7 day switching: told you so

Seven day switching was never going to lead to a massive rise in switching rates.

At the risk of being accused of gloating…

As written on this site and elsewhere in the run-up to 7 day switching last year, this (albeit very welcome and brilliantly executed innovation – take a bow The Payments Council) was never going to lead to a massive rise in switching rates, writes Douglas Blakey.

It scarcely seems credible that this time last year, uninformed and gullible PRs were pitching this desk ad nauseam to run stories with utterly ridiculous forecasts that up to one third of current account holders were set to switch banks.

It was bunkum then and totally predictably my forecasts of only a modest increase in switching rates has been borne out by the facts.

For the record, just over 1m of 46m UK current account holders has switched their main current account in the 11 months since 7 day switching came in.

At the most generous calculation, this equates to about 2.4% of UK current account customers.

For the same period last year pre-7 day switching, 926,000 customers switched or 2.2% of customers.

The system has worked pretty well and a 19% year-on-year rise in customers switching justifies the efforts of all stakeholders.

So a modest uptick but it is a far cry from many of the wildly optimistic forecasts made a year ago.

As for the winners: that basically means Santander and Nationwide.

The latest switching stats from TNS show that Santander remains the main gainer from switching, accounting for 29% of all switchers into a new bank and 9% of all switchers out.
For its part, Nationwide has recorded net gains of between 3% and 8% of switchers in every month of the Switch regime boosting its market share to 6.4% from 6.2% a year ago.

Class leading internet and mobile banking are now motivators to switch for 1 in 10 customers; not as high a figure as I would have expected to see but a stat I expect to see increase.

It is surely no coincidence that of the traditional Big 4 UK retail banks, Barclays is the only one not to be showing a net loss among the switching segment, given Barclays class-leading digital proposition.

So rather than consumer apathy – on the contrary the UK bank customer has never been more financial savvy thanks to the likes of Moneysupermarket.com – there is a fairly simple explanation.

The vast majority of UK current account customers are pretty satisfied with their existing bank and enjoy a decent service.

For this writer, 12 years with what is now TSB and over 20 with NatWest, I see no incentive to switch until one or other messes up.

Switching rates will no doubt continue to inch up; but please spare me any more daft pitches trying to kid and con that a quarter or a third or whatever other ridiculous figure is plucked out of thin air are going to switch.

It did not and will not happen.