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Nationwide’s £39m bonus tab for new current account switchers

Nationwide’s £39m bonus tab for new current account switchers
Paloma Kubiak
Written By:
Paloma Kubiak

Nationwide triumphed in the current account switch stakes, welcoming nearly 200,000 newbies in just three months, enticed by its £200 cash bonus.

A total of 196,260 savers jumped ship from their existing provider in the three months to December 2023 to open a Nationwide Building Society current account, lured by its £200 switch bonus.

In September last year, Nationwide launched an inflation-busting 8% regular saver account, as well as a £200 cash incentive, which was available for four months.

However, once leavers were included, it left Nationwide with a net gain of 163,363 – a new record high – smashing its own previous best of 111,841 net gains in Q4 2022.

According to the latest figures from Pay.UK, the owner and operator of the Current Account Switch Service (CASS), Barclays came in second place, but with a much lower net gain figure of 12,823.

And making up the last of the top three was Lloyds Bank, which saw a net gain of 5,800 new customers. It also ran a £175 current account switch bonus in the period.

Indeed, every other bank or building society in the list of 20 brands included in the published data was left with a net loss of customers, with those three named above being the only ones with positive numbers.

All in all, it means Nationwide is looking at a total CASS bonus bill of £39m – a big price to pay to onboard new current account customers.

Switch cash bonus deals fizzle out

Earlier this week, the last hard cash current account switch bonus (£175) offer was pulled by First Direct, leaving savers to explore other perks when considering alternative providers.

Alastair Douglas, CEO of TotallyMoney, said: “Just a few weeks ago, there were five banks fighting for customers, offering attractive cash bonuses for people willing to move their money. And now, the best incentive you might get is an interest-free overdraft, or cashback on your spending. Have we passed peak current account switching? Are big bonuses simply a race to the bottom?”

Douglas added: “If, and when cash bonuses return to market, let’s just hope they’re simple and easy to understand. Recently, we’ve seen some banks ask customers to jump through multiple hoops to secure the headline offer, including minimum transaction numbers, app logins, and even setting up a separate savings account.”

Current account switching so far this year

While the customer switch data is three months in arrears due to “commercial sensitivity”, Pay.UK also releases total but anonymised figures on the number of recent switches.

In Q1 2024, there were 320,364 switches across 53 participating banks and building societies, up from 48 this time last year.

Meanwhile, over the past 12 months to 31 March 2024, there were more than 1.4 million switches.

And, since CASS launched in 2013, 10.6 million switches have been processed.

Pay.UK also revealed a total of 98.7% of switches were completed in the seven-working-day timescale during the latest quarter.

It added that March was the busiest month across the quarter, with a total of 132,282 switches. Small business and charity accounts also saw high switching levels, with 7,075 switches taking place, up 10% from the same period in 2023 (6,421).

Online or mobile app banking (41%) remained the top reason why people preferred their new account, as was the case across the entirety of 2023. This was followed by interest earned (33%), customer service (28%), and location of branches (23%).

John Dentry, product owner at Pay.UK, said: “People and businesses have more choice than ever when selecting a banking provider. Cash incentives continue to be a highly effective way for banks to attract customers, but as we repeatedly see through our data, online or mobile app banking remains the top reason why people prefer their new account.”

Related: Nationwide extends branch promise, including Virgin Money