Which banks and building societies are benefiting and which are losing customers since the launch of easier switching?
Over 730,000 people have switched their current account since the launch of the seven-day switch guarantee in September last year.
But which banks have been the big winners – and which are struggling to keep up? Luckily researchers at TNS have been monitoring exactly that.
Its latest Current Account Switching Index has identified who is getting the most business from switchers, and why they are moving.
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.
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.
Rather having a local branch, or a branch with decent opening hours, is the number one concern for those switching to a new account.
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.
Interestingly, while reputation is only a small reason for leaving a bank, it's a far bigger factor when picking a new one.
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Who we are switching to
Now let's see which banks and building societies are benefiting from people switching, since the launch of the seven-day switch guarantee.
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Santander (+13%), Halifax (+7%) and Nationwide (+5%) are the big winners in the battle for current
account customers with the highest overall net gains.
Santander attracted the largest share of new current account customers. No doubt this is down to its 123 Current Account. It's an attractive option 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.
However, despite its success attracting new customers, Santander also lost quite a few, with poor customer service cited as the main reason.
Halifax reported the second largest gain of current account customers, scoring well for offering rewards. And it does offer good ones. You get £100 for switching to any of its three current accounts but if you go for the Reward option you'll get £5 each month as 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.
According to TNS around a fifth of those leaving the troubled Co-operative Bank are choosing Nationwide, which enjoyed the third largest share of new customers. 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.
Interest rates have become increasingly important to switchers with a rise from 12% to 19% saying getting a return on their credit balances was the main reason for choosing their new bank.
Nationwide will have to stave off competition from TSB and its Classic Plus account, which also pays a whopping 5%. Although it only applies on balances up to £2,000, the rate doesn't drop away after a year.
It will also be interesting to see how challenger bank Tesco will fare in the next set of results, considering it has recently launched a current account paying 3% interest and rewards customers with Clubcard points on debit card spending.
HSBC (-7%), Cooperative Bank (-5%), Barclays (-3%), Royal Bank of Scotland (-3%), NatWest (-3%), Lloyds Bank (-2%) and Bank of Scotland (-1%)- were the biggest losers as they all lost more customers than they were able to gain.
In the first three months of the seven-day switch launch the Co-operative made net overall gains, but for the past three months it has been a net loser. However, it's making a big effort to bounce back.
The ethical bank is asking customers to help revitalise its policy and is now offering a £100 cash bonus incentive as well as a £25 donation to a charity for new customers that switch to its current accounts.
Oddly even though Lloyds and Barclays continued to haemorrhage customers, one in three switchers that selected them did so becuase of their reputation.
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