Back to Banking - Capturing Retail Deposits

This publication has been discontinued on July 19, 2011.

Introduction

Abstract

Overview

Introduction

With banks and building societies in the UK scrambling to strengthen their balance sheets, Datamonitor assesses the attractiveness of the various funding options, and concludes that retail deposits represent the best source of new capital. Five key customer segments are particularly ripe for targeting, and Datamonitor' s megatrends framework is used to devise strategies for these.

Scope

• Assesses the attractiveness of the various sources of capital and identifies retail deposits as the most attractive.
• Prioritizes five key customer segments which are particularly attractive based on factors like size of savings and long-term revenue potential.
• Uses Datamonitor' s megatrends framework to profile these customer segments and suggest strategies for targeting them.
• Includes global examples of intelligent services and marketing campaigns focussing on these segments.

Highlights

In October this year, key banks and building societies in the UK agreed to strengthen their balance sheets, as part of the government-led effort to ensure the stability of the financial system. Among the funding alternatives, Datamonitor' s analysis shows that accessing additional funds from depositors stands out as the most attractive option.

Datamonitor has identified five key lucrative segments for banks to target. These segments are home savers, independent professional services, milestoners (people whose lives and behaviors have been affected by trigger events like marriage or children), UK resident expats and accumulators (50 to 59 year olds saving for retirement).

Reasons to Purchase

• Gain insights into the current deposit and mortgage positions of key UK banks and building societies.
• Understand the nature of five key customer segments that are ripe for targeting with deposit products.
• See how other financial services companies are intelligently marketing to these segments.

