This comes one year on from the launch of the Government’s scheme to encourage consumers to switch their banking current accounts by reducing the time that it takes to switch bank accounts from 30 days to just seven.
As detailed in the Payment Council’s annual report, switching levels are up 22% on last year, with some banks winning new customers - Halifax, Santander and Nationwide - and some, inevitably, losing customers - NatWest, Barclays, HSBC and Lloyds.
This rise in consumer switching has been hailed as a success story of a scheme that is going to plan, or so according to George Osborne.
There are many benefits that have been discussed as rising from the growth of consumers switching their current accounts:
1) Accountability: The Daily Mail has suggested that this switching is the public’s way of “punishing” the banks for the mistakes of pre and post-2008
2) Competitive rates: In order to woo potential new customers and to retain existing customers, banks are now offering more customers more competitive rates and incentives
3) Entrepreneurialism: With increased switching comes the opportunity for new companies to appear and succeed. This has been seen in the banking industry with so-called “challenger banks”, and is also being seen in the energy industry with the growth of alternative energy providers
So to what can we attribute this switching?
The most obvious answer is the governmental support that this scheme has received; a call to action from the powers that be which made headlines by suggesting that consumers deserve better.
But we in the communications industry would like to suggest that another big reason as to why the scheme was so well received is the act of communicating itself, both online and in the press. Whereas previously it was more likely that “a man would divorce his wife than switch his bank account”, due to the fact that it was unheard of and very difficult to switch, this scheme has not only made it easier but also more common for bank customers to question the product that they have been receiving and to look around at other options.
Whilst some have said that this 1.2 million is a modest figure, the BBC reported that 69% of consumers are now aware that they have the ability to switch due to the launch of the scheme.
This scheme has come at a time when consumer understanding and empowerment is of utmost importance. Whether that be regarding current accounts, energy bills or phone tariffs, consumers are now being given the necessary information and comparison tools to take more control over their own finances and help them live their lives more efficiently. Consumer price comparison websites such as moneysavingexpert.com have become hugely popular in recent years for just this reason, as have debates about preferred providers on social media.
The communications industry sits at the heart of this new information era, with information about new schemes and alternative providers being disseminated through national, trade and technical press, as well as through websites and social media. Companies seeking to ensure that their voice is still heard and that their commercial and financial case is still shared must therefore be keen and willing to engage with communications so as to ensure that they are not on the losing side of the market. Companies must also learn to listen and respond to the comments of their customers or face losing them to competitors.
In years gone by, customer switching and the need for communication were not in the mind of the corporate. Today, however, customers are on the lookout and companies must fight (and shout) to keep them…
The cold may be setting in but Abchaps are still out and about! We met up with some of our favourite journalists at Bloomberg and Dow Jones this week to get their take on the somewhat ‘choppy’ markets. We also caught up with the team at Daniel Stewart over a few glasses at our favourite local. We work very closely with a number of their team, and so it was fantastic so get everyone together again.
Investec has hired Christian Hess to head its financial sponsor transaction group. Christian was previously a partner at Compass Partners and the founder of Hess & Co International. Warren Mead has been appointed the head of challenger banking and alternative finance at KPMG, where he worked for 15 years. Robin Baillie has joined law firm Squire Patton Boggs as a global projects and real estate partner. Robin was previously a partner at Nabarro.
"Uswitch": an energy price comparison website helping consumers find the best energy deals on the market. Websites such as these heavily drive consumer switching
Frieze London, the contemporary art fair, is taking place in Regents Park. Frieze is expected to draw in the world’s rich and famous and it is anticipated that they will spend millions on different works. The art fair has gained enormous popularity of recent years but the organisers have capped admission to 70,000 over the course of the event as it is unable to expand. The nearby illustrious and plush streets of Marylebone and Mayfair are expected be net gainers of the elite who will pile into its restaurants, cafes and hotels.
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