Product and Pricing Trends in UK deposits and ISAs

Content

• Executive Summary
• Introduction
• Market Context
• Product Trends In Uk Deposits And Isas
• Product Segments
• Chapter 1 Introduction
  • What Is This Report About?
  • Who Is The Target Reader?
  • How To Use This Report
• Chapter 2 Market Context
  • Introduction
  • The Deposits Market Still Represents Almost Half The Total Uk Retail Savings And Investments Market
  • Net Deposits Inflows Bounced Back In 2006 While Inflows Into Direct Equity Declined
  • Datamonitor Anticipates Consistent Growth In The Deposits Market Over The Next Five Years
  • The Isa Market Continues To Go From Strength To Strength
  • Total Isa Sales Continue To Grow Albeit At A Slower Rate Than In 2005
  • Mini Isas Remain The Key Component Of The Isa Market, With Cash Isas The Most Popular Form Of Mini Isa
  • Almost All Sales Of Maxi Isas Are In The Form Of Stocks And Shares
  • New Isa Subscriptions Have Consistently Risen From A Low In 2003
  • The Average Value Of New Isa Subscriptions Continues To Rise With Maxi Isa And Stocks And Shares Mini Isas Rising Fastest
  • A Market Correction During The Next Five Years Is Expected To Signficantly Affect Isa Sales Growth
  • Data Tables
• Chapter 3 Product Trends In Uk Deposits And Isas
  • Introduction
  • Key Findings
  • The Product Segments Continue To Slowly Diversify But Ordinary Savings Accounts Still Comprise Over Half The Market
  • Ordinary Savings Account Numbers Are Declining But The Segment Is Not Necessarily Easier For Consumers To Navigate
  • Regular Savings Accounts Continue To Grow In Popularity Among Providers
  • In The Foreign Currency Segment, Offshore Usd Accounts Are Growing, Threatening The Dominance Of Offshore Euro Accounts
  • Current Accounts With An Overdraft Continue To Outstrip Those Without
  • Product Providers Are Taking Notice Of The Changing Demands Of Consumers In Terms Of Distribution Channels
  • No Notice Or Instant Access Accounts Make Up The Majority Of All Ordinary Savings Accounts
  • Sight Deposits Are Increasingly Popular With Consumers As Time Deposits Fall Out Of Favor And Cash Isas See Significant Growth
  • Direct Banking's Popularity Has Waned Slightly Over The Year In Terms Of The Number Of Accounts Offered
  • Online Savers Have Access To Better Rates And Are Able To Make Lower Initial Deposits
  • Building Societies Are Achieving Greater Parity With Banks In Terms Of Product Range Diversity
  • More Top Competitors Are Tying Products Together To Increase Their Share Of Their Customers' Wallet
  • Offsetting Or Pooling Savings Is Set To Become More Prevalent
  • Pricing Has Become More Cutthroat As Providers Up The Competition For New Business
  • Increased Competition And Consumer Demand May Turn The Tide Against Complex Pricing
  • Data Tables
• Chapter 4 Product Segments
  • Introduction
  • Key Findings
  • Ordinary Savings Accounts Are Declining But Still Dominant In The Savings And Deposits Market
  • Notice Periods Continue To Come Down In Ordinary Savings Accounts
  • Tiered Pricing Is Still Prevalent Among Building Society Accounts But Banks Are Simplifying Pricing Structures
  • Pricing Schemes Aim To Retain Existing Customers And Partition The Client Base
  • Bonuses Are Key To Retaining Existing Customers
  • Providers Are Offering A Range Of Differently Priced Accounts With Graduated Minimum Balance Thresholds
  • The Average Interest Rate Offered On Ordinary Savings Accounts Has Risen Over The Past Year
  • The Popularity Of Different Distribution Methods Varies Between Banks And Building Societies While Also Affecting Pricing Levels
  • Newer Distribution Strategies Offer The Most Competitive Pricing To Customers
  • Branch Only Distribution Remains Strong Despite Small Increases In The Number Of Direct Access Accounts
  • The Number Of Regular Savings Accounts Grew By 11% Between February 2006 And January 2007
  • Building Societies Are Strengthening Their Control Over Regular Savings Accounts
  • Three Of The Four New Entrants To The Market In 2006 Were Building Societies
  • Building Society Regular Savings Accounts Cater To Either End Of The Notice Period Spectrum, While Banks Tend To Offer Mid-Range Notice Periods
