For the first time in the decade of the JGFR / GfK UK Banking Barometer, Santander and Nationwide have entered the Top 5 of main financial services providers (MFSP)*
The desire among politicians, regulators, consumer bodies and financial journalists to see greater movement in the prime banking relationship appears to be underway.
At the same time there has been a jump in people (particularly women) moving to first direct, entering the Top 10 of MFSP brands for the first time. The HSBC direct bank subsidiary replaced Royal Bank of Scotland, exiting the Top 10 for the first time. Co-operative Bank also recorded a healthy gain in MFSP customers and moved up into ninth spot
The Big 5 high street bank brands (Lloyds TSB, Barclays, HSBC, NatWest and Halifax) saw their combined market share fall to its lowest on record in September (55%, down from 66% a year ago and 60% in June)
Nationwide whose TV advertising may have helped drive the growth in MFSP customers to record levels has seen a big jump in women customers.
For the RBS Group one hope is that they will be allowed to keep their branches following the aborted Santander sale. Losing the 316 branches will push them towards challenger brand status.
Both main brands lost market share this quarter with NatWest falling behind Santander for the first time.
Despite the emergence of the challenger brands Lloyds TSB and Barclays retain their long-standing dominance, with Barclays set to benefit considerably as the leading MFSP brand when the sale of some 600 Lloyds Banking Group branches to the Co-operative Bank goes through.
On a 4-quarter moving average basis Barclays just edged out Lloyds TSB as market leader with HSBC in third place ahead of NatWest and Santander (see chart in Appendix).
It is not just market share but customer activity levels that drive business volumes. There are considerable differences in activity levels** between brands. HSBC, Halifax and Nationwide consistently have among the most financially active customer bases with higher proportions in saving households.
More households (48%) compared to a year ago (42%) are’ just making do’ with fewer saving households (35% v 42%, September 2011) and more struggling households (running down savings and falling into debt) – 16% v 15%, September 2011
Among MFSPs there are notable differences among the financial position of customer bases and in product demand. For most MFSPs the financial condition of their customer base has deteriorated over the past year although product demand – especially borrowing demand - is higher this September and it may be this that is in part driving change in the MFSP market.
With the Funding for Lending scheme intended to boost mortgage lending, and greater numbers of young people intending to take out a mortgage for property purchase this quarter, banks that are offering competitive mortgage rates may attract new, younger MFSP customers. How long they stay will depend partly on their success in obtaining a mortgage.
Many will also be holding savings accounts providing the chance to take up an offset mortgage which in today’s low savings rate environment are becoming a key part of the main financial services provider package. Others may move to Mum & Dad’s bank where large savings deposits may be housed and used as the mortgage offset.
Commented John Gilbert, Chief Executive of JGFR:
“Something is happening that looks fairly familiar. The 21st century new model main financial services provider appears to be moving towards becoming a customer- friendly building society with current accounts and a flexible package of other services / benefits.”
*The Autumn 2012 UK Banking Barometer examines the market share of MFSPs, of their customer’s product purchase intentions, of the activity of MFSP customers, of their financial position and of their product demand. It also analyses regional demand patterns.
**JGFR commissioned GfK NOP to run a question alongside the March, June, September and December Financial Activity Barometers and Consumer Confidence Barometer to find out who people considered to be their main financial services provider in March 2003. It has run quarterly since. The latest Barometers were carried out among 2,000 adults aged 16+ between August 31 and September 9th
***JGFR makes the following distinction among consumers. To be financially engaged people expect to undertake 1 of the 18 savings, investment or borrowing activities in the Financial activity barometer; to be financially active requires taking out 2 or more financial activities and to be very financially active requires taking out 4 or more financial activities. In the latest FAB 73% of the adult population expect to be financially engaged, up from 69% in June. 51% intend to undertake 2 or more activities (50%, June) and 24% expect to undertake 4 or more activities (21% June)
Please visit www.jgfr.co.uk for more information
16 October 2012