It’s little over a year since the UK’s seven-day current account switch was launched. Despite 1.2 million savvy-consumers opting to take advantage and cash in on the banks’ lucrative opening deals, the Competitions and Markets Authority (CMA) has unveiled plans for a further inquiry into current account and small business banking markets. The CMA says it wants to further boost competition among High Street banks.1
But according to the Payments Council, more than two out of three UK consumers (69%) are already aware of the current account switching service.2
This is reflected by the year-on-year volume of current account switches being up by more than a fifth (22%) at 1,203,334 – compared to 985,600. Although it’s worth bearing in mind that current account switching was lower in 2013, than it had been during previous years.
The CMA says it’s the sector’s perceived ‘lack of transparency’, that is driving the new probe amid claims complex overdraft charging structures are making it tough for consumers to find the best deal.
The Payments Council says so far, the main beneficiaries of seven-day account switching are Halifax and Santander, while the traditional big four retail banks appear to have lost ground. But, of course, the picture could all change again within the next 12 months.
Research firm Optimisa, working on behalf of the Payments Council, says it found a high level of satisfaction with the service with almost universally positive feedback – although some switchers felt that the service generally took longer than the seven-day mandate. It was also noted that continuous authorisations on debit cards are not transferred.3
The vast majority of (88%) switchers felt that there was very little effort involved in their part, which had increased from around three out of four (75%) before the introduction of the seven-day offering. In general it’s fair to say that for the majority of consumers who have used the service it has been successful. But the scheme’s impact in significantly driving competitiveness via current account switching has not yet happened.
We also carried out analysis of the current account market and the findings largely reflected the market research in showing no real long term impact from the introduction of seven-day switching.
It’s also worth noting, albeit unsurprisingly, young people aged between 18 and 21 favour opening new current accounts at the start of the academic year. In fact more than half of new current accounts are opened by under-30s, while only around one in seven (15%) of new applications are from over-50s. There are no significant variations by region, although there is a slight bias towards greater number of current account applications in London and the South East.
So it comes back to the big question as to why aren’t consumers switching their bank accounts given it’s now far quicker, relatively seamless, hassle free and often with the option of a slew of three figure cash incentives? Are we all simply creatures of habit and don’t believe any one bank offering is significantly better than another? Or do we favour consistency for the sake of familiarity and ease of use with on-line banking software, or the location of branches, as further justification to stay put.
It really begs the question as to whether the CMA investigation and findings will actually have an impact and pave the way for widespread cultural change.