Despite a well-publicised reduction in disposable income, according to a recent Mintel report, those with spare cash are likely to favour instant access savings accounts over investment products:
- Nearly half of consumers favour financial products with low financial returns but with high capital protection compared with just 15 per cent who favour high financial returns with low capital protection
- 65 per cent of internet users own an instant access savings account with a fixed rate bond the next most popular with 20 per cent owning one
- 64 per cent of internet users do not own an investment product and 43 per cent would not invest anything in a product that carries an element of risk
The size of the UK savings market is set to rise to just under £1.3 billion by 2015 as consumers continue to save and reduce spending.
HML’s chief executive officer Andrew Jones says organisations should capitalise on this growth market to support other business strategies like mortgage lending, particularly in light of the high cost, and lack of availability, of wholesale funding.
He says:
“There is undoubtedly an opportunity for lenders to get the funds they need from the savings market. Consumers’ aversion to risk is a direct result of the credit crunch, and while the economy remains flat, fast access to savings, possibly to support lifestyle choices, will be a priority for many.
“Well-marketed products at the right rate will get the attention of consumers, and if the offering is multi-channel to accommodate preferences, the evidence suggests that deposits can be gathered.”
Jones’ says the vehicle for entering the market could be outsourcing:
“By using an outsourcer, lenders will not have to spend money building an administration platform or employing full time staff. They can turn overspill resource on and off according to demand.
“The level of servicing on an account is low, particularly as consumers seem to favour online access and managing the account themselves.”
HML’s savings solution is an end-to-end administration system and a version of Skipton Building Society’s platform, which currently services around £9 billion of savings.
It services instant access accounts, fixed term bonds and ISAs, while offering savers the ability to manage their account online, by post and over the phone.
