Following a benign retail savings market over the last decade, the UK savings landscape has transformed dramatically over the past 12 months begging the question, ‘what next?’.

Newcastle Strategic Solutions, the savings management platform managing balances approaching £50bn on behalf of clients and their customers, has been helping clients enter the savings market and grow their operations since 2004. With best-buy rates changing almost on an intra-day basis over the past year, a key part of this has been helping navigate this new, fast paced retail market.

Given the dynamic nature of the current savings market, what are the opportunities for savings providers, and what trends are likely to shape the next 12-18 months? 

First, a reality check. Inflation continues to squeeze household budgets and impact consumers’ ability to save. But, after years of rock-bottom interest rates, consumers are starting to show positive savings habits, as higher rates and product innovations encourage savers to build a degree of financial security, and to look for the best deals. 

Small businesses are also recognising the importance of making their cash balances work harder as they manage increasing costs. 

For savings providers, it has been vital to build an understanding of the changing market dynamic in order to unlock growth. 

With many people still sitting on savings amassed during the pandemic, and around £233bn savings balances currently in zero-paying accounts, encouraging consumers to move their money to savings accounts, many of which are now paying well in excess of 5%, is a great opportunity for those looking to build their retail book. 

Longer term, the transfer of wealth to younger consumers is a huge opportunity for savings providers: it’s estimated that around £1trillion of assets will move hands before the end of 2027, with the majority shifting between generations as inheritance or gifts. But providers will need to consider how best to attract this type of consumer, versus a more traditional saver. 

Another interesting trend is the growth of the ‘subscription economy’, and ‘buy now pay later’. There is work to do to challenge a ‘why save when I can buy it now?’ attitude. If that’s done well, and combined with innovative savings tools, providers can help their customers achieve their goals in a more sustainable way. 

There is also a growing demand for green products and technology as individuals place greater importance on the environmental impact of their actions, including personal finances. Ethical savings options, especially when combined with strong account features, ease-of-use, and competitive rates, will be popular with younger adults ready to prioritise societal impact over financial returns. 

We’re also seeing small businesses seeking better returns from their funds, which typically earn very low rates of interest with their current account provider. Our experience is that small businesses maintain larger average deposits than personal customers and are much less likely to move if they see the rate they are being paid as fair. This could be a good opportunity for established retail savings providers. 

Finally, we should expect an increase in demand for the hyper-personal experience that customers are now used to from brands such as Spotify, Amazon, and Netflix. Financial services companies have lots of data, but need to use it better to get to know their customers and offer services that matter to them when they need it. 

The market faces further uncertainty for the foreseeable future. At Newcastle Strategic Solutions we’ll continue to monitor the latest market changes and trends, and work with clients to respond, benefitting them and their customers.

You can find out more by visiting: www.newcastlesolutions.co.uk or email solutions@newcastle.co.uk