Twice as Rich in 15 years time
What will customers in 2020 demand from their banks?
- Three quarters will expect better value products
- Up to 11 million customers could move away from the Big Four
With an average disposable income of £50,000 - double the amount of money going through our bank accounts - and savings averaging £22,000, a new report from Alliance & Leicester reveals that by 2020 we will not only be better off, but will also demand significantly better value from our banks. The 'Banking Revolution' report by Alliance & Leicester shows that apathy about our finances is set to become a thing of the past as growing wealth, a better understanding of financial affairs and a 'bank in our home' approach to finances dramatically shifts our banking habits. Three quarters of banking customers will expect well priced products offering good interest rates in the future. In the current market, this could lead to an exodus of up to 11 million from the Big Four banks that currently dominate the market. Commenting on the findings Chris Rhodes, Managing Director of the Retail Bank at Alliance & Leicester said: "For too long the Big Four banks have benefited from general consumer apathy around banking products and a dominance through large branch networks. However, this is already beginning to change and our report shows that this will accelerate in the future. "Higher incomes will lead to larger balances in both bank accounts and savings accounts and as such we will be less prepared to put up with poor deals. Coupled with near universal internet access, we will be able to search out better offers much more easily. "Against this backdrop, the cost of supporting a large branch network will become a hindrance rather than an advantage as it makes it more difficult for larger banks to offer better value products. The result could be a significant exodus from uncompetitive providers changing the face of the banking market as we know it today." The research reveals five key drivers behind the change in our banking habits: 1. A doubling of incomes and savings
Rising affluence will mean that the average wage in 2020 is forecast to be double that of today at almost £50,000 - equating to around £38,000 in today's terms. As such, the amount of money going into our bank accounts will also double and savings will grow from £11,000 to £22,000. 2. 'A bank in our home'
With 42 million internet banking customers by 2020 - the 'bank in our home' will be the norm for 8 in 10 of us. The internet bank of 2020 will be as easy to access as any TV channel as the demand for convenience and a culture of immediacy grows, with internet in the home forecast to be near universal in 15 years. This will create unrivalled ease of access to financial affairs and as a result a greater interest in and awareness of the value (or not) banks are offering their customers. 3. A rise in levels of education
Future generations will be better equipped to understand the basics of finance - most obviously interest rates - than ever before. The population will be better educated and the report forecasts that the number of people with no educational qualifications is set to fall further from 24% now to just 17% in 15 years' time. As such, the average bank customer will feel more confident to challenge and demand better value products from their bank. 4. Demand for cheaper products
In 2020 we will be more price conscious when it comes to the products offered by our banks. Over three quarters (78%) of banking customers will expect better value products from their bank, as today's 25 to 44 year olds turn into a more demanding older generation. 5. A culture of change - 40% of bank customers prepared to switch
Until now, the trend to change jobs more frequently, move house and into and out of relationships has not affected the majority's appetite for change in our banking relationships. Therefore, although we think our banks should be offering us better deals we do little about it. However, the customer of tomorrow will be as willing to change their bank as they are to change other things in their lives and it will be the search for value and cheaper products and the ease of doing so which causes this trend to change. Currently fewer than 2% of customers switch current accounts a year - with 7% saying they are planning to do so in the next 12 months.** By 2020 more than five times as many customers will be willing to switch their current accounts - with 4 in 10 people being prepared to switch. Alliance & Leicester had 1,900 best buys last year and has developed a strategy aimed at continuing to offer customers good value products in the future. Financial News Feeds provided by OneCompare.com
Date published: 11/15/2004 8:53:15 AM
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