Table of Contents

• Overview
  • Catalyst
  • Summary
• Executive Summary
  • Retail deposits stand out as the most attractive funding option for banks
  • Datamonitor has identified 10 megatrends in consumer behavior
  • Each customer segment has different characteristics and service requirements
    • Home savers
    • Independent professional services
    • Milestoners
    • UK resident expats
    • Accumulators
• Table of Contents
• Table of figures
• Table of tables
• MARKET CONTEXT
  • Raising capital in the normal way is no longer attractive; it is time to return to the old tradition of deposit taking
    • Many UK banks find themselves generally overweight in mortgages and underweight in deposits
    • There are many unattractive options for new sources of funding
    • Retail deposits stands out as easily the most attractive funding option
  • Lucrative customers can be targeted by using the megatrends framework
    • Key lucrative segments exist
    • The financial services megatrends framework can be used to target these customer segments
• ATTRACTING RETAIL DEPOSITS: LOOKING BEYOND PRICE
  • Takeouts and implications for attracting retail deposits
  • In today' s conditions, competition between financial services companies is fierce
    • Financial service providers must look past price to compete successfully in today' s market
    • Consumer empowerment means banks must get some ' basics' right to attract and retain customers
  • ING Direct hemorrhaged deposits after launching on price and then bucking the interest rate trend
  • Britons with deposits in Icesave narrowly avoided a financial meltdown
• THE HOME SAVERS
  • Takeouts and implications for targeting home savers
  • Getting onto and moving up the property ladder is becoming difficult
    • The lending practices of the banks have changed radically
    • The falling market is also deterring purchasers of property
  • The megatrends framework for home savers
    • Comfort and Connectivity: German banks adopt an innovative approach for home savers
    • Lifestage complexity: recognize that many people will not be moving onto or up the property ladder
• THE INDEPENDENT PROFESSIONAL SERVICES
  • Takeouts and implications for targeting independent professionals
  • The professional services is an attractive customer segment for banks
    • Professionals working in their own practices face a dual challenge
      • The independent professional services customer segment is large in number and has a good earnings profile but is under personal and professional stress
  • The megatrends framework for independent professionals
    • Convenience: professionals are seeking products and services that deliver convenience
    • Connectivity: stressing the importance of community and business support to independent professionals
    • Wellbeing: independent professionals are looking for products that enhance the balance in their lives
• THE MILESTONERS: TRIGGER EVENTS IN PEOPLE' S LIVES
  • Takeouts and implications for targeting ' milestoners'
  • There are number of ' trigger events' in people' s lives that banks can benefit from
    • Trigger events are moments in people' s lives that can induce significant changes in savings behavior
      • There is a wide range of trigger events in the UK each year and consumers typically have a number of ' bankable' trigger events in their own lives
      • Banks can use their existing CRM systems to build personal relationships with their clients within a technological age
  • The megatrends framework for trigger events
    • Individualism: milestones in people' s lives make them stand apart from the crowd
    • Connectivity: milestones increase people' s community focus
    • Comfort: parents and grandparents want to ensure a secure future for children
• THE UK RESIDENT EXPATS
  • Takeouts and implications for targeting resident expats
  • The UK has seen large-scale inflows of people
    • Settled foreigners represent an attractive market segment
  • The megatrends framework for expats
    • Convenience: HSBC is one UK bank targeting the expat market
    • Connectivity: HSBC helps expats connect into relevant resources
    • Lifestage complexity: Société Générale recognizes the diversity of the expat segment
• THE ACCUMULATORS: THE 50-59 YEARS SUPERSAVERS
  • Takeouts and implications for targeting ' accumulators'
  • The accumulators are a diverse group of people, united by a strong resource base from which they have the ability to increase their savings
    • Accumulators are aged between 50 and 59 years, but have lifestage complexity
  • The megatrends framework for accumulators
    • Individualism: accumulators want their individual needs recognized with a personal service
      • Harris Private Bank promotes its personalized financial planning services
      • UBS recognizes the lifestage complexity of accumulators and provides reassurance that their diverse needs are being catered for
    • Convenience: accumulators want flexibility and efficient service delivery
      • Convenience allows customers access to their savings but rewards them for letting it stay put
      • The importance of convenience in researching the best product or service at the best price
      • Convenience is an important aspect of efficient service delivery
    • Lifestage complexity: old patterns no longer hold and the 40-54 years group may cover a range of lifestages
• APPENDIX
  • Definitions
    • Overview of Datamonitor' s savings and investment model
      • Flows methodology
      • Market share methodology
      • Savings and investments forecast justification
  • The financial services megatrends framework
    • Datamonitor has identified 10 megatrends in consumer behavior
      • Megatrends are a tool for capturing the drivers of consumer behavior
      • A megatrend framework is a vital tool for analyzing and structuring consumer attitudes and behaviors
      • A trend framework is used for generating and selecting ideas
    • A megatrend framework is vital for financial services
      • Customer retention as well as customer acquisition must be considered
      • There are inherent obstacles in financial services that limit innovation in customer targeting
      • Greater customer understanding can help overcome the obstacles found with targeting and communicating to customers
      • The megatrend framework enhances an analysis of the UK deposit market
    • There are 10 megatrends that impact on the actions and attitudes of financial services customers
      • The six behavior trends identify the benefits that consumers wish to gain from a product or service
      • The four complexities are areas within which traditional assumptions or measures of behavior no longer apply
  • Methodology
  • Bibliography
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
• List of Tables
  • Table 1: The mortgage: deposit ratio is a useful indicator of financial health
  • Table 2: Foreign expats living in Britain, by investable assets
• List of Figures
  • Figure 1: Key sources and characteristics of each type of retail bank funding options
  • Figure 2: Interbank lending continues to come at a high cost
  • Figure 3: ING Direct: When savings don' t feel so good
  • Figure 4: The number of home loans being granted in the UK has dropped dramatically
  • Figure 5: UK house prices are sharply down
  • Figure 6: The workings of the Bauspar system
  • Figure 7: Commerzbank stresses flexibility in its offering
  • Figure 8: Showing how money accumulates to build a house
  • Figure 9: Lloyds TSB recognizes that not everyone will be looking to buy
  • Figure 10: BNZ tailors home loan and business packages to suit client needs
  • Figure 11: BNZ stresses the importance of community connectivity to those working in their own business
  • Figure 12: FNB reaches out to professionals running their own businesses by providing business support tools
  • Figure 13: HSBC adds value to its services for professionals by selling professional indemnity insurance
  • Figure 14: Westpac recognizes the difficulties those running their own businesses may face when it comes to meeting their superannuation payments
  • Figure 15: There are at least 1.5 million trigger events in the UK each year
  • Figure 16: Back to banking: building personal relationships within a technological age
  • Figure 17: BNZ uses free texts to connect with customers based on their individually-defined criteria
  • Figure 18: BNP Paribas connects with people when they are beginning life together... and when it comes to an end
  • Figure 19: ABSA connects child, family and community with its FuturePlan account
  • Figure 20: OCBC combines a trust savings account with insurance features in its ' School Plan'
  • Figure 21: India and Ireland are the most common expats resident in the UK
  • Figure 22: Passport is a banking product/service from HSBC specifically aimed at expats
  • Figure 23: HSBC offers useful resources and information for expats
  • Figure 24: Société Générale shows great awareness of the lifestage complexity megatrend
  • Figure 25: The accumulators are a significant part of the population in the UK
  • Figure 26: Harris promotes a personalized pre-retirement service
  • Figure 27: UBS offers its clients a pre-retirement service packed with reassurance
  • Figure 28: Barclays Premier offers ' nest-egg' savings to reward customers for keeping their money in the bank
  • Figure 29: ING Direct offers comfort and convenience
  • Figure 30: BNZ addresses lifestage complexity and connectivity with its ' TotalMoney' program

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