  • There Is A Signficant Difference Between Banks And Building Societies In The Pricing Of Regular Savings Accounts
  • Fixed Rates' Popularity Has Stalled Over The Past Year But Continue To Offer Eye-Catching Rates
  • Mini Cash Isas Remain In High Demand
  • Mini Cash Isas Are Slowly Moving Towards Longer Notice Accounts, While Also Maintaining A Trend For No-Notice Accounts
  • Banks Are More Likely To Offer Mini Cash Isas With No Notice Period
  • Fixed Rates Are Becoming More Common But Are Strongly Tied To Long Term Mini Cash Isas
  • Interest Rates Are Not Keeping Pace With The Base Rate But Gradually Improve With Increased Investment
  • Distribution Is Focused On The Branch Network, But Banks Offer A Wide Range Of Access Options
  • Current Accounts With Overdrafts Remain The Key Sub Segment Of The Current Account Market
  • Current Accounts With Overdrafts Are Seeing Some Changes To Product Features
  • Interest Rates Vary Widely And Rarely Reflect The Bank Of England Base Rate
  • Funding Requirements Are Particularly Common Among Building Societies Although Banks Have Embraced Account Fees
  • Building Societies Are Creeping Into This Segment
  • Non-Overdraft Current Accounts Are Aimed At Niche Markets
  • There Is A Broad Range Of Distribution Options Available For Current Accounts With An Overdraft
  • The Intended Immediacy Of Current Accounts Is Emphasized By The Relative Popularity Of Telephone And Internet Banking
  • Several Varieties Of Foreign Currency Account Are Available But These Vary Signficantly In Popularity
  • Clearly Tiered Interest Rates Reward Serious Savers While Offshore Rates Beat Onshore Equivalents
  • Onshore Euro Current Accounts Are Unlikely To Offer Interest Rates
  • Similar Distribution Of Notice Periods In The Offshore Accounts Reflect The Similarity Of The Offerings In Each Market
  • Data Tables - Ordinary Savings Accounts
  • Data Tables - Regular Savings Accounts
  • Data Tables - Mini Cash Isas
  • Data Tables - Current Accounts
  • Data Tables - Foreign Currency Accounts
• Chapter 5 Appendix
  • Definitions
  • Average Interest Rate
  • Base Rate / Discount Rate
  • Deposits
  • Investment Trusts
  • Isas And Mini Cash Isas
  • Oeics
  • Unit Trusts
  • Research Methodology
  • Further Reading
  • Datamonitor Savings & Investments Spp Reports
  • Spp Writing Team
• List Of Tables
  • Table 1: Uk Retail Deposits And Savings, 2002-2006
  • Table 2: Net Inflows Into Uk Retail Deposits And Savings, 2002-2006
  • Table 3: Forecast Uk Retail Deposits And Savings, 2007-2011
  • Table 4: Gross Isa Sales In The Uk, 2002-2006 (Gbpm)
  • Table 5: Gross Mini Isa Sales In The Uk, 2002-2006 (Gbpm)
  • Table 6: Gross Maxi Isa Sales In The Uk, 2002-2006 (Gbpm)
  • Table 7: Number Of New Isa Accounts Opened In The Uk By Account Type, 2002 - 2006
  • Table 8: Average Value Per Subscription Of Selected Isa Types, 2002 - 2006
  • Table 9: Forecast Annual Isa Balances By Stocks And Shares And Cash, 2007 - 2011
  • Table 10: Market Segmentation By Number Of Accounts, 2006 And 2007
  • Table 11: Notice Period By Type Of Institution, With Comparison To 2004 Total Data
  • Table 12: Total Uk Personal Deposit Balances By Holding Institution And Type, 2001 - 2005
  • Table 13: Proportion Of Ordinary Savings Accounts Operating By Each Method
  • Table 14: Average Number Of Accounts Offered By Banks And Building Societies, January 2007
  • Table 15: Ordinary Savings Accounts By Notice Period, Feb 1999-Jan 2007
  • Table 16: Tiered And Non-Tiered Interest Rates On Ordinary Savings Accounts Split By Institution, January 2007 And February 2006
  • Table 17: Average Interest Rates Paid On Ordinary Savings Accounts In February 2006 And January 2007, By Level Of Investment
  • Table 18: Average Interest Rate Paid On Ordinary Savings Accounts, January 2007, Segmented By Distribution Strategy
  • Table 19: Distribution Channels Of Ordinary Savings Accounts, February 2006 And January 2007
  • Table 20: Regular Savings Accounts Split By Provider Type
  • Table 21: Notice Period Of Regular Savings Accounts By Provider Type, January 2007
  • Table 22: Average Interest Rate Paid On Regular Savings Accounts, By Notice Period, January 2007
  • Table 23: Mini Cash Isa Accounts By Notice Period, January 2007
  • Table 24: Mini Cash Isa Accounts By Notice Period And Distributor, January 2007
