UK current account battle continues
Account switches in Q2 2014 by gains and losses (Click to enlarge)
Several of the UK’s major banking brands are losing customers to rivals such as Spanish bank Santander and building society Nationwide, according to figures released by the UK Payments Council – while competitor bank Nationwide continues to add customers.
The number of UK account holders switching their bank accounts increased by 12% last year, rising to 1.16 million according to the UK Payments Council. The figures suggest a modest increase – but the numbers switching are still small compared to the UK’s 40 million current account holders.
The UK’s current account switching service was introduced in September 2013 as part of a push to drive up competition between UK retail banks. The service guarantees a switch within a maximum of seven working days.
The UK Payments Council figures break down the numbers leaving and joining each of the UK’s major current account providers each quarter. According to the latest available figures which cover Q2 2014, the biggest losers were Barclays, Co-operative, NatWest and its parent RBS, and HSBC. Together, these lost a net 75,000 customers from April to June. The biggest winners were Santander, Halifax and Nationwide, who gained 89,000 customers between them over the same period.
By the end of December 2014, more than two-thirds of people (69%) in the UK were aware of the current account switching service, up from 59% a year earlier. Customer confidence in the service increased from 58% to 65% in the same period. In total, there were 1,156,838 switches in 2014, up from 1,030,718 switches in 2013.
Two new banks have just joined the switching service – Duncan Lawrie and Weatherbys Private Bank. This brings the total number of banks and building societies on the service to 36.
Separately, high-profile challenger Metro Bank (which is not included in the figures) has released its Q4 2014 results, and now has 447,000 account holders, a year-on-year growth of 63%. The bank, which is concentrated in the southeast of England, also reports a 118% increase in deposits for the full year, to £2,867 million. Metro Bank plans to hire an extra 500 staff and open 10 more stores in 2015. However, the bank still lost money (£8.9 million), though the rate of loss is decreasing (£9.4 million the previous quarter).
The release of the latest figures follows a separate report by TNS UK earlier this month, which found that the main driver for switching remains customer service, cited by 23% as a reason for leaving and 12% as a reason for choosing. The top reasons for choosing – all scoring 15% – were reputation, rewards and convenience. Online and mobile banking are now given as selection criteria by 10% of switchers and this has climbed steadily in the last year.
