Photo by Thirdman from Pexels
News Digital Banking
Bank account switching continues to stall
Data from 2021 show there has not been a full recovery on levels of current account switching seen before 2020, despite a continued strong showing from challengers such as Monzo and Starling.
Current account switching remained substantially below the pre-pandemic era for the second year in a row, according to newly released data.
A total of 782,223 people switched their UK bank accounts in 2021, the Current Account Switching Service (CASS) says, compared to just over 1 million in 2019.
The service, which was set up in 2013 to encourage banking competition by making it quicker and easier to switch banks accounts for both retail and SMEs, first saw a slide in the early months of the pandemic.
The total number of current accounts switched in 2020 was 704,560, meaning levels did tick up in 2021 but remained well over 20 per cent lower than before the coronavirus pandemic.
Current account switching is really a tale of two trends. Financial incentives such as the £125 offered by Nationwide, which was the most switched to bank account in the three months from July to September 2021 (the most up to date figures) are hugely important. In addition, a huge driver is the move to digital challengers such as Starling Bank and Monzo Bank which came in second and third to Nationwide and offer no financial incentive. Santander and Virgin Money are in fourth and fifth respectively for net switching gains.
CASS says service-related, i.e non-financial reasons, were the most significant contributors to people favouring their new current account once a switch had been completed.
In a survey the top reasons cited included: better online banking facilities (51 per cent), sophisticated mobile or app-based banking systems (41 per cent) and improved customer service (38 per cent). Location of branches (24 per cent) and preferable account fees or charges (23 per cent) followed closely.
David Piper, Head of Service Lines at Pay.UK, owner and operator of the Current Account Switch Service, notes that despite the strong levels of switching in 2019 “performance and usage of the Current Account Switch Service remained strong in the final months of 2021."
“We also saw digital-first participants continuing to attract new customers as many seek current account providers with high-quality online tools, such as mobile apps. Throughout 2022 and beyond, our focus will continue to be on ensuring CASS is available to anyone wanting to switch current accounts simply and reliably,” he added.
Companies In This Article
