Introduction
Geographical, national and regional definitions
Conversion factors
Population
Exchange rates
BMRB Target Group Index sample sizes
Abbreviations
Executive Summary
Switching is limited among RoI and NI consumers - for now
Market is controlled by small number of players, North and South
Back to basics for the banks as service is the top factor in RoI and NI
Different account features and incentives appeal to specific consumer groups
Opportunities for new providers?
Permanent TSB customers least likely to move in RoI, while in NI it is Bank of Ireland customers
Market Background
The rules have been changed to make switching easier
The economy
Figure 1: Health of the economy, percentage growth, RoI and NI, 2002-06
Low interest rates promote higher levels of borrowing
Figure 2: Eurozone short-term interest rates, 1999-2004
Interest rates in NI pick up somewhat
Figure 3: Bank of England base rates, 1999-2005
Increasing choice of providers threatens the status quo
The savvy consumer
Internet has changed the nature of the game
Figure 4: Internet usage, RoI and NI, 2001 and 2005
Choice of providers has increased
Retention and Switching: the GB Perspective
Overdrafts and credit balance interest rates used as key incentives to switch…
…but some concentrate on a cash incentive
Providers aim to make the switching process easier
Targeting and advertising
Figure 5: Advertising expenditure on current accounts, by organisation, April 2003-March 2004 and April 2004-March 2005
Direct marketing and CRM becoming increasingly important
Customer retention and acquisition often go hand-in-hand
The GB consumer
Customer Retention and Switching on the Home Front
Permanent TSB aiming to challenge the dominance of the ‘Big Two’ in RoI
Other providers following Permanent TSB’s lead
Bank of Ireland responds with a focus on customer service
Competition is heating up amongst the ‘Big Four’ in NI
The Consumer
Penetration of current accounts
Figure 6: Penetration of current accounts, by gender, age, socio-economic status, marital status and presence of children, RoI and NI, June 2005
Higher employment drives account ownership
Figure 7: Penetration of current accounts, by working status and region, RoI and NI, June 2005
Breakdown of current account providers
‘Big Two’ account for around two thirds of primary current accounts in RoI…
Figure 8: Breakdown of main current account providers, RoI and NI, June 2005
…while the NI market is similarly dominated by the four indigenous banks who control three quarters of primary current accounts
RoI bank profiles
Figure 9: Bank customer profiles, by gender, age and socio-economic status, RoI, June 2005
AIB customer profile leans towards younger consumers while Ulster Bank has an older age profile
Ulster Bank has a higher share of the top earners
It’s a family affair for Bank of Ireland and Permanent TSB
Figure 10: Bank customer profiles, by marital status, presence of chldren, working status and region, RoI, June 2005
Work profile underlines potential for direct banking at AIB
Permanent TSB and Ulster Bank lack the national profile of the ‘Big Two’
NI bank profiles
First Trust and Northern Bank have a lower percentage of young consumers
Figure 11: Bank customer profiles, by gender, age and socio-economic status, NI, June 2005
Little difference in the socio-economic status of the NI customer profiles
With an older customer base, First Trust and Northern Bank are also less likely to have customers with dependent children
A younger customer base means that Bank of Ireland has a higher percentage of students
Figure 12: Bank customer profiles, by marital status, presence of chldren, working status and region, NI, June 2005
Two thirds of Halifax customers are based in Belfast
Switching behaviour
Switching behaviour limited among RoI and NI consumers…
Figure 13: Switching behaviour, RoI and NI, June 2005
…but there is potential for future switching behaviour
Inertia grows with age for RoI current account holders
Figure 14: Switching behaviour by all adults, age and socio-economic status, RoI, June 2005
Moves to automate benefit payments impacting switching behaviour of less affluent?
Low instance of switching among AB consumers, but they could be on the verge
Again, switching appears to be an age issue in RoI
Figure 15: Switching behaviour, by marital status, presence of children, working status and region, RoI, June 2005
Dubliners are the happiest bankers?
Differences in switching intentions among NI men and women
Figure 16: Switching behaviour, by gender, age and socio-economic status, NI, June 2005
Younger NI account holders show similarities to their RoI counterparts
Are C1 consumers in NI feeling left out?
Younger parents in RoI and NI more receptive to switching
Figure 17: Switching behaviour, by marital status, presence of children, working status and region, NI, June 2005
Current account features
Service is top factor in RoI and NI
Figure 18: Factors rated as important from a current account provider, RoI and NI, June 2005
In RoI, 35-44s appear most rate-driven/price conscious
Figure 19: Factors rated as important from a current account provider, by gender, age and socio-economic status, RoI, June 2005
Direct banking is popular among younger and more affluent…
…while the affluent place a high premium on service
Figure 20: Factors rated as important from a current account provider, by gender, age and socio-economic status, RoI, June 2005
Young RoI consumers need some advice
Figure 21: Factors rated as important from a current account provider, by marital status, presence of children, working status and region, RoI, June 2005
Interest rates more important to married consumers in RoI and those with children
Changing circumstances for widowed/separated/divorced to explain interest in discounts on other products?
