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.
Out of all the banks mentioned in our survey, Barclays seems to have nailed down the experience the best. Of all respondents who had visited a bank branch in the last two years, Barclays received the highest percentage score for its branch experience and service, with 29% saying it was excellent or very good.
This opinion was shared across all generations, with 40% of Gen Zers, 38% of Millennials, 28% of Gen Xers, 22% of Baby Boomers and 32% of the Silent Generation saying Barclays’ in-branch experience was excellent or very good.
Santander, on the other hand, was voted as having the poorest experience, with 6% saying its in-branch experience was “extremely poor”.
Strongest in branch experience
Overall 16% 13% 13%
Gen Zers 16% 15% 13%
Millennials 20% 13% 12%
Gen Xers 18% 16% 16%
Baby Boomers 14% 14% 13%
Silent Gen 17% 14% 11%
qudini.com 7 Who do you bank with?
(Overall %) 0% 5% 10% 15% 20% 25%
Barclays (19%)
Halifax (16%)
Other (16%)
Lloyds (15%)
Santander (15%)
NatWest (13%)
HSBC (11%)
TSB (6%)
I do not bank (4%) with anyone
Monzo (4%)
Cooperative (3%)
MetroBank (2%)
Virgin Money (2%)
Starling (2%)
Revolut (2%)
Silent generation (73+) Baby boomers (54-72) Generation X (38-53) Millennials (24-37) Generation Z (16-23)
qudini.com 8 Neobanks are still niche, but they’re gaining momentum
Fresh newcomers like Monzo and Revolut have caused quite a stir in the banking community as of late. By replacing physical branches with a strong online or mobile app presence, neobanks have been eagerly adopted throughout the UK.
Out of all our survey respondents, 4.2% Surprisingly, older generations were more had an account with Monzo, 1.8% had an likely to have heard of challenger banks than account with Starling, 1.5% had an account their younger counterparts. For instance, with Revolut and 0.5% had an account with 47% of Baby Boomers and 49% of the Silent Atom Bank - accumulating to a grand total of Generation have heard of Monzo, compared to 8.1% of all survey respondents. Monzo had only 29% of Gen Zers and 36% of Millennials. a particularly high adoption rate amongst This trend carried across Starling, Atom Bank younger audiences, with 8% of Gen Zers and and Revolut. 6% of Millennials saying they have an account.
Although not quite on the same scale as the Big Four, awareness levels for neobanks were relatively high. Out of all the challenger banks, Monzo had the highest brand awareness, at 40% overall, followed by Starling at 28%, Atom Bank at 26% and Revolut at 18%.
Neobank brand awareness levels 40%
28%
26%
18%
qudini.com 9 Almost half of Monzo and Revolut customers consider switching permanently
The increased popularity of neobanks like Monzo and Revolut arguably comes down to their flexibility. They are easy to obtain, even easier to use and offer a number of innovative digital features that allow users to keep track of their day-to-day spending.
And while these neobanks now have huge customer bases, the majority still use their neobank accounts as add-ons to their existing bank accounts with more traditional providers. Of the 6% of respondents who are customers of Monzo and/or Revolut, only 26% said they use it as their primary bank.
Younger generations are considerably more likely to use these banks as their primary providers, with 31% of Gen Zers and 36% of Millennials saying this was the case. This percentage drops significantly for older generations, with only 14% of Gen Xers and 9% of Baby Boomers saying they currently do.
Just under a third (32%) were adamant that they would always use a traditional bank as their primary provider, however, this could soon change as neobanks continue to earn the trust of their existing customers. A significant 42% of Monzo/Revolut customers said they are strongly considering using these banks as their primary providers. This was particularly true for respondents from Greater London, Norwich, Newcastle, Leeds and Edinburgh.
Gen Xers and Baby Boomers are more likely to say they will always use a traditional bank in addition, at 46% and 45% respectively. This was also the case for female consumers with a Monzo or Revolut account, with 40% saying they would always use a traditional bank in addition, compared to only 23% of males.
qudini.com 10 Is awareness the only thing that’s holding back the neobanks?
A lack of awareness was the number one reason why our respondents wouldn’t use a neobank as their sole banking provider. When we asked all of our respondents - those with and without a neobank account - if they would ever consider switching their account to Monzo or Revolut, 32% said they’ve never heard of them.
The second most common response However, out of all the respondents, 14% said holding respondents back from switching they’re considering using Monzo or Revolut to a neobank permanently was their lack as their sole provider - and this figure jumped of branches, with 22% saying that it was up to 20% when looking at Millennials alone. off-putting. This was particularly true with Only 8% of Baby Boomers and 1% of the Silent respondents from the Silent Generation, Generation said the same. with 30% saying this was of concern, while Gen Xers were the least likely to see this as an issue, with only 18% agreeing with the statement.
Others expressed concerns about the stability of Monzo or Revolut, with 17% saying they don’t think they’re stable enough to be sole banking providers.
Why don’t you use one of the neobanks like Monzo or Revolut as your primary bank provider?
Never heard of them 32%
I wouldn’t want to use a bank without branches 22%
I don’t think they are stable enough 17%
I am considering it 14%
I don’t think they can support enough of my banking needs 11%
I don’t think they offer the customer service I would want 10%
I don’t know 10%
qudini.com 11 Conclusion: Banks need to blend efficiency with a human touch
While the Big Four banks still dominate the UK market, our survey revealed that Barclays is the most well-known and has the best brand and marketing, in-branch experience, online banking and customer experience. However, out of all respondents who had visited a bank branch in the last two years, Halifax was voted as having the best customer service.
From a customer experience standpoint, the bank considered to have the best overall customer experience and service was Barclays - it was also voted the most relevant.
Despite their comparatively low adoption levels, neobanks are quickly gaining momentum in the retail banking sector. Compared to older generations, younger consumers are considerably less aware of neobanks, but as these awareness levels rise over the next few years, and as neobanks continue to infiltrate and appeal to younger consumers, adoption rates will most likely increase.
We will also most likely see the number of consumers using neobanks as their primary provider increase Time -e as a relatively high number of Monzo and Revolut ffi ic customers (and non-customers) are already i e considering making the switch. n
t Overall, these survey results indicate that modern consumers are big on customer service and experience, both Hum an in its traditional and digital to u forms. The banks that can c
h provide a time-efficient service with a human touch across all channels will stand to gain the upperhand.
qudini.com 12 Qudini Retail Choreography Win the banking revolution
We help retail banks increase profitability and ensure lasting brand relevance through superior customer experiences, advanced branch operations and game-changing business intelligence.
Qudini’s pioneering solutions include:
Appointment Scheduling
Wait Line Management
Event Bookings
Staff Task Management
Branch Floor Management
Business Intelligence
How Qudini benefits retail banks: More footfall: Doubling appointment booking traffic for video bankers and community personal bankers Greater productivity: 50% reduction of admin time in managing appointments Increased retention: 20% reduction of walkouts in- branch Better resource allocation: due to insights on what customers need and when Digital education: 16% increase in in-branch apps downloaded. Let’s talk
Qudini works with the world’s leading retail banks [email protected] and retailers, including NatWest, Royal Bank of Scotland, Standard Chartered, Samsung, O2, IQOS, Read use cases, case studies and ROI at: Tui, L’Occitane and Brown Thomas qudini.com/industries/retail-banking