  • Table 25: Interest Rates Offered In Mini Cash Isas By Tier And Distributor, January 2007, Including Comparative Bank Of England Base Rate
  • Table 26: Proportion Of Accounts By Distribution Method And Distributor, January 2007
  • Table 27: Interest Rates Paid On Current Accounts By Level Of Investment And Distributor, January 2007
  • Table 28: Proportion Of Current Accounts With Overdraft By Distribution Method And Distributor, January 2007
  • Table 29: Foreign Currency Account Market Size, January 2007
  • Table 30: Interest Rates Available On Foreign Currency Savings Accounts By Investment Tier And Denomination Of Account, January 2007
  • Table 31: Foreign Currency Accounts By Notice Period, January 2007
• List Of Figures
  • Figure 1: Deposits Continued To Show Good Growth Relative To The Rest Of The Uk S&I Market Between 2002 And 2006
  • Figure 2: Net Inflows For Deposits Remained Strong In 2006 While
  • Figure 3: The Deposits Market Is Forecast To Grow Significantly Over The Next Five Years
  • Figure 4: Total Sales Of Isas Continued To Rise In 2006 Although Growth Has Slowed Since 2005
  • Figure 5: Cash Isas Continue To Be The Most Popular Form Of Mini Isa
  • Figure 6: Stocks And Shares Traditionally Account For The Vast Majority Of Maxi Isa Sales
  • Figure 7: The Total Number Of New Isa Subscriptions Has Risen Steadily Since 2003
  • Figure 8: The Average Value Of All Forms Of Isa Subscription Has Risen Between 2002 And 2006
  • Figure 9: Isa Balances Will Have Mixed Fortunes Over The Next Five Years
  • Figure 10: The Market Continues To Slowly Shift Away From Ordinary Savings Accounts Between 2006 And 2007
  • Figure 11: Longer Notice Periods For Ordinary Savings Accounts Are Becoming Less Common, Particularly Among Banks
  • Figure 12: Sight Deposits With Banks Alone Now Account For Almost Half The Uk Deposits Market Value
  • Figure 13: Between February 2006 And January 2007, The Number Of Accounts Operated Online And By Telephone Decreased Slightly
  • Figure 14: Building Societies Had A Larger Number Of Available Accounts Than Banks In January 2007
  • Figure 15: There Has Been A Continuous Shift Towards Shorter Notice Periods Over The Past Eight Years
  • Figure 16: The Number Of Non-Tiered Accounts Among Banks Have Risen Between 2006 And 2007, While Among Building Societies Tiered Accounts Have Gained Ground
  • Figure 17: Average Interest Rates On Ordinary Savings Accounts Grew Significantly Between February 2006 And January 2007
  • Figure 18: The Distribution Channels Used Have A Significant Impact On The Pricing Of Ordinary Savings Accounts
  • Figure 19: The Proportion Of Branch-Only Ordinary Savings Accounts Grew Slightly Between February 2006 And January 2007
  • Figure 20: Building Societies Have Taken An Additional 2.2% Of The Total Regular Savings Account Market Between February 2006 And January 2007
  • Figure 21: Instant Access Is The Most Popular Form Of Regular Savings Account Among Both Banks And Building Societies In 2007
  • Figure 22: Pricing On Regular Savings Accounts Varies Considerably Depending On The Notice Period On The Account
  • Figure 23: Instant Access And No Notice Isas Have Declined Slightly This Year While Notice Periods Of A Year Or More Have Risen
  • Figure 24: Banks Offer Significantly More Mini Cash Isas Without A Notice Period Than Building Societies
  • Figure 25: Building Society Interest Rates Tend To Be Set Slightly Higher Than Those Of Banks Although Both On Average Are Lower Than The Bank Of England Base Rate
  • Figure 26: Branch Access To Mini Cash Isas Remains Dominant
  • Figure 27: Current Account Interest Rates Do Not Reflect The Base Rate And Do Not Reward High Balances
  • Figure 28: Banks Still Form The Majority Of Providers And Offer The Largest Proportion Of Current Accounts In January 2007
  • Figure 29: Current Accounts With Overdrafts Offer A Wide Range Of Access Methods
  • Figure 30: The Offshore Sub Segment Was Far Larger Than The Onshore Foreign Currency Account Market In January 2007
  • Figure 31: Offshore Usd Accounts Offer The Highest Interest Rates Among Offshore Foreign Currency Savings Accounts
  • Figure 32: The Proportion Of No Notice Accounts Is Higher Among Offshore Accounts Than Onshore Euro Accounts