- New research commissioned by the Current Account Switch Service reveals that consumer awareness of Current Account Switch Service has remained high, and attitudes towards Current Account Switch Service and the simplicity of the switching process are generally positive
- The research suggests that the impact of the coronavirus pandemic on switching bank accounts has led to more people feeling financially vulnerable
- The research also suggests that financially vulnerable people and some SMEs think switching could be risky. These people and businesses may benefit from more positive support on how to switch accounts
- 76% of consumers consider cash rewards to be an important factor for switching accounts.
Financially vulnerable1 consumers would benefit from more targeted information and support to overcome negative associations with switching, according to Frontier Economics research commissioned by the Current Account Switch Service.
The study of 1,000 respondents across the UK is the first major study into consumer attitudes to bank accounts since the pandemic. It reveals new insights into the factors and behaviours that impacted current account switching in 2020. It uses Implicit Association Testing (IAT) methodology to help identify the attitudes of key Current Account Switch Service priority groups (financially vulnerable people, 18-24s and SMEs) and how their attitudes to switching may have changed during the Coronavirus pandemic.
The research found several factors have had an impact on switching volumes. The strongest driver for switching is the prospect of receiving some type of switching benefit. 76% of consumers would be motivated to switch for a reward, and 70% would be motivated by a cashback offer. Consumers are also motivated by better interest rates (68% of consumers) and by better product deals (57% of consumers). Ease of switching and the prospect of better customer service are also important considerations for 57% of consumers.
The IAT research results also show the considerations consumers make when switching accounts. Trust in the new bank is important to just over half of consumers, while only 39% of consumers consider a recommendation from family or friends to be important in the decision to switch.
In addition, a significant proportion of financially vulnerable customers could identify more barriers to switching than others. People who are financially vulnerable are 7% more likely to fear that they could be rejected by a bank and 5% are more likely to worry about getting the same overdraft facility than other customers. These figures were even higher for regular overdraft users who were 9% more worried about being rejected and 18% more worried about getting the same overdraft.
The IAT techniques used in the study suggest that some micro businesses and SME’s and some people working in the gig economy felt less positive about switching. The research suggested that financially vulnerable customers are also more likely than other groups to feel less positive, with the research suggesting they associate switching with words such as ‘confusing’ and ‘complicated’. 43% of those who undertook IAT polling associated the word ‘stressful’ with switching current accounts, while 56% associated switching with the words ‘time consuming’, and 52% ‘hard work’. These results could be referring to choosing between current accounts as awareness of Current Account Switch Service has remained high during the pandemic, and attitudes towards Current Account Switch Service and the simplicity of the switching process is positive.
"The long-term impact of the Covid-19 pandemic could potentially lead to sustained higher levels of financial vulnerability for some time. It is vital those who could benefit from switching have access to information that allows them to fully understand the process. That is why we are committed to continue to raise awareness among this group."
"Our research partnership with Frontier Economics has generated a number of findings for the switching ecosystem to consider. It suggests that the whole current account ecosystem has a role to play in ensuring people can switch if they want to, when they want to. The Current Account Switch Service is committed to collaborate with current account providers and consumer representatives to facilitate the work needed to review and refresh the switching service."
"At the Current Account Switch Service, we will use the findings of this research to engage with participants, regulators and consumer bodies to help the ecosystem continue to meet the needs of consumers and businesses, particularly those who will benefit the most from the switch service."
Said Maha El Dimachki, Chief Payments Officer of Pay.UK, owner and operator of the Current Account Switch Service
To mark the launch of the research, Current Account Switch Service convened a panel of experts to discuss the issues. Chaired by Chris Pond (Chair, Financial Inclusion Commission and independent Director of the Current Account Switch Service), the panel included Jo Ainsley (Senior Service Lines Manager, Pay.UK), Dougie Belmore (Head of Payments, Virgin Money), Joe Lane (Principal Policy Manager, Citizens Advice) and Phil Sneade (Associate Director, Frontier Economics). The panel discussed the impact of Covid-19 on consumer vulnerability and confidence when switching, what the current account market can learn from these findings, what products and services consumers will want to have greater access to in the future and the role of Current Account Switch Service in this rapidly evolving ecosystem.
Since launch 2013, over 6.7 million accounts have been switched and more than 100 million payments have been successfully redirected by the service. Over the course of the pandemic, Current Account Switch Service has seen a significant drop in the number of switches that have been conducted, most notably between March and April 2020, at the peak of initial lockdowns. Though recently these numbers have bounced back, as seen through its quarterly dashboards and this trend is predicted to continue.
The full report can be found below.