Economy
Customer service and reputation main driver for consumers switching current accounts
New research has suggested that most customers are choosing to switch current accounts based on the bank’s reputation and customer service, despite larger banks trying to entice consumers with financial incentives.
The current account switching service, which makes it easier and quicker for consumers to change their provider, has led to customers drifting away from traditional high street banking names, in spite of marketing campaigns and special offers, according to research from TNS.
Santander, Nationwide and Halifax were found to have benefited most, registering net gains of 12%, 6% and 4% respectively. Nationwide previously said it had gained 54,000 new customers following the switch and labelled the service a “big success”.
New high street lender MetroBank has also stated it had seen a 100% increase in customers switching from other account providers.
In contrast, Lloyds and TSB, Barclays, Natwest, HSBC and the Royal Bank of Scotland have all lost more customers than they have gained through the service. Amid scandals, the market share of Britain’s five biggest banks dropped five percentage points in 2012 and the new service is likely to see this fall even further.
Awareness of the service has stabilised at 50%, according to the research. Whilst those aged over 55 are more likely to have heard of the service the younger generation, aged between 25 and 34, are more active in switching accounts.
Maureen Duffy, CEO of TNS UK, said, “We have consistently found that reputation is driven by great service and, while customers want best value and increasingly expected to be rewarded, these are weaker drivers of loyalty and satisfaction.”
This is reflected in the Co-operative Bank’s figures, which show just a 1% net gain. Over the last few months, the rescue plan and scandals around the bank appear to have damaged its reputation and impacted on the number customers choosing to open accounts with it.
Several surveys were conducted to predict the amount of customers expected to use the switching measures. Research from uSwitch.com and MoneySupermarket.com both estimated that around two in five people would swap banks when the service was introduced.
Separate research indicated that only a small minority, 2%, intended to change their current account provider.
The TNS survey found that whilst there has been no dramatic change in overall levels of switching since the service launched, just over a third (35%) of those that had switched in the last year had done so in the last three months, against 27% in the three months prior to the launch.
Campaign group Move your Money launched a scorecard alongside the switching service in order to help customers assess the ethical performance of banks.
Further reading:
89,000 have switched banks since September launch of switching service
Big five’s banking monopoly at risk, with 2.4m closing accounts in 2012
Switching your current account just got easier – but what now?
Bank customers reveal switching fears – but over 80% say process is easy