It’s an often quoted fact that you’re more likely to get divorced than switch your current account. But is the new seven working-day switching service going to change people’s minds?
Most people rarely switch their current accounts, if ever. In fact, our research found that 55% of people had never switched their main bank or building society account. And I admit, I count myself as one of the 55%.
There are a variety of reasons why people don’t switch current accounts. Personally, I just keep putting it off. But whatever the reason, the big banks have cottoned on to the fact that their customers aren’t likely to leave them. Safe in this knowledge, they’re often able to get away with providing bad customer service, offering poor interest rates and applying high charges.
The new seven day switching service
Under pressure from the government, the banking industry is introducing a new seven working-day switching service. From September, when customers switch to a new bank, that bank will arrange for all payments going in and out of the old account to be transferred automatically. Importantly – the bank will guarantee these payments, so any bank charges will be refunded if something goes wrong.
The current process of switching your current account can take up to 30 days, and payment transfers aren’t guaranteed. So this new, quick and easy switching service is a welcome step in the right direction.
But does it go far enough? A report from Consumer Intelligence found that only 11% of people who haven’t switched accounts before would be persuaded to switch as a result of the new service.
We want the government and the banking industry to be more ambitious. For a start, the government should commission an analysis into the feasibility of Portable Account Numbers – a system where you would always retain the same bank account number. This would make switching banks as easy as changing your mobile phone provider.
Bring something new to banking
But why is switching so important? Ultimately, simpler switching is a great way to generate more competition between the banks. But do people really want to switch to another big bank that just provides more of the same?
That’s why we think it’s important that the government makes it easier for new banks to come into the market – banks that can offer something different. It’s also why we’re campaigning for Better Banks – to make sure banks put customer service before sales.
In 2010, Metro Bank was the first new high street bank to open in the UK in over 100 years. It claims to give customers what they want through more convenient opening hours, allowing dogs in their ‘stores’ (its founder, Vernon Hill, said he doesn’t like the term ‘branch’), and it has even opened the UK’s first drive-thru bank in Slough.
I‘m glad that Metro Bank is taking a fresh approach to banking, and I hope that we start seeing more innovation from other banks. Personally, when I come to switch, I’m tempted to move to a banking provider that prides itself on its ethical values.
Have you ever switched current accounts, and if so, what tempted you to move? Would the new seven working-day switching service encourage you to switch?
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