19 November 2014

To switch or not to switch? The psychology of bank account switching

When did you last switch your current account? If you’ve never switched you’re not alone. Research has shown that over the course of a year, just 6% of bank customers switched their accounts – that’s compared to 20% of energy customers.

The whole issue of switching accounts – with banks, insurance firms and energy companies too – seems like a fraught one. Doesn’t it entail endless searching on comparison sites for good deals, phone calls, piles of paperwork? And in the end, is it all really worth it? Will my payments be redirected properly? Maybe it’s easier to stick with the account I’ve had all this time…

As our infographic shows, we’re twice as likely to move home than switch our bank account, despite there being good reasons to switch provider: better interest rates, attractive deals and improved customer service. However a 7-day switching service, introduced last year, is encouraging more and more people to make a move.

Here we’ve put together some facts, figures and analysis on the psychology of bank account switching. 

Infographic - Switching your current account

State of play: how we feel about our banks

Not everyone loves their bank. Our research shows many bank customers aren’t happy with their current provider:

  • One in 10 feel frustrated when dealing with their bank
  • 16% feel there isn’t enough communication
  • 20% feel they don’t get enough back from their bank
  • Over half of people (54%) see their bank as ‘just a service they have to use’

So why are people put off switching?

  • The choice of accounts on offer can be bewildering rather than transparent
  • It’s not always clear what the benefits of switching actually are
  • It’s a hassle to switch
  • There are concerns direct debits and other payments won’t be sorted properly

Good news- switching account is now easier than ever before

As part of an effort to encourage more people to switch accounts and to make the whole process a lot easier, an industry-wide switching scheme, backed by providers including Nationwide, was launched last year.

The Current Account Switch Service guarantees a free, quick and simple switch to another bank or building society – all within 7 working days. 

Key points:

  • 7-day turnaround (previous process could take up to 30 days)
  • You choose which date you want to switch
  • Your existing payment arrangements are automatically transferred
  • Any payments made to your old account will be redirected to your new account

Latest data on the service shows that the number of people switching banks has risen 16% since the launch of the initiative. During the first six months of 2014, 592,000 current accounts were switched, compared with 511,000 switches during the same period in 2013. Is it time you switched?

Source: Nationwide Building Society 2014

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