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The banks customers are deserting

The banks customers are deserting

More than 600,000 people have so far taken advantage of the Current Account Switch Service, which guarantees a switch from one current account to another will be completed in seven working days, since its launch in September last year.

And we now know a little more about which banks have been the big winners and losers thanks to a new report from researchers TNS.

Its latest Current Account Switching Index has identified who is getting the most business from switchers, and why they are moving. First, let’s take a look at the motivating factors behind moving your account.

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Why we switch

TNS picked out a number of reasons why we may either choose to leave a bank, or which may sway us towards selecting a new one.

Reason for choosing new bank

Reason for leaving existing bank

Customer service

11%

24%

Reputation

15%

3%

Branch local/opening hours

27%

12%

Special offer/no special offer

11%

12%

Interest rates on credit

15%

9%

Rewards/lack of rewards

15%

8%

Monthly fee

4%

4%

Charges

0%

6%

So poor customer service is the big reason for motivating us to leave a bank, but not so much of a factor when it comes to choosing a new one. Instead having a local branch, or a branch with decent opening hours, is the number one concern.

We are also shopping around for a decent return on our cash, with interest rates and rewards also big plus points when picking a new account.

Interesting, while reputation is only a small reason for leaving a bank, it’s a far bigger factor when picking a new one.

[Who really owns your bank or building society?]



Who we are switching to

Now let’s see which banks and building societies are benefitting from people switching since the launch of the seven-day switch.

Bank/building society

People joining

People leaving

Net change

Santander

22%

12%

+10%

Halifax

16%

9%

+7%

Nationwide

11%

3%

+8%

Lloyds Bank

9%

14%

-5%

NatWest

9%

15%

-6%

Barclays

8%

12%

-4%

Co-operative Bank

5%

3%

+2%

TSB

5%

6%

-1%

HSBC

5%

10%

-5%

Royal Bank of Scotland

2%

3%

-1%

First Direct

2%

1%

+1%

Bank of Scotland

1%

2%

-1%

Santander has done very well in attracting new current account customers, no doubt due to the 123 current account. It’s a nifty little account that not only pays up to 3% interest on balances of up to £20,000, but also offers cashback on certain direct debits. You get 1% cashback on water, Council Tax and Santander mortgage payments, 2% on gas and electricity bills and 3% on communications bills. However, there is a £2 monthly fee to take into account.

Despite its success attracting new customers, Santander also lost quite a few, with poor customer service cited as the main reason.

Nationwide is another winner, with a net growth of 8%. Switchers were attracted by a combination of reputation and interest rates. That should come as no surprise, as Nationwide’s FlexDirect pays a mighty 5% on balances of up to £2,500 for a year, so long as you pay in £1,000 a month. It also offers a fee-free overdraft for that first 12 months and there’s no monthly fee to worry about.

Halifax reported a gain of 7% of current account customers, scoring well for offering rewards. And it does offer good ones, with £100 for switching your account over. The Reward current account is also a personal favourite, as it pays you £5 each month so long as you pay in £750, pay out two different direct debits and stay in credit. You also earn cashback on certain offers when you spend using your debit card.

Lloyds, TSB and NatWest all lost customers overall, but did well on convenient branches and opening hours. It’s worth giving TSB a mention here as its Classic Plus account also pays a whopping 5% on its current account, and it’s a rate that doesn’t drop after a year unlike other top deals. I would expect to see it having made gains when the next figures are published.

It’s perhaps surprising that First Direct only gained 1% of customers and didn’t get a mention for customer service, given it wins every customer service award going, including our own lovemoney.com award.

[Fed up with your bank? Compare current accounts]