Current Accounts - Ireland - February 2008

Table of Contents

Issues in the Market

• Key themes of the report
• Definition
• Abbreviations

Market In Brief

• Healthy growth in current accounts in both RoI and NI
• RoI favours Big Two while NI consumers still keen on the Big Four
• RoI consumers still leaving a paper trail, unlike NI consumers
• RoI consumers still leaving a paper trail, unlike NI consumers
• Multiple account ownership on the rise and still more popular in NI
• Changing set of criteria driving account switching - providers take note

Internal Market Environment

• Key points
• Developments on the European scene
• Brussels legislators threaten to get tough
• Pan-European consensus converging
• SEPA compliance a major driving force
• Low level of card fees paid in Ireland directly linked to SEPA project
• EU likely to put pressure on Irish Government
• Irish bankers lobbying for card duty to be abolished - out of step with Europe
• UK market could get messy
• Unfair charges being investigated
• Mainland UK consumers next in line
• Competition Commission makes new demands of the banks
• October 2008 deadline for NI banks
• Overdraft fees and bank charges being contested in record numbers
• No decision until 2008
• UK account providers forced to bite back
• Irish current account market makes for interesting analysis
• Chip and Pin now operational in both markets
• More RoI people switching accounts
• RoI online banking uptake unremarkable but steadily increasing
• Financial attitudes
  • Figure 1: Attitudes towards personal finance, December 2007
• NI consumers appear more short-termist
• RoI consumers keen to stay in financial control

Broader Market Environment

• Key points
• The economy
• Rising interest rates
  • Figure 2: UK and eurozone interest rates, 2002-07
• Mortgage repayments to increase
• Under-40s with a credit card habit likely the hardest-hit by rate rise
• Strong GDP growth both North and South
  • Figure 3: The economic outlook for RoI and NI, 2006-08
• Consumer spending still a major engine for growth in RoI
• NI consumers happy to keep spending but have their concerns
• Inflationary pressure in the UK affecting NI consumers
• Rising incomes good news for RoI financial institutions
• Disposable incomes take a battering in NI
• Declining unemployment levels in both NI and RoI
• Consumer confidence a key indicator for the economy
• RoI consumer confidence hits four-year low
• Population statistics
• Changing demographics
  • Figure 4: Population change, by age group, NI, 2000-20
  • Figure 5: Population change, by age group, RoI, 2000-20
• Long-term responsibilities start later
  • Figure 6: Average age at marriage, by gender, NI and RoI, 2000-05
  • Figure 7: Average age of women at birth of first child, NI and RoI, 1991-2005
• Time-poor individuals require online banking
• Changing norms in Irish and UK society
• Promotion of a cashless society
• EU10 nationals aged 25-44 the typical immigrant profile for RoI
• Disparate broadband penetration between both states

Market Value and Forecast

• Key points
• RoI growth pushes ahead
  • Figure 8: Number of current accounts in issue, RoI and NI, 2001-12
• Value held in RoI is rising while NI continues to gain ground
  • Figure 9: 12-month averages of amounts held in Irish residents' current accounts, RoI and NI, 2004-06
• Irish consumers prefer a chequebook with their account
  • Figure 10: Type of current account held, RoI and NI, 2004-06
• Joint accounts increasing at slower pace than individual current accounts
• Future outlook
• A cashless society by 2012?
• Internet offers considerable potential
• Competition set to intensify and drive the market

Companies and Products

• Key points
  • Figure 11: Market share of leading current account providers, RoI, 2007
  • Figure 12: Market share of leading current account providers, NI, 2007
• Abbey (NI only)
• Alliance & Leicester (NI only)
• AIB/First Trust Bank
• Bank of Ireland
• HBOS
• National Irish Bank and Northern Bank
• Nationwide (NI only)
• Permanent TSB
• Post Office (NI only)
• The Royal Bank of Scotland
• Pureplays and direct banks

Channels to Market

• Key points
• Branch and ATM banking
• NI banks contributing to a branch renaissance
  • Figure 13: Branches and ATMs of clearing bank groups in RoI and the top four banks in NI, 2002-06
• 134% growth over four years in ATM penetration in RoI
• Direct banking
• Online banking
  • Figure 14: Methods used to access banking services, RoI and NI, 2007

Consumer: Ownership of Current Accounts

• Key points
• Banking literacy
  • Figure 15: Penetration of any accounts, NI and RoI, 2002-07
• Current account ownership
  • Figure 16: Current account ownership, NI and RoI, 2007
• Demographic summary
• Married full-timers with teenage kids - typical profile
• Switching behaviour
  • Figure 17: Number of current accounts, NI and RoI, 2007
• Multiple account holding more prevalent in NI
• More RoI consumers are unbanked than in NI
• Bank account activity
• High demand for basic banking facilities among young people
• Joint accounts popular with affluent 35-44-year-olds
• Couples without kids own individual and joint accounts

Appendix

• Regional definitions
• Population 2006
• BMRB Target Group Index (TGI) sample sizes
• Summary of Competition Commission ruling to NI banks - May 2007
• Adults who have used the Internet
  • Figure 21: Number of current accounts in issue, RoI and NI, 2001-12
• Adults who have used the Internet
  • Figure 22: Adult population who have used the Internet in the last 12 months, by gender, age, socio-economic group, lifestage, working status, presence of children and marital status, NI and RoI, 2006
  • Figure 23: Forecast population change, by age, NI, 2000-20
  • Figure 24: Forecast population change, by age, RoI, 2000-20
• Additional consumer data tables
• Employment statistics
  • Figure 25: Percentage in employment, by age group, NI and RoI, 2000-05
• Household composition
  • Figure 26: Number of households, by size, NI and RoI, 2000-05
  • Figure 27: Consumers who choose ' The amount of debt that I have' as a concern, by gender, age, socio-economic group, working status and marital status, NI and RoI, 2006
  • Figure 28: Current worries, NI and RoI, 2006
  • Figure 29: Type of current accounts held, by gender, age, socio-economic group, lifestage, marital status, working status and presence of children, NI, 2006
  • Figure 30: Type of current accounts held, by gender, age, socio-economic group, lifestage, marital status, working status and presence of children, RoI, 2006
  • Figure 31: Number of current accounts held, by gender, age, socio-economic group, marital status, working status and number of people in household, lifestage, NI, 2007
  • Figure 32: Number of current accounts held, by gender, age, socio-economic group, marital status, working status and number of people in household, lifestage, RoI, 2007