The UK’s Current Account Switch Service (CASS) has significantly simplified the switching process for consumers. However, underlying issues still remain in the market, which the Financial Conduct Authority (FCA) must address.
CASS was introduced in September 2013 to promote competition and to provide improved customer service. The main barriers are absence of real differentiation in the current account market, inertia, and the bundling of products or services, both by banks and consumers.
In researching Datamonitor Financial’s ‘UK Current Accounts: The Switcher’s Perspective‘ report, I found that switchers’ attitudes and behaviors towards personal finance have changed over time. Banks are offering financial incentives to attract customers, but this could prove a costly acquisition strategy if underlying needs are not being met, as this may result in consumers once again considering alternative providers.
According to Datamonitor Financial’s recent 2015 Financial Services Consumer Insight Survey, financial incentives are the leading reason for people to switch. However, this is a temporary phenomenon. As challenger banks identify areas that are underserved by high street banks and carve their own niches by targeting specific customer segments, over time consumers’ switching motivations will change.
Top 5 reasons to switch (2015)
The FCA still has more work to do to foster greater switching. Firstly, it must create conditions whereby consumers have choice and incentives to switch, but also crucially feel informed and confident enough about their different options to do so. Secondly, it must encourage new players to enter the market with customer-friendly banking propositions, as only when there is competition will switching volumes become truly significant.
– This article is reproduced with kind permission from Datamonitor Financial. Some minor changes have been made to reflect BankNXT style considerations. You can read the original article here.