Very low returns on balances and wages that are under pressure from inflation have combined to make it difficult for UK consumers to grow their savings in recent years. However, there are early indications that the factors that are adversely affecting savings will ease over the forecast period of 2013-17.
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Understand the developments shaping the UK retail savings market.
Discover how market forces will influence customers' ability and willingness to save.
Test internal assumptions driving forecasts through independent third-party analysis.
What are the factors that will affect the savings market in 2014 and beyond?
How will consumers' desire to increase their savings interact with a challenging economic climate?
How will the latest consumer behavioral trends affect the products demanded in the retail savings market?
How can financial services providers acquire new deposit customers?
What are some of the best-practice examples of product design in the savings market?
Interest rates available on savings accounts are unlikely to change substantially throughout the majority of 2014. With the end of the FLS in January 2015 in sight, providers will begin to push up the returns on their savings products as competition to acquire deposits increases to replace the cheap line of credit provided by the state.
Consumers are saving a greater proportion of their disposable incomes than they did pre-2008. They are reacting to the prevailing conditions and will begin to save less and spend more as the economy improves and confidence returns. However, given the severity of the economic downturn,we expect the savings ratio to be between 5% and 7% until 2015.
Providers should simplify and be more transparent with their savings proposition. Verdict Financial research has found that simplicity and transparency are high on consumers' priority list in financial services. Transparency is vital to ensure that consumers feel fully informed, while offerings that are difficult to comprehend will put consumers off.