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1 Timetric Publisher Sample Phone: (US) or or (Int'l) Hours: Monday - Thursday: 5:30am - 6:30pm EST Fridays: 5:30am - 5:30pm EST customerservice@marketresearch.com MarketResearch.com

2 Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Product Code: VR1038MR Published Date: July

3 TABLE OF CONTENTS TABLE OF CONTENTS 1 Executive Summary Global Snapshot Current Account Market Dynamics Assessment of Market Trends Key Drivers Challenges The Americas Emerging Trends Product Comparison Product comparison the US Production comparison Canada Product comparison Brazil Strategies Europe Emerging Trends Product Comparison Product comparison the UK Product comparison Germany Strategies Asia-Pacific Emerging Trends Product Comparison Product comparison Australia Product comparison India Strategies The Middle East and Africa Emerging Trends Product Comparison Product comparison UAE Product comparison South Africa Strategies Case Study First Direct Upfront Incentives Encourage Customers to Switch to its Current Accounts Bank of America Keep the Change Initiative to Acquire Customers T-Mobile Mobile-Based Checking Accounts in the US Union Bank Empowering Customers to Create their own Current Accounts HDFC Bank Implementation of Effective Customer Segmentation and Distribution Strategies Absa Bank Introduction of Packaged Current Accounts Appendix Methodology Contact Timetric About Timetric Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 2

4 TABLE OF CONTENTS 8.4 Timetric s Services Disclaimer Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 3

5 LIST OF FIGURES LIST OF FIGURES Figure 1: Percentage of Respondents Forming New Primary Relationships With Banks, Figure 2: The US Free Checking Accounts (%), Figure 3: The Americas Open-Loop Prepaid Card Growth Rates, Figure 4: Europe Users of Mobile Banking, July Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 4

6 LIST OF TABLES LIST OF TABLES Table 1: Global Current Market Snapshot Emerging Trends and Strategies Adopted... 9 Table 2: Economic Conditions in Key Markets, 2009 and Table 3: Debit Cards Volumes in Key Countries (Million), Table 4: New Businesses Registered in Key Countries, Table 5: Unbanked Populations in Key Developing Economies, Table 6: Open-Loop Prepaid Cards Segment Value (US$ Billion), Table 7: Canada Current Accounts With Low Charges Table 8: The US and Canada Online and Mobile Penetration, Table 9: The US Checking Account Types, March Table 10: The US Basic Checking Accounts, March Table 11: The US Premier Checking Accounts, March Table 12: The US Student Checking Accounts, March Table 13: Canada Checking Account Types, March Table 14: Canada Everyday Banking and Checking Accounts, March Table 15: Canada Unlimited Banking Current Accounts, March Table 16: Brazil Current Account Types, March Table 17: Brazil University Current Accounts, March Table 18: Brazil Business Current Accounts, March Table 19: The UK Current Account Types, Table 20: The UK Basic Current Accounts, March Table 21: The UK Graduate Current Accounts, March Table 22: Germany Current Account Types, Table 23: Germany Basic Current Accounts, March Table 24: Germany Premium Current Accounts, March Table 25: The UK With Benefits Current Accounts Table 26: Asia-Pacific Current Accounts With Low Banking Charges Table 27: Australia Transaction Account Types, March Table 28: Australia Everyday Banking, March Table 29: Australia Everyday Business Accounts, March Table 30: India Current Account Types, March Table 31: India Regular Current Accounts, March Table 32: India Agri-Current Accounts, March Table 33: Asia-Pacific Current Accounts for Specific Customer Segments Table 34: The Middle East and Africa Economic Indicators, Table 35: The UAE Current Account Types, March Table 36: The UAE Current Accounts, March Table 37: The UAE Business Current Accounts, March Table 38: South Africa Current Account Types, March Table 39: South Africa Basic Current Accounts, March Table 40: South Africa Small Business Current Accounts, March Table 41: The Middle East and Africa Specific Current Accounts for High-Income Customers Table 42: The Middle East and Africa Specific Current Accounts for Students and Young People Table 43: HDFC Bank Current Accounts for Specific Customer Segments Table 44: Absa Bank Value Bundles and Benefits Offered, Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 5

