A report from Assurant Solutions and YouGov, PBAs and Young Adults 2015, asked over 500 UK consumers on packaged and current accounts, as well as their relevance and usefulness in the market today. Despite more options than ever, 69% of respondents are not considering switching accounts. Patrick Brusnahan reports
The fourth of these reports conducted by YouGov, the survey represented 500 UK adults (aged over 18) and two boost surveys, one of 18-24-year-olds holding a packaged bank account, and one of 25-34-year-olds holding a packaged bank account. Overall, this led to 263 packaged bank account owners aged 18-34 and 366 current account holders aged 18-34 who did not have a packaged bank account.
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Packaged vs. Current
As to be expected, the majority of bank accounts were held by the bigger banks in the UK, with NatWest taking the largest share of current accounts at 19% and Santander holding the largest share of packaged accounts at 16%; not a surprise considering the success of its 123 Account.
There was a large level of satisfaction with bank accounts recorded. 84% of packaged account holders were satisfied while 82% of current account holders were also satisfied. While these are very close levels, it changes when looking at the top two levels of satisfaction (Levels 6 and 7, out of 7) in the survey. In these tiers, 64% of packaged account holders were satisfied compared to 55% of current account holders.
This level of satisfaction might have led to 69% of respondents declaring that they had not considered switching accounts.
The report stated: "While ownership of a PBA does not appear to make a customer any more or less likely to switch, those who do own such an account are more likely to be highly satisfied with their provider."
Giving the young what they need
When it came to which products 18-34-year-olds had as part of their packaged accounts, there were three products which outweighed all others; travel insurance, mobile phone insurance and car breakdown cover. The same three products came top when current account holders were asked which products they have owned, but at a lesser scale. This does suggest that there are selling opportunities if a packaged can offer these products at a lower price than purchasing them separately.
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By GlobalDataOverall, mobile phone insurance was considered most likely to be relevant, but packaged bank account holders are significantly more likely to say that a product is relevant than current account holders without packaged bank accounts.
It was also considered most valuable as 43% of all packaged bank account holders called it very valuable with 65% of respondents believing it to be valuable to some degree. The reaction was not as high for travel insurance or car breakdown cover, with 64% and 60% of packaged account holders regarding them valuable.
In terms of engaging with banks, with all reasons for contact, online was the preferred option. This included opening an account, upgrading an account, making a query about account benefits, managing account benefits and utilising account benefits. The only reason where there was some competition was in opening an account where online was preferred by 46% of respondents, but face-to-face received 42% preference.
A fairly surprising result was the lack of preference for mobile apps as every reason received a less than 5% approval rating. Few consumers actually preferred to utilise apps for banking engagement, despite their surge in popularity everywhere else.
Potential threats
While banks received the most support for providing packaged bank accounts, there is a lot of uncertainty. 41% of packaged bank account holders and 48% of current account holders didn’t know. With regards to current account holders, this was nearly double the amount of respondents that felt a bank would be best placed to offer those accounts. However, over four in ten packaged bank account owners don’t feel they could get better value elsewhere.
On the other hand, there was more certainty regarding customer service and bank accounts.
The report stated: "Over half of PBA (packaged bank account) owners select banks for best customer service, falling to 35% of current account owners. These percentages are reversed for those stating they don’t know. The good news for banks here is that potential competitors are not ranked highly; the bad news is only one-third of current account customers (who, after all, also have a relationship with banks) choose them."
Banks are definitely considered more trustworthy than their competitors, despite the constant stream of negative publicity towards them since the global financial crisis. However, once again, a large chunk of respondents didn’t know who was more trustworthy between banks, mobile phone providers and insurance companies.
On who is best at dealing with claims regarding a packaged bank account, insurance companies actually tied with banks. The runaway winner though was ‘Don’t Know’ with 39% and 49% of packaged bank account owners and current account owners respectively.
The report concluded: "Banks appear to be in a strong position, with existing PBA owners in particular supportive of their providers. Perhaps most important are the results regarding claims – if claims handling ability is equally likely to be seen as good when comparing insurance companies and banks, but payouts are more likely to be thought of as coming from banks, then the latter are likely to be seen as having a more attractive PBA (or equivalent) proposition."
