanding Balances – Household Sector (GBP Million), 2010-2015

Figure 9: The UK – Balances Outstanding on Cash ISAs in the Household Sector, 2009–2015

Figure 10: The UK – Total Amount Subscribed to Cash ISAs, FY2009–2015

Figure 11: The UK – Total Number of Cash ISAs, FY2009–2015

Figure 12: The UK – Cash ISA Balances as a Share of Total Deposit Balances Outstanding (%), 2009–2015

Figure 13: The UK – Savings Accounts Sector Breakdown, 2013

Figure 14: The UK – Number of Stocks and Shares ISAs, FY2009–2010 to FY2014–2015

Figure 15: The UK – Amount Subscribed to Stocks and Shares ISAs, FY2009–2010 to FY2014–2015

Figure 16: The UK – Average amount subscribed to Stocks and Shares and cash ISAs, FY2005–2015

Figure 17: The UK – Amount Subscribed to Stocks and Shares ISAs, 2008–2015

Figure 18: The UK – Number of People Subscribed to ISAs by Region, FY2012–2013

Figure 19: The UK – Number of Individuals Subscribed to Stocks and Shares ISAs by Income Group and Subscription Limits, FY2012–2013

Figure 20: The UK – Number of Individuals Subscribed to Stocks and Shares ISAs by Income Group and Subscription Limits, FY2012–2013

Figure 21: The UK – Junior ISA Breakdown, 2012–2015

Figure 22: The UK – Junior ISA Subscription Limits, FY2011–2015

Figure 23: The UK – Number of ISA Subscribers by Age, FY2013

Figure 24: The UK – Number of Male ISA Subscribers by Age, FY2013

Figure 25: The UK – Number of Female ISA Subscribers by Age, FY2012–2013

Figure 26: The UK – Average Saving Account Interest Rates (%, End-year), 2011–2015

Figure 27: The UK – Real GDP Growth (%), 2008–2018

Figure 28: The UK – Unemployment and Redundancy Rates (%), 2006-2015

Figure 29: The UK – Average Weekly Earnings (GBP), 2004–2013

Figure 30: The UK – Household Disposable Income (GBP), 1997–2013

Figure 31: The UK – Consumer Price Inflation (%), 2010–2015

Figure 32: UK BoE Official Bank Rate (%), 2006–2015

Figure 33: The UK – Average House Prices (GBP), 2005–2014

Figure 34: UK Annual Gas and Electricity Bills: 2004–2014

Figure 35: The UK – Household Savings Ratio(%), 2008–2015

Figure 36: The UK – Market Shares of the 10 Leading Retail Saving Institutions(%), 2014

Figure 37: The UK – Market Shares of the Leading Current Account Providers (%), 2014

Figure 38: UK: Current Account Net Gains/ Losses by Banks, 2014

Figure 39: The UK – Total Amount Subscribed to ISAs Forecast: FY2007–2018

Figure 40: The UK – Household Cash Deposits – Balances Outstanding (GBP Billion), 2015–2019

Figure 41: The UK – Forecasted Savings Account Interest Rates, 2011-2019

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