Fewer customers switching bank accounts

2 May 2017   By Samantha Smith

BACS have released their latest figures for use of the Current Account Switching Service (CASS), revealing that the number of customers switching their bank has fallen compared to last year.

current account switch guarantee in window
Credit: Barry Barnes/Shutterstock.com

They recorded 248,302 total switches for the first quarter of the year, which was down by 19.8% compared to the same three months of 2016, when 309,678 customers moved from one bank to another.

On top of this, Bacs latest CASS Dashboar also shows that there's been an annual decrease, with 949,047 switches made in the 12 months to March 2017 compared to the 1,061,144 completed in the year to March 2016 (a 10.6% drop).

This decline comes at a time when smaller banks such as the Cooperative have been going through a relatively difficult period, suggesting that customers may not see enough of an attraction in moving from one of the bigger high street institutions to a smaller rival.

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This conclusion is suggested by the fact that public awareness of CASS is at an all-time high according to Bacs, who oversee the switching service.

According to the organisation, awareness levels reached 79% in March, representing a 21% increase since the service was launched in September 2013.

This increase is largely the result of a new advertising campaign launched last September, to coincide with the three-year anniversary of the service.

And not only has awareness of CASS been increased, but Bacs began streamlining and revamping the service at the beginning of the year, in a bid to make it easier to use for customers.

However, neither increased publicity nor increased efficiency have translated into increased switching.

In fact, aside from the declines between 2016 and 2017 reported above, there was also a decline between 2015 and 2016.

Namely, between April 2014 and 2015 there were 1,136,251 switches, while between April 2015 and April 2016 there were 1,061,144.

This is a 7.1% decline, and together with the 10.6% decline for this past year, it indicates a worrying gradual trend towards decreasing switches.

Account switching

Source: Bacs, CASS Dashboard, April 26th 2017


And yet, given that CASS is more efficient than ever and more of us know about it than ever, it's clear that this decline isn't really the result of any particular problem concerning the switching service.

Instead, it's likely that the market is the main factor driving the depression in switches, with banks and customers more responsible for the decline than anyone or anything else.

For example, it's often been said that current accounts are "impossible to compare", with surveys finding that many customers are unable to evaluate such things as interest on credit, overdraft fees and whether accounts are good value for money overall.

Given this inability, it's unlikely that a maximum number of people will be driven to switch, since their lack of financial awareness effectively means they don't really know whether they'd be getting a better deal if they do. And because they don't really know, too many decide that it's better simply to stay put.

This difficulty is often too great to be helped by the numerous rewards, prizes and incentives banks offer new customers, with the likes of Halifax, HSBC and many others continuing to entice new switchers with the promise of vouchers and payouts.

Indeed, this persistent reliance on one-off handouts is actually a very stark indication of how customers often see little reason when it comes to the accounts themselves to switch.


Added to this, there's also the problem that distinct alternatives to the Big Four high street banks aren't in plentiful supply.

For instance, the Co-operative Bank have continued to have problems ever since suffering massive losses in 2013, with the bank now up for sale and looking less able to offer an ethical alternative to its biggest rivals.

And while at least one ethical newcomer has entered the market recently, smaller independent banks as a whole complained to the Competition and Markets Authority (CMA) in 2015 that they're at a distinct disadvantage compared to their larger competitors.

That's because these competitors don't operate on a level playing field. Allegedly, they obscure information about interest rates, disguise steep overdraft charges behind claims of "free" accounts, and benefit from "disproportionately punitive" capital requirements.

As a result, they've been able to hold sway over the market, which they've kept in a state where there isn't much scope to meaningfully compare accounts.

And because of this, the numbers of customers switching have lost momentum since CASS' peak in 2014/15, even though they remain relatively encouraging at 949,047.

In the face of this decline, it can only he hoped that the CMA's plans to create a database of disengaged customers to be prodded into switching will have the desired effect, and that the numbers will begin rising again in the not-too distant future.

Have you used the Current Account Switch Service? If so, was it easy to use, and are you likely to use it again? Let us know by leaving your comments below.

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