Figure 22: Factors rated as important from a current account provider, by marital status, presence of children, working status and region, RoI, June 2005
Providers need to work harder to keep Dubliners content
Younger NI consumers most interested in interest-free overdrafts, in contrast to their Southern counterparts
Figure 23: Factors rated as important from a current account provider, by gender, age and socio-economic status, NI, June 2005
Responses in NI show commonalities with RoI consumers
Figure 24: Factors rated as important from a current account provider, by gender, age and socio-economic status, NI, June 2005
Direct banking favoured by NI students, while service is less of an issue
Figure 25: Factors rated as important from a current account provider, by marital status, presence of children, working status and region, NI, June 2005
Consumers in Derry and Antrim appear to take a keen interest in current accounts
Figure 26: Factors rated as important from a current account provider, by marital status, presence of children, working status and region, NI, June 2005
Switching incentives and motivators
Poor service a key trigger for switching for both RoI and NI consumers
NI consumers show signs of more loyalty
Figure 27: Switching motivators and incentives, RoI and NI, June 2005
Rates and fees are key switching incentives for some
Poor service less likely to be tolerated by the relatively young and the more affluent in RoI
Figure 28: Switching incentives and motivators, by gender, age and socio-economic status, RoI, June 2005
25-34-year-olds in RoI price savvy with regard to rates and fees
Figure 29: Switching incentives and motivators, by gender, age and socio-economic status, RoI, June 2005
Cash works best for young, single, RoI students
Figure 30: Switching incentives and motivators, by marital status, presence of children, working status and region, RoI, June 2005
Consumers in the rest of Leinster keen to get the best rates
Figure 31: Switching incentives and motivators, by marital status, presence of children, working status and region, RoI, June 2005
Further evidence of financial apathy and inertia among consumers in Connacht/Ulster
Demand for competitive rates and acceptance of direct banking among young and affluent in NI provides opportunities
Figure 32: Switching incentives and motivators, by gender, age and socio-economic status, NI, June 2005
Should providers target switchers among older consumers and less affluent?
Figure 33: Switching incentives and motivators, by gender, age and socio-economic status, NI, June 2005
Overdrafts an area of interest for 35-44-year-olds in NI
Figure 34: Switching incentives and motivators, by marital status, presence of children, working status and region, NI, June 2005
A quarter of NI students would change provider for an account that offers added benefits and discounted products
Figure 35: Switching incentives and motivators, by marital status, presence of children, working status and region, NI, June 2005
Consumers in Antrim show a high loyalty to their provider
Analysis of the consumer switching groups
Figure 36: Profile of Recent Switchers, Stayers and Possible Movers, by gender, age and socio-economic status, RoI and NI, June 2005
Figure 37: Profile of Recent Switchers, Stayers and Possible Movers, by marital status, presence of children, working status and region, RoI, June 2005
Service is still the key factor for all consumer groups in RoI
Direct banking channels to fulfil key role in service delivery
Figure 38: Factors rated as important from a current account provider, by consumer switching group, RoI, June 2005
Possible Movers in RoI less interested in reputation and branch location, opening the door for new players
Stayers in RoI intend to stay loyal - or do they?
Recent Switchers in RoI more outspoken about poor service
Figure 39: Switching motivators and incentives, by consumer switching group, RoI, June 2005
Possible Movers in RoI open to offers
Interest-free overdraft facility and branch location highly rated by just under half of Recent Switchers in NI
Figure 40: Factors rated as important from a current account provider, by consumer switching group, NI, June 2005
Stayers in NI are most interested in service
As in RoI, Possible Movers in NI place little stock in reputation and branch location…
…but do appear to be price/rate conscious
Figure 41: Switching motivators and incentives, by consumer switching group, NI, June 2005
Recent Switchers in NI are least likely to rate service as important but most likely to act on poor service
Analysis of bank customer bases
Recent Switchers in RoI account for a higher percentage of AIB and Permanent TSB customers
Figure 42: Switching behaviour, by current account provider, RoI, June 2005
RoI customers of AIB and Bank of Ireland have itchy feet but Ulster Bank customers are keen to stay where they are
Permanent TSB customers demand more from their current account provider
Figure 43: Factors rated as important from a current account provider, by current account provider, RoI, June 2005
Figure 44: Factors rated as important from a current account provider, by current account provider, RoI, June 2005
Ulster Bank customers in RoI are particularly keen on better interest rates on credit balances
Figure 45: Switching motivators and incentives, by current account provider, RoI, June 2005
A fifth of Permanent TSB customers intend to stay loyal
Figure 46: Switching motivators and incentives, by current account provider, RoI, June 2005
In NI, Halifax customer base is more mobile
Figure 47: Switching behaviour, by current account provider, NI, June 2005
Lifetime customers of Northern and Ulster Bank are most likely to stay - and most likely to go
Halifax customers take more interest in their current accounts
Figure 48: Factors rated as important from a current account provider, by current account provider, NI, June 2005
Figure 49: Factors rated as important from a current account provider, by current account provider, NI, June 2005
Halifax customers least likely to tolerate poor service
Figure 50: Switching motivators and incentives, by current account provider, RoI, June 2005
Bank of Ireland customers most likely to stay put in NI
Figure 51: Switching motivators and incentives, by current account provider, RoI, June 2005
Conclusions and Recommendations
Poor service is key motivator to switch - switching still within the locus of control of providers
Rewards for switching, but what about rewards for loyalty?
Cross-selling or packaged accounts useful tools for customer retention
Customer profiles may influence retention/acquisition focus
More customers up for grabs in RoI than in NI and GB
Opportunities for new current account providers?
Age and affluence key to switching intentions
The Future
Figure 52: Forecast number of current accounts, RoI and NI, 2004-08
Figure 53: Trends in RoI population, by age band, 1999-2009
Figure 54: Trends in NI population, by age band, 1999-2009 |
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