Between 1 October and 31 December 2019, digital challenger Monzo reported the largest net gain of current account customers (20,843), after 23,721 came on board while just 2,878 left the bank.

Nationwide Building Society, which regularly tops the table, lost out to the challenger as it came in second place in the latest quarterly switching results which are reported three months in arrears.

The mutual opened 36,558 new customer accounts but 21,599 bolted, leaving it with a net gain of 14,959 – its worst performance in five years.

Andrew Hagger of Moneycomms, said the numbers are well down on recent figures. “Hiking its overdraft rates from 18.9% to 39.9% on 11 November last year has no doubt played a major part in the down turn,” he said.

In third place came Lloyds which welcomed 36,219 new customer accounts, but saw a loss of 22,976, leaving it with an overall net gain of 13,243.

Overall, HSBC had the largest number of customers who joined in the quarter (44,321), but it also had the highest figure of those who left at 39,715. This meant it had a net gain of just 4,606.

At the other end of the scale, Halifax again recorded the largest net loss of 22,130 after 8,293 joined but 30,423 customers exited.

The figures from Pay.UK which owns and runs the Current Account Switch Service (CASS), revealed that more than 6.6 million switches have taken place since the scheme launched in 2013.

Over 113,000 switches took place in March 2020 alone – the highest monthly total since March 2016 and the third highest ever recorded (107,611 personal switches, 5,426 business switches).

A total of 280,520 switches were completed between January and March 2020.

In the past 12 months to 31 March 2020, there were 1,017,354 switches and to date, 49 brands participate in the switch scheme.

Pay.UK added that despite the impact of Covid-19, the Current Account Switch Service remains available to help anyone who wishes to switch. However, it is too early to say how the pandemic will impact the switching market in the longer term. RBS and NatWest recently removed their £175 switching incentives.

Rise of digital challengers

Jon Ostler, CEO of personal finance comparison site, finder.com, said Monzo topping the switching table for the first time “makes sense”, with digital banks being well positioned to benefit from an enforced move away from high street to digital banking.

“While traditional banks are improving their apps at a relatively fast pace, this area is still regarded as a speciality of challenger banks. Earlier this year, Finder’s digital banking adoption research found half of customers who planned to stick with a traditional bank valued the ability to visit a staff member in person. Now this option isn’t available for the foreseeable future, you could argue the quality of the challenger banks’ apps give them the edge.”

John Crossley, head of money at comparethemarket.com, said ultra-low interest rates mean the majority of current accounts gain very little and this may be one reason why we have seen a surprisingly large amount of switching over the past few months.

“Many high street banks slashed rates on popular current account offerings, reducing their attractiveness and potentially driving customers into the arms of challenger brands. The biggest winners have been digital banks, which accounted for over one quarter of total switches. Monzo, for the first time ever, also had the highest gains of any bank. Once seen as the banks for trendy Millennials and Generation Z, the challenger banks are fast becoming mainstream.”

For Hagger, the increase in people moving accounts will have been fueled by the banks announcing massive hikes to their overdraft charges.

“The Q1 figures for 2020 [once published] will make interesting reading and show which banks have suffered the most for charging rates of up to 49.9% EAR (in the case of Lloyds Bank) for agreed overdrafts,” he said.