In one of his blogs, Chris Skinner took a look at the rate of consumer checking account switching in the UK. This is an interesting view into consumer banking habits. In the UK, banks have been required, by regulation, to make it easy for a consumer to switch their bank account, their established direct deposit and recurring debit transactions from one institution to another. Despite nation-wide promotions letting consumers know that bank account switching had been made easier and banks’ attempts to lure consumers in with rich rewards, this blog reviews the supporting data and reports that very few consumers actually do:
Switching has been a focus of the Competition & Markets Authority, regulators, government and more, and yet promoting people to switch is not working. According to the latest stats, there are around 70 million deposit accounts across the UK, with the average citizen having 2.4 accounts, and yet we’re only seeing a million account switches a year. That’s about 1.4% who switch, whilst 98.6% of customers can’t be bothered.
This is lower than before the account switching regulation came into force in 2013. Leading up to that regulatory change, a parliamentary review brought the CEOs of the mainstream banks and asked them how many customers switch.
So banks had to invest in the technology, operations and human resources to make changing banks easier, and it’s no being used. As open banking begins to roll out, we will have see if this changes consumers’ minds about where to bank, or if most of the services consumers want are provided by third party processors, then where consumers’ balances are held become even less important.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
Read the quoted story here