Pandemic blamed for big drop in bank account switches
This is sharply down from the year before when more than one million switches took place.
CASS put this drop down to the pandemic, noting that the Covid-19 crisis had made people more reluctant to switch, while banks themselves were found to have adopted a more cautious approach, focusing on helping existing customers rather than marketing their services to new customers.
CASS pointed to the fact that many banks withdrew switching incentives last year, which would also have dented the numbers switching accounts. However, it highlighted that as the year progressed switching activity grew once more, with switching incentives gradually reintroduced. In the 4th quarter for example nearly 190,000 switches took place, a third more than in the previous quarter.
What is the Current Account Switch Service?
The CASS was introduced back in 2013, with the aim of making moving to a new bank account more straightforward.
More than 40 banks and building societies have signed up to the service, which sees the bank you are switching to handle moving over your direct debits and other payments, while your old bank closes your account once the switch has taken place.
You get to pick the date when the switch takes place too, so that it goes through at the most convenient time.
According to the latest figures from the CASS, more than seven million switches have now taken place using the service since its launch.
Jo Kenrick, Chair of the Pay.UK Switching Services Participant Committee, argued the pandemic had caused people to reflect on what was important in their lives, and who we bank with “may not be the priority”.
She continued: “As a community we must recognise the impacts of the pandemic will continue to be felt into the future and we must be prepared for this. Our activity in 2021 will help to ensure we remain mindful of how we deliver our collaborative role as the UK’s switching service for current accounts.”
Why switch current accounts?
There has been no shortage of studies over the years which have suggested that Brits can be somewhat apathetic about the idea of switching bank account, questioning whether it’s really worth the effort.
The big selling point of the CASS has been that there is really very little effort involved, but there can be significant perks to moving account provider.
Since February both HSBC and First Direct have introduced cash bonuses for new current account customers of £125 and £100 respectively, while other accounts pay cashback on a host of direct debits, allowing you to make money back as you pay your bills.
Previous data from CASS has identified the banks which are gaining customers, and which are losing them. Its most recent figures cover the three months to September 2020, with Halifax the big benefactors having been the first to reintroduce a cash switching bonus following the start of the pandemic, ahead of challenger banks Starling and Monzo.