The top ten leading bank brands (including Nationwide) increased their market share as main financial services providers (MFSPs) in the Q2 JGFR / GfK UK Banking Barometer (BB)*. In the Q1 BB, of the 91% of adults who had an MFSP, 82% cited one of the ten leading bank brands. In the Q2 BB 85% of adults cite a leading brand, down 1 point on a year ago.
Slightly more people cite one of the Top 5 brands (60%) compared to 59% in Q1. A year ago the top 5 MFSP brands had a 61% market share. The gain of challenger brands Santander and Nationwide in the summer / autumn, which may have reflected high profile advertising campaigns, has weakened in the past 2 BBs. Most leading brands saw some market share increase in the current BB apart from Barclays, falling to its lowest MFSP share since March 2006, although remaining in second position behind Lloyds TSB
with little change in the latter’s market share.
Despite great efforts by regulators and commentators to get people changing banks, even if people do switch, it would appear to be to one of the established major brands. For the brands themselves the levels of customer activity in prospect and the state of the financial situation of customer bases is vital.
In the latest JGFR / GfK UK Financial Activity Barometer** the proportion of adults financially active (undertaking 2 or more savings, investment or borrowing products) fell from 49% in Q1 2013 to 48% in Q2, and down from 51% a year ago. Households’ financial position has weakened in the past year. In March 2012 38% of households were saving, 49% making do and 12% struggling (running down savings and falling into debt). Currently 36% of households are saving, 49% making do and 14% struggling.
Demand for financial products is falling, increasing competition among providers. The banks networks have been an important sales channel although much tougher regulation is forcing banks
to cut back their longer term savings / investment offerings.
Several high street banks have pulled out of giving financial advice – although in the 2013 ComPeer/JGFR Financial DIY report*** there was an increase in the proportion of people (9%) who
regarded their MFSP as their main financial services advisor. This level is far below the 28% in 2003 before the banks de-personalised relationships as technology took hold and trust fell away in the wake of the financial crisis.
John Gilbert, Chief Executive of JGFR commented on the UK Banking Barometer findings:
“The past month has been a difficult one for the banking industry. Concern over the strength of the banks has been much in focus. Despite efforts by regulators to increase competition for current accounts, consumers prefer major brand names with branch / ATM networks. Increasing product regulation looks likely to further push banks towards current account charging as product revenues subside”