Bank account switching in 2014 more than 2013 but less than 2012

Fewer people changed their current account provider in 2014 than before the seven-day switching service was available

The number of people that changed current account in 2014 was higher than in 2013 but less than the number that switched in 2012, before the seven-day switching service was made available.

The lack of differentiation between what banks offer continues to limit switching, but this could change with a raft of new finance firms entering the UK retail banking sector.

The seven-day switching service can change a customer’s current account in a week, instead of the 30 days it took before. According to the Payments Council, 69% in the UK are aware of the service.

There were 1.16 million switches in 2014, up from 1.03 million switches in 2013. But in 2012, when the seven-day switching service was not available, there were more (1.2 million). 

While the seven-day switching system is welcomed, if there is to be a significant increase in switching accounts there needs to be more choice. 

But the efforts of financial regulators the Financial Conduct Authority and the Prudential Regulation Authority to introduce more choice are beginning to bear fruit. Currently there are a number of new banks either just starting out or in the process of getting a banking licence. Starling and Charter Savings Bank are examples.

Another example is digital-only Atom Bank, which is in the process of launching and was founded by Antony Thomson, who set up Metro Bank in 2009. Metro was the first banking organisation to open in the UK since the end of the 19th century.

Thomson recently said Atom Bank will use its lower cost base to offer more competitive interest rates.

One banking source said financial services in the future will become a very large number of smaller specialists that customers can compare easily online using things like moneysupermarket.

“So the days of having multiple products with one firm may be over soon,” he said. "I believe people will increasingly select individual products from different firms. A current account here, savings over there and a credit card somewhere else. 

"If regulation and compensation schemes provide confidence, I think people will be open to new brands. I am also sure those firms with the best IT will prevail. Best meaning very secure, reliable, always available and easy to use on any platform."

New banks would have been encouraged by Metro Banks latest figures. It now has 447,000 customer accounts, which is 63% higher than 2014. It also announced 118% growth in deposits to more than £2.8bn and an 112% increase in loans taken out compared with 2013.

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