A fifth of Brits consider switching savings account in the next year, making the savings market a key battleground between incumbents and challenger banks

A fifth of Brits consider switching savings account in the next year, making the savings market a key battleground between incumbents and challenger banks
21.07.2020 09:05 am

A fifth of Brits consider switching savings account in the next year, making the savings market a key battleground between incumbents and challenger banks


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 could 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 this does not carry very much weight with the consumer when it comes to a market where people are clearly looking for the best possible rate. In order to ensure they remain competitive and retain their customer base, large banks need to think carefully about how they can maintain an attractive offering. Rate pricing is an important part of this, and where banks cannot offer attractive rates themselves, they should consider partnering with third party institutions who can”.

Related News

ClearBank Becomes First Clearing Bank to Offer Multi-Currency Bank Accounts via API

ClearBank, the cloud-based clearing bank, has become the first clearing bank to offer multi-... Read more »

Paymentology and Thought Machine Collaborate to Create Digital Banking Platform

Paymentology, the UK cloud-native payment processor, is partnering with digital banking platform Thought Machine, to bring rapid integration... Read more »

Commerzbank Issues the Second Own Green Bond €500 Million Worth

Commerzbank AG has today very successfully issued another Green Bond with an issuance volume of €500 million. It is the Bank’s second own Green Bond after the... Read more »

FT Survey: 78% Say UK Banks Have “Surprised Themselves” With Their Adaptability During COVID-19

Appian (NASDAQ: APPN) today published survey results examining the response of the UK banking sector to the coronavirus pandemic, revealing that nearly three-... Read more »

Saudi Arabian Fintech Hakbah Joins Visa’s Fintech Fast Track Program

Hakbah, an alternative financial saving platform based in Riyadh, Saudi Arabia, today announced that it has joined Visa’s Fintech Fast Track... Read more »

Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel