2020 UK Retail Banking Survey Executive summary Today’s political and economic uncertainty has already left a dent in the revenues and profit margins of the retail banking sector. For some, not-so-fond memories of the 2008 financial crisis that saw the likes of banking giant Northern Rock fall to its knees will come rushing back to them; for others, the opportunity for innovation has never been brighter. The UK’s retail banking sector has over 300 Neobanks like Monzo and Revolut have banks and 45 building societies, equating to dominated news headlines in recent months, a grand total of 9,000+ branches, yet the Big which perhaps explains why older generations Four banks (HSBC, Barclays, NatWest/Royal are significantly more aware of them than Bank of Scotland and Lloyds Banking Group) younger generations, but this could soon change. still manage over 75% of customer bank accounts in the UK, 85% of business accounts In previous years, these neobank newcomers and more than £5 trillion in total assets. have thrived off of guerrilla marketing and word of mouth campaigns - take Monzo’s To find out how the opinions of consumers elusive coral cards that created an air of fare in today’s rapidly changing banking mystique younger consumers found environment, we carried out a survey of over irresistible. However, as neobanks continue 2,000 consumers in the UK, from a range to up the ante on the marketing front of different generations and regions, and by targeting mainstream audiences, pinpointed a number of crucial insights awareness levels could rapidly change. into the sector. And, as our survey discovered, many For instance, we discovered: consumers are open to switching over to these neobanks on a permanent basis • What Big Four bank is the most if they can offer them more than the likes well-known - and who holds the keys to effective brand and of the Big Four. marketing, in-branch experience, online banking and customer service While increased competition might create • What bank has the best customer chaos for those who hold the reins, it’s also service (hint: it’s not one of the Big Four) the main driver of innovation. In the years • The bank with the best overall that lie ahead, banks that listen to the needs customer experience and service of their customers, and seek to innovate at • Who the most relevant bank is to modern consumers every touchpoint, will stand to gain the most. • Neobanks may be niche, but they’re gaining momentum, and fast... CEO and Co-Founder at Qudini Imogen Wethered When looking at today’s retail banking sector, it would be remiss not to acknowledge the increase in competition that’s hit the market over the last decade; Metrobank, the Spanish- owned Santander, and a flurry of neobanks. Yet, while this fresh competition was supposed to break the dominance of the Big Four, the Bank of England has introduced a number of regulations that are supposedly holding them back from reaching growth. qudini.com 2 About our survey: In August, 2019, we surveyed 2,001 consumers that were 16 years old or older from across 11 different regions throughout the United Kingdom about their relationships with retail banks. This included East of England, Greater London, East Midlands, West Midlands, North East, North West, Northern Ireland, Scotland, South East, South West, Wales and Yorkshire and the Humber. We classified Generation Z as being between 16 and 23 years old, Millennials as being between 24 and 37 years old, Generation X as being between 38 and 53 years old, Baby Boomers as being between 54 and 72 years old, and the Silent Generation as being 73 years old and older. Key findings: 1. The most well-known bank is Barclays, with 79% saying they’ve heard of them 2. 47% of Baby Boomers and 49% of the Silent Generation have heard of Monzo, compared to only 29% of Gen Zers and 36% of Millennials 3. Barclays was voted the strongest and most relevant bank 4. 64% said Halifax has a ‘Good Customer Experience’ 5. 8% of all survey respondents have a neobank account 6. 14% of all respondents are considering using Monzo or Revolut as their primary bank 7. One in five of all Millennials are considering using Monzo/Revolut as their primary bank 8. Just over a quarter of Monzo and Revolut current customers use them as their primary bank provider 9. 42% of Monzo and Revolut customers are strongly considering making them their primary bank 10. 10% of Gen Zers and 8% of Millennials don’t bank with anyone qudini.com 3 Qudini UK Retail Banking Survey The Big Four are known for dominating the lion's share... It seems the Big Four banks are equally known for dominating the lion’s share of the retail banking market, making it near impossible for any newcomers or smaller competitors to muscle their way in. Barclays had the highest number of customers in Brand and marketing our survey, with just under one fifth (19.1%) saying they have an account with the bank. Halifax, a banking The bank said to have the strongest division of Bank of Scotland, which in turn is owned brand and marketing presence was by Lloyds Banking Group, occupied 15.9%, followed Barclays, followed closely by Halifax and Lloyds. From a generational closely by Lloyds at 14.8%. Santander took a 14.8% standpoint, this sentiment was true stake, which was followed by NatWest (and RBS) for Millennials and Baby Boomers, at 13% and HSBC at 10.7% while Gen Zers and Gen Xers said Lloyds had the strongest brand and On a generational level, Barclays had the highest marketing. The Silent Generation percentage of customers across all generations besides cast their vote in NatWest and Gen Xers, who were equally as likely to be customers of HSBC’s direction. Halifax. In-branch experience Barclays also had the highest level of brand awareness, Barclays had the highest scores with 79% of respondents saying they’d heard of the bank for in-branch experience overall, before. Lloyds, NatWest and HSBC followed closely in followed by Lloyds and Halifax. suit, lagging only one to two percentage points behind. Barclays’ in-branch experience was the most favored by Gen Zers, Our study also revealed that older generations are Millennials and Baby Boomers, while Gen Xers said Lloyds and significantly more aware of banks than their younger the Silent Generation said HSBC. counterparts. Barclays was the most well-known with Gen Zers and Millennials, at 60% and 66% respectively. Online banking Generation X were just as likely to have heard of Barclays Barclays had the best online as they were Lloyds, at 82%. Barclays was also well- banking experience overall, followed known with Baby Boomers, at 92%, and the Silent by Halifax and Lloyds. This opinion Generation had the highest awareness levels overall, with was shared by all generations except 97% equally as aware of Lloyds, Halifax and Santander. the Silent Generation, who preferred NatWest instead. But it wasn’t just reach and awareness that saw Barclays dominate - the bank also received the highest percentage Customer service points for its brand and marketing, in-branch experience, Barclays had the highest general online banking and customer experience. customer service overall, followed by Halifax and Lloyds. This opinion was shared by Gen Zers, Millennials and Baby Boomers, while Gen Xers and the Silent Generation preferred Lloyds. qudini.com 4 Which of the following banks/financial services companies have you heard of? (Tick all that apply) (Overall %) 0% 25% 50% 75% Barclays (79%) Lloyds (77%) Halifax (77%) NatWest (77%) HSBC (77%) Santander (75%) TSB (72%) Cooperative (64%) Virgin Money (59%) MetroBank (50%) Monzo (40%) Standard (31%) Chartered Coutts (29%) Starling (28%) Atom Bank (26%) Silent generation (73+) Baby boomers (54-72) Revolut (18%) Generation X (38-53) Millennials (24-37) None of the above (4%) Generation Z (16-23) qudini.com 5 Barclays is the strongest and most relevant In today’s fast-paced and rapidly changing business environment, embracing digital innovation and changing consumer demands is imperative to remaining relevant with modern consumers. When asked which bank they think is the strongest and most relevant, Barclays was the most common answer, with 39% of all survey respondents stating that this was the case. This was followed by Lloyds and Halifax, which were both at 32%. This opinion was shared across all Generations except the Silent Generation, who cast their vote Santander’s way. When asked which bank was neither strong nor relevant, Cooperative was the most mentioned. This sentiment was shared by all generations, and increased significantly with age. Halifax come first on the customer experience front While there might be more communication channels than ever before, consumers still want a thorough yet speedy customer experience - whatever channel they choose to engage through. When asked which banking brand had a ‘good customer experience’, Halifax received the highest percentage points overall, at 64%. The Silent Generation were particularly big supporters of the bank, with 82% sharing this opinion - a stark contrast to Gen Z’s 49%. Millennials and Gen Zers were more likely to believe Barclays’ customer experience was the best, at 52% and 57% respectively. NatWest had made a particularly positive impression on Gen Xers, with 66% casting their vote in NatWest’s direction, while Baby Boomers were more likely to say Lloyds, at 72%. qudini.com 6 Barclays scores big for its in-branch experience Banks have made a big effort in recent years to modernize their in-store experience, incorporating everything from electronic kiosks and appointment scheduling software through to in-branch cafes and free wifi.