Simplification of the bank account switching process has led to an increase in people moving their accounts away from one bank and towards another. According to figures, many of these customers are moving away from the big banks they have previously dealt with, as major high-street names are the most major firms to lose customers to the new, faster switching process.
Some of the banks which lost the most customers amidst the rush of customer switching were Natwest, Barclays, RBS, HSBC and Lloyds. Figures from July-September last year show these banks losing a greater proportion of their customers as people took advantage of the simplified switching process to move their accounts to a new bank.
Some of the more notable recipients of these customers included Nationwide Building Society, Santander, Tesco Bank and most notably Halifax. These banks all recorded net gains in customer numbers as a result of the flurry of switching activity that took place after the process was reformed.
Under the reformed switching system, moving a bank account from one provider to another became significantly faster as well as much easier for customers. The time the entire switch process takes was cut to just seven working days. Beforehand, it could take up to 30 working days. All regular payments such as direct debits and standing orders are moved from the old account to the new automatically as part of the switch process, so the customer does not need to set any of these up anew. Furthermore, if any payments are made to the old account or requested from it after the switch, they will be redirected automatically to the new account for a period of 36 months after the changeover.
The system for switching bank accounts is overseen by the switching council, which reports that there was a significant increase in people switching bank accounts in recent months. Overall, the past twelve months have seen 1.14 million customers use the service to switch current account deals. This is a year-on-year increase of 7%, at least some of which is likely to be down to the streamlining of the process.
According to Andrew Hagger of MoneyComms: “More people are voting with their feet and looking for a more suitable banking relationship.” However, Hagger also notes that “the vast majority are refusing to budge from their existing provider despite the array of enticing upfront cash incentives on offer.”
The continued reluctance of many consumers to switch, Hagger suggests, may be down to “The confusing array of different tariffs on offer for credit interest, cashback, rewards and overdraft charges.”