Bank account switching service project attracts global attention

The success of the Payments Councils project to introduce a system to reduce the time to switch current account providers has stirred interest overseas

The success of the Payments Councils project to introduce a system to reduce the time and complexity related to switching UK current account providers has stirred interest from overseas organisations.

The seven-day current account switching service project, was overseen by supplier CGI and was delivered this month on the exact day it was planned and to budget.

The Payments Council launched the service with an initial 33 banks and building societies included in the initial roll-out, with more to follow.

The service is the result of regulation, introduced by the Banking Commission, aimed at simplifying and speeding up the process of changing bank account providers for consumers, small businesses and charities. It means the time of the current process - where switching accounts can take up to 30 days - will be slashed. 

The project, which took two years, demonstrates the project management challenges of introducing an IT system critical to the economy and multiple stakeholders including consumers, banks and regulators.

Its success has attracted the interest of organisations in other countries and CGI is talking to overseas firms about the project, said Melba Foggo, vice president for service to financial services sector at CGI: “We are now talking to organisations in other countries about how we achieved this.”

The project required the coordination of multiple disparate stakeholders. These included the banks both large and small, the existing transaction service provider Vocalink, as well as regulatory bodies such as the former Financial Services Authority and the Office of Fair Trading.

The glue in the middle

CGI, which acquired Logica for £1.7bn in May 2012, was appointed by the Payments Council to manage the entire project. According to Foggo, its role was “the glue that held all the parties together.”

She said the reason the project hit its target was because CGI was in it from the beginning and was a constant within a project requiring input from many organisations with their own demands.

The project began in July 2011 with a two-month detailed study of the business processes and requirements. There was stakeholder engagement required before a business case was drawn up.

After creating a design and setting a budget, in January 2012 the project entered the delivery phase with the 16 September 2013 deadline set.

A centralised system, built by Vocalink, makes sure all payments made to the old account will be redirected to the new account. This ensures payments will not be lost if old account details are used in error. The service operates on a new, custom-developed IT platform based on the ISO 20022 specification.  

Foggo said the fact that Vocalink was an incumbent supplier for the Payments Council meant the project could be done much more quickly: “It would have taken longer, probably four or five years, if the incumbent had not been used."

One source said the cost of implementing the system was between £5m and £10m.

Earlier this year a BT-sponsored YouGov study revealed that 62% of UK bank customers would welcome an easier way to change banks. The research questioned over 6,500 people in six countries worldwide. 

But Gareth Lodge, an analyst at Celent, said the project is a waste of money because there was already a centralised system that could do the same thing provided by Bacs (Bankers' Automated Clearing Services). 

“There has been an account switching service in place for a decade. This system took seven days to complete its part of the switch - it was the bank systems that made the overall process take so long,” he said.

According to Lodge, over the last decade since the Bacs system has been in place, switching never went above 3% of account holders or below 2%. He does not expect this to change because banks still do not really offer that much differentiation in their services.

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