Brits are beginning to warm to the idea of changing their banks, as greater numbers use the new fast-track switching system to switch their current account.
The new switching system was launched in September to improve efficiency and cut the time required to switch bank accounts from up to 28 days to just seven days.
The new £750 million service ensures that inbound and outbound payment instructions from an old account are forwarded to a new account, while customers will also be refunded if anything goes wrong during the transfer.
(Find out more about the new switch system here.)
The response to the new system was relatively modest. The number of switches completed in the four weeks following the launch was 11% higher than the number that took place during the equivalent period in 2012.
But the number of switchers has steadily risen, according to the Payments Council, with over 115,000 applying to change their current account in October – a 12.7% increase on the 102,300 that switched during October 2012.
And the momentum appears to be growing. 35% who switched this year have done so within the last three months, according to the TNS Global current account switching index.
Winners and Losers
The figures also suggest that customers are fleeing traditional high-street banks, with poor customer service, high rates and charges among the reasons for leaving.
Though Lloyds TSB has gained 14% of switchers, it has lost 20% to other banks. HSBC has also lost out heavily, gaining just 4% of switchers compared to the 11% it has lost.
First Direct, which offers a £100 joining bonus, is making small inroads, gaining 2% of switchers, while Nationwide has seen 11% of switchers joining its ranks.
Customers have been seduced by special offers and rewards, with 26% highlighting these as the principal reason for joining another bank.
The most popular choice for switchers has been Santander, with its 123 current account offering a unique combination of cashback and interest worth up to 3% (find out more about the account here).
Despite losing 9% of switchers, many due to poor customer service, the bank has seen an influx of customers willing to reap the rewards offered by the generous current account.
TNS has identified Nationwide as a standout performer in the early months of the switching system.
The society’s offers include the FlexDirect account, which pays 5% interest on balances up to £2,500 in the first twelve months, and the new packaged FlexPlus account, which offers interest of up to 3% alongside a host of comprehensive policies.
Maureen Duffy, the chief executive of TNS UK, said it was proving a good fit for customers. "In this latest wave, Nationwide seems to be achieving the best balance between service and value as they both feature in their reasons for choosing Nationwide", she said.
"It will be interesting to see if that can continue."
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