Martin Lewis of Moneysavingexpert.com says that loyalty doesn’t pay. However, customer inertia, especially in the area of switching current accounts, has so far meant that, even if customers do not ‘like’ or feel loyal to their financial services provider they are unlikely to switch to a competitor.
But that might be about to change with the ‘perfect storm’ conditions of Virgin Money taking over Northern Rock (following Metro Bank into the ‘new current account provider’ sector of the market) and the Independent Commission on Banking’s final report recommending that the following measures be introduced by all banks to simplify bank account switching:
1. 7 day transfer
2. Seamless redirection of direct debits and standing orders
3. More information on the overall costs of each account (so that a proper price comparison can be made)
Thus, current account customers might finally be given the guarantee that they can switch account provider painlessly, the motivation, as Sir Richard Branson’s consumer-friendly Virgin Money proposition finally enters the banking space and the tools to do the job thoroughly, as the price comparison sites will be able to use the more detailed information on the costs of different current accounts to provide more accurate assessments of their relative merits for different customers
Will the trust that consumers have lost in the financial services industry following the credit crisis finally start to be restored by the new bank brands? And will the customer-centric communication for which Virgin is known elsewhere strike the right note with disillusioned current account holders?
Is switching bank in 2012 on everyone’s ‘to do’ list or will consumers be as apathetic about changing current account this year as they always are. In short, is 2012 a ‘tipping point’?
Here is a report that I’ve recently written for one of my clients, market research agency, Opinium, on what might happen.