Despite experiencing problems with their current banks, 4 out of 5 consumers remain reluctant to switch.
As RBI reported in February, the most recent figures from the UK’s Current Account Switch Service (CASS) highlight a a year-on year decline in customers switching their main current account.
Total switches in 2017 amounted to 931,956, down a whopping 8% from 1,010,423 in 2016. Even worse: the rate of decline in total switches has increased. The figure for 2016 represented a decline of 2.3% from the 1,033,939 switches in 2015. In 2014, there were 1,156,838 switches.
Despite the banks’ success in administering 7 day switching – the service enjoyed a satisfaction rate of 93% in the fourth quarter of 2017 – present switching rates are less than they were in 2012 before the service launched, when 1.12 million switches took place.
That may be set to change according to research released by Swiss-headquartered digital banking fintech Crealogix.
Crealogix research finds that while half of consumers (51%) have never changed banks, almost 82% have experienced problems with their bank. Its study of 2,000 consumers across the UK forecasts that the rise of challenger banks and the Open Banking initiative might see more people open to changing providers. Banks need to start putting customer experience at the heart of their operations.
When asked what they would do if they found a better deal with a bank elsewhere, currently only 24% would switch banks immediately. 41% would contact their bank to see if they could match that deal. There is a slight generational divide, with 46% of 25-34 year olds saying they would give their current bank a chance, versus 38% of over 55s.
The study uncovered that millennials consider themselves almost twice as loyal to their bank as those in the 55+ age group (22% versus 12%).
Mike Bradford, CEO Crealogix UK said: “Those banks that focus purely on the changing habits of millennials should not assume that it is the younger generations who are the first to switch banks if standards are not met. It seems the older generations are more fickle. Regardless of generational habits, this survey shines a light on the need to really focus on customer experience as Open Banking and challenger banks change the landscape for consumers.”
“Long gone are the days when moving banks was made overly complicated by those eager to keep hold of their customers from cradle to grave. From the seven-day switch to the recent Open Banking initiative and API-driven banking, the power is being returned to the consumer.
“Banks need to change if they are to avoid the fate of the mobile phone networks – once all-powerful now transformed to mere dumb pipes,” Mike Bradford added. “Only those banks that start delivering a more personalised experience to drive engagement and loyalty will survive. The stakes are high.”