7 EXECUTIVE SUMMARY 1 Executive Summary Due to changes in regulatory frameworks and competitive dynamics, retail banking and its current account business have changed gradually during the last decade. Despite initiatives taken by banks to retain customers, the current accounts market in developed economies recorded growing instances of account switching. Improved customer service, attractive reward programs and financial incentives offered by banks are the main factors encouraging customers to switch their primary banks. In emerging economies, pricing has been the primary reason for the low volume of banking customers. As pricing is affected by cost pressures and changing customer expectations, banks are adopting a number of product and pricing strategies in the form of loyalty programs, incentives, packaged current accounts and customized product offerings to entice customers. Furthermore, with increasing technological advancements, banks are encouraging customers to use low-cost banking channels to conduct banking transactions, resulting in reduced operating costs and improved profitability. Current account switching is rising in the US and the UK With rising competition and regulatory pressure, banks in the US are increasing charges on current accounts in order to maintain profitability. Consequently, the percentage of free checking or current accounts dropped from 76% in 2009 to 38% in This has led customers to switch to banks offering no, or low, monthly fees on basic checking accounts. The UK current account market also recorded a high number of customers switching accounts. Robust customer service mechanisms, branch proximity, flexible banking hours and attractive reward programs are factors enticing customers to switch banks. The switching of accounts was further intensified with the introduction of the Current Account Switch Service by the Payments Council on September 16, 2013, which allows fast and seamless switching to new banks. For the six-month period between October 1, 2013 and March 31, 2014, 609,300 UK current accounts were switched, a 14.0% increase compared to the equivalent period in 2012 when there were 532,500 switches. Due to firm s capitalizing on this trend, the current account market has recorded a number of new entrants. T- Mobile, a provider of wireless voice, messaging, and data services launched a mobile-based checking account in the US in January 2014, with low banking charges. Similarly, UK-based retailer Tesco is also launching current account products in the UK through its banking arm, Tesco Bank. Banks in emerging economies are offering low-cost accounts to attract the unbanked Governments and financial institutions in emerging economies such as Brazil and India are striving to bring the unbanked population into the formal banking system. They have launched programs to increase financial literacy and awareness of the benefits of banking products. Banks in these countries offer basic and simplified current accounts with very low banking charges to make them affordable for rural and low-income customers. The Central Bank of Brazil has introduced simplified savings and current accounts with no opening or annual maintenance fees; a policy that has increased customer volumes. Brazil s unbanked population declined from 71% in 2005 to 64% in 2009, and 44% by the end of Similarly, banks in India are increasingly offering current accounts with low transaction fees primarily designed for entrepreneurs, start-ups, and small and medium-sized enterprises (SMEs). These products carry relatively low banking charges and minimum account balance requirement as compared to conventional current account products. The introduction of low-cost products with value-added services will help banks to penetrate these customer segments. Packaged accounts enable banks to increase current account sales and offer cross-sale opportunities Traditionally, banks have offered current accounts with basic features such as a checkbook, a debit card and standing order facilities. However, current accounts are now evolving into a multi-purpose package offering a number of other financial benefits to customers. In the UK, 20% of the country s 46 million current accounts are packaged accounts, which bundle other products such as credit cards, insurance, preferential deals on mortgages, concierge services, travel discounts and card security. As the combined cost of obtaining these services individually is often higher, many customers opt for bundles, enabling banks to cross-sell products and increase transaction volumes. Barclays offers a range of packaged Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 6

8 EXECUTIVE SUMMARY current accounts, under which customers are offered bundled benefits and services such as concierge services, legal and tax assistance, family travel insurance, airport lounge access, mobile phone insurance and card security. Banks such as Canadian Imperial Bank of Commerce (CIBC), Wells Fargo and Absa Bank also offer packaged current accounts bundled with other banking products and services. Loyalty programs to increase revenues through interchange fees Loyalty programs have emerged as a key marketing tool in the global retail banking industry. These programs have become a critical operational element in driving low-cost customer acquisition and maximizing revenue generation through existing clients. With the emergence of payment cards, banks have been offering rewards to encourage card use. Rising competition and consumer demand for current accounts at competitive rates have been reducing banks profitability. Banks are, therefore using reward programs to encourage debit card transactions and increase revenues in the form of interchange fees. Use of low-cost distribution models to improve operational efficiency Retail banking customers are becoming increasingly value-driven following the global economic crisis. Banks are reassessing costs and pricing across different banking models to maintain profitability. Across the world, full-service branch banking remains the most popular model to market products and services. However, as real estate costs rise and consumer preferences change, banks are considering other low-cost channels such as online, mobile and self-service branch banking, enabling customers to conduct almost all banking transactions autonomously. Banks have been adopting these models to offer improved banking experiences while reducing operating expenses. Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 7

