In September 2013 the UK Payments Council launched the Current Account Switching Service, this means that people can switch their current account to a new participating bank and have their new account, along with their existing payments up and running within seven days.
In general the take up of the Current Account Switching Service has been lower than hoped. There is much speculation as to why more people have not changed bank account. It could be that they are not clear as to what they’d gain from moving bank, it could be that there is little to differentiate the current account of one bank from that of another, or it could be the perceived risk and difficulty in the account switching process itself.
One suggested solution to deal with the process is portability of account numbers. If this were implemented, people could move their account to a new bank while keeping the same bank account details such as account number and sort code.
Some have likened account number portability to the flexibility we have with mobile phones, it is normal to keep your mobile phone number when you switch provider. Another analogy has likened current account portability to keeping your postal address when you move house. I’m sure you can imagine the chaos that would cause the Post Office!
Should account number portability become a reality the implications on payment infrastructure must be considered. The information in a sort code and account number ensures that payments are delivered to the correct bank and account. If the sort code, which currently relates to a specific bank and branch, remains the same but the account in question is no longer with that bank then the delivery of payments is made much more complicated.
There are solutions that can manage the more complex payment routing that account number portability would need but to use them would require thought and investment. It’s also not clear that account number portability would address the problem I had with switching accounts, which was recurring payments on my debit card.
Account number portability is not completely untried, in the Netherlands account portability was in place for several years, however more recently the scheme was abandoned, to be replaced by a switching service similar to the service we now have in the UK.
It remains to be seen if account number portability is the answer to giving us more flexibility and choice when it comes to moving from one bank to another. There are also complex considerations to be understood, particularly when it comes to how payments are routed.