United Kingdom (UK) Retail Banking Market Sizing and Opportunities 2022

1.1 Growth in consumer credit balances has slowed
1.2 UK consumers’ preference for incumbents has decreased

3. Market Environment
3.1 Market balances

4.1 GDP and unemployment

5.1 Retail deposits: The market share held by the top five decreased from 66% in 2010 to 58% in 2020
5.2 Residential mortgages: Market share concentration among the top five decreased from 69% in 2010 to 65% in 2020
5.3 Credit cards: Market share concentration among the top five increased from 56% in 2010 to 57% in 2020
5.4 Personal loans: Market share among the top five settled at 36% in 2020 - the same as in 2010
5.5 COVID-19 has made it possible for banks to make efficiencies, but these have increased short-term costs

6.1 Retail banking provider preference is beginning to shift from incumbents to alternative providers
6.2 UK consumers prefer traditional providers due to their better levels of service and branch networks
6.3 The preference for alternatives is driven by better rates/ rewards and superior digital banking functionality
6.4 The COVID-19 pandemic drove an increase in fraud
6.5 UK banks have attempted to prioritize the attributes of service that customers rank as most important
6.6 UK banks must perfect the ability to resolve minor and regular banking problems
6.7 Cross-selling is correlated with high rates of customer satisfaction and tenure

7.1 Starling Bank
7.2 Monzo
7.3 Revolut

8.1 Abbreviations and acronyms
8.2 Methodology
8.3 Further reading

Figure 1: Residential mortgage and retail deposit balances have increased year on year since 2010, with deposits increasing most in 2020 due to COVID-19
Figure 2: Consumer credit balances have followed a similar trajectory since 2010, although personal loan balances far exceed credit card balances
Figure 3: Retail deposit and residential mortgage growth will be lower than in comparable markets
Figure 4: GDP is set to have grown in 2021 as vaccination programs allowed for reopening and recovery
Figure 5: Inflation is expected to increase and peak in 2022, with forecasted wage growth unlikely to keep up
Figure 6: Retail deposits market share quarterly growth, 2017-21
Figure 7: Residential mortgages market share quarterly growth, 2017-21
Figure 8: Credit cards market share quarterly growth, 2017-21
Figure 9: Personal loans market share quarterly growth, 2017-21
Figure 10: Cost/income ratios, 2015-20
Figure 11: Preference for a transaction/savings account from financial intermediaries and retailers/supermarkets grew most in the UK between 2020 and 2021
Figure 12: A decline in preference for traditional providers has been seen globally
Figure 13: In terms of transaction/savings accounts from traditional providers, a decline in preference was witnessed across all UK age groups - especially 18-24-year-olds
Figure 14: Better overall levels of service is the top reason for choosing a traditional provider, but trust in incumbents is also a key factor
Figure 15: Better rates and rewards is the top reason for preferring alternatives across all age groups
Figure 16: The key reason consumers prefer alternative providers is better rates and rewards
Figure 17: Card details being stolen online is the most likely reason for being a victim of fraud
Figure 18: Satisfaction across attributes shows that banks in the UK have not been entirely successful in prioritizing the attributes that matter most to customers
Figure 19: Regular branch users are most likely to want an omnichannel experience
Figure 20: When applying for a mortgage, preference for branches is lower in the UK than comparable markets
Figure 21: Proportion of consumers who have been with their financial services provider less than five years
Figure 22: A tenure of five years or longer is when customers are most receptive to cross-selling
Figure 23: Higher rates of cross-selling correlate with higher customer satisfaction across all attributes