9 APPENDIX 2 Appendix 2.1 Methodology Timetric s dedicated research and analysis teams consist of experienced professionals with industry backgrounds in marketing, market research, consulting and advanced statistical expertise. Timetric adheres to the Codes of Practice of the Market Research Society ( and the Society of Competitive Intelligence Professionals ( All Timetric databases are continuously updated and revised. 2.2 Contact Timetric If you have any queries about this report, or would like any further information, please contact info@timetric.com. 2.3 About Timetric Timetric is a leading provider of online data, analysis and advisory services on key financial and industry sectors. It provides integrated information services covering risk assessments, forecasts, industry analysis, market intelligence, news and comment. Timetric helps over 1,500 financial services institutions and their partner companies around the world benefit from better, timelier decisions. Timetric provides: High-quality data including proprietary, specialized industry data, survey-based research, social media monitoring, macroeconomic data and forecasts Expert analysis from experienced economists and analysts, who use robust proprietary models, indices and forecasts Powerful proprietary visualization and workflow technologies developed over years of extensive investment Timetric has office locations in London, New York, San Francisco, Hyderabad, Seoul, Singapore and Sydney. It employs 500 people, including 150 analysts and economists, and 200 professional researchers. 2.4 Timetric s Services Intelligence Centers Timetric s industry intelligence centers are premium web-based services that provide access to interactive tools, comprehensive research and expert analysis in key sectors. They provide invaluable decision support presented in an easily digestible format and grounded in deep research. Timetric offers Intelligence Centers covering the following industries: Banking Insurance Wealth Construction Travel and Tourism Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 8

10 APPENDIX Briefing Services Timetric offers a range of briefing services, which offer cutting-edge thought leadership and expert commentary on and for the financial services industries. Driven by influential and respected editorial teams with years of experience in their respective fields, these services deliver need-to-know insight and analysis to decision makers across the financial services value chain. Timetric offers briefing services covering the following financial sectors: Accountancy Asset Finance Banking Cards and Payments Insurance Consultancy Timetric specializes in the development and delivery of innovative research solutions designed to provide competitive advantage and profitability to clients. Dedicated industry analysts and economists provide expert advice and actionable recommendations underpinned by Timetric s market and country knowledge, experience and proprietary databases, panels and research infrastructure. For projects requiring quantitative data, Timetric undertakes special research projects using its in-house panels and survey technology. These provide ready access to an extensive source of specialist business executives and consumers. Core capabilities include: Economic Research and Consulting Highly experienced economists provide a number of bespoke research services covering subjects ranging from macroeconomic forecasting to sector outlooks, business presentations and workshops. Industry Analysis and Consulting Information analysis, independent expert opinion and advice, facilitated decision or strategic support, are provided by Timetric s extensive body of proprietary data and analysis models. It provides expertise-based consulting to deliver solutions that best suit its clients requirements. Quantitative Research Timetric connects with thousands of potential customers for various markets every day. Using sophisticated, interactive and highly engaging graphical surveys, research speed is increased and costs reduced, while ensuring that respondents deliver the insight needed. Qualitative Research Timetric s Qualitative Research service helps customers understand the emotional and cultural behaviors of a target audience. Timetric provides unique access through market-leading publications and information services to decision makers specifically brought together to discuss topics that are important to the client. Technology Solutions Timetric has built a unique technological platform to collect and visualize data, and employs some of the world s leading experts on data collection and visualization. Through technology and software consulting services, Timetric can provide clients with the means to gather and visualize the data the client has, or wants to collect. Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 9

11 APPENDIX 2.5 Disclaimer All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Timetric. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that Timetric delivers will be based on information gathered in good faith from both primary and secondary sources, the accuracy of which Timetric is not always in a position to guarantee. Timetric will accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect. Insight Report: Current Accounts Emerging Trends, Product Insights and Case Studies Page 10