Surge in current account customers ditching and switching their bank
Over 376,000 were processed during the last three months of 2022
A record number of current account holders ditched and switched their bank using the seven-day switching service in the last three months of 2022, figures show.
The Current Account Switch Service (Cass) processed 376,107 switches between October and December.
It was the highest quarterly total since the service was launched in September 2013.
The highest total number of monthly switches ever using Cass was recorded in November, at 157,376.
Cass said the high switching totals align with a number of strong incentives and offers from current account providers at the time.
Several current account providers have been offering cash to switch, which may give people a welcome boost at a time when budgets are under strain.
The high switching totals may signal that consumers and businesses across the UK are reassessing their current account options during the challenging economic climate and looking to accounts that offer services that suit them better or provide switching incentives, Cass suggested.
Under the initiative, current account switches are usually completed in seven working days and payments are automatically moved from the old account to the new one.
Payments accidentally made to or requested from the old account will be automatically redirected to the new account.
A guarantee also means that the customer will not be left out of pocket if anything goes wrong with the switch.
The scheme can be used by small businesses and small charities as well as individual people.
Switching figures released voluntarily by banks and building societies also show that Santander, HSBC, Starling and Monzo had the highest net switching gains between July and September 2022, among switchers specifically using Cass.
The figures do not include current accounts switched outside the scheme, so they do not show all the switches made.
Earlier this week, Santander UK launched a new £200 switching incentive. In November, it launched a new current account called Santander Edge, which offers cashback on bills and spending as well as having a linked savings account paying 4% interest, for a £3 monthly fee.
The bank still offers its long-running 123 current account, which pays cashback on bills and 1.75% annual interest on balances up to £20,000, for a monthly fee of £4.
Cass said its own research among 2,000 people indicates seven in 10 (73%) switchers prefer their new current account to their previous one, with service-related benefits continuing to be the main reasons people prefer their new account.
Online banking was found to be the main reason cited for preferring their new account, followed by customer service and mobile banking/banking app ease.
The interest rate gained through a current account continued to be the fourth most important factor for switching, Cass said.
David Piper, head of payments operations at Pay.UK, owner and operator of Cass, said: “It is encouraging to see the highest level of switches ever this quarter, demonstrating the continued relevance of the service to consumers and businesses across the UK.”
Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “The record-breaking quarter for current account switching came at a time when several banking brands were offering a free cash sweetener amid a cost-of-living crisis.
“Those customers who decided to switch accounts during (the fourth quarter of) 2022 could well have done so for different reasons, whether that be due to a poor level or service or that their existing account was not working hard enough for them.
“On the flip side, those customers who were struggling financially may have seen a free cash incentive hard to ignore, particularly as it is quick and simple to switch bank accounts using the Current Account Switch Service.
“Consumers’ spending habits have likely changed over the past few months as well, and they may be more conscious of budgeting and maximising the benefits of their current account than before.
“With that in mind, it’s positive to see customers making steps to ditch their existing account to find a better deal and potentially get a free cash incentive in the process.
“As it stands, there are very few brands offering a free cash incentive, but during the last quarter of 2022, there were several brands dipping in and out with free cash offers, of up to £200 in some cases, when using the Cass.”
She said there appear to be fewer up-front cash incentives for customers to switch right now, but added: “We could see more banks launch free cash offers if they need to attract new business in the months to come”.
Published: by Radio NewsHub