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UK account switching service fails to take off

22 July 2015  |  8025 views  |  9 tablet keyboard

The UK's current account switching service (Cass) has failed to shake up the banking market, prompting a measly four per cent increase in the number of people moving providers over the last year.

Introduced in September 2013, the current account switching service was designed to make it easier and quicker for Brits to move their bank provider, boosting competition. The service, which cost the industry in the region of $750 million, was recommended by the Independent Commission on Banking, which had originally looked at full account number portability, which would have cost anything up to £5 billion.

Over the first 12 months of Cass's existence there was a 22% increase in switching volumes but momentum has stalled, with 1.1 million switches in the last year, up slightly from 1.06 million the year before.

Earlier this year the Financial Conduct Authority (FCA) bemoaned the disappointing take-up, blaming it on a lack of awareness of and confidence in the system. Although Bacs says that 69% of consumers are aware of Cass, the FCA's own research found just 41% are.

In the last month both Lloyds and Halifax have released online tools designed to make the process of moving provider even easier but regulators and politicians are still weighing up a move to full account portability, letting customers keep their account numbers and sort codes after moving provider. This is attractive to a "significant minority" of people, says the FCA, and would increase confidence in a smooth, error-free switch.

The FCA has floated two potential models for delivering account portability: building it within the existing market structure and then running the additional infrastructure centrally, as is the case with Cass; or a new central utility model based on a shared platform. The work has now been passed on to the new Payments System Regulator.

Comments: (9)

A Finextra member
A Finextra member | 22 July, 2015, 09:15

I wonder if customers actually want this. And perhaps the lack of movement shows that most customers are either simply happy where they are, or feel the competition is no more competative/better.

Another massive project cost for what?

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A Finextra member
A Finextra member | 22 July, 2015, 09:29

maybe lack of choice is the problem - like we all said before the BBA,supported by certain government ministers ,spent so much money .

How many new banks , with innovation driven services could have been launched for £750m ?

answers on a postcard please

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Dave Sanderson
Dave Sanderson - YBS Group - Bradford/Leeds - UK | 22 July, 2015, 10:16

I'd agree with the previous comments. I used CASS for the first time last month and found it faultless, the reason I hadn't used it before was because I had no reason to switch.

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A Finextra member
A Finextra member | 22 July, 2015, 13:30

Perhaps the Government could be persuaded to test the waters with consumers before mandating any more big initiatives like this. It's what we'd do with our own ventures before committing big budgets to them. Or do the Ministers already know better than the consumers what's good for them?

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 23 July, 2015, 13:48

Even when you make bank switching less painful than root canal surgery, not enough people want to switch. I totally agree with the previous comments.

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Robin Setty
Robin Setty - ACI Worldwide (EMEA) Limited - Watford | 24 July, 2015, 12:22

Even if the take up of switching is currently low, at least a 'technology obstacle' has now been removed. Prior to CASS, the difficulty in switching was anti-competitive and this was a blocker especially to challenger banks.  Just because volumes of switching have disappointed, it doesn't mean that making switching easier wasn't worthwhile.  I'm sure that once word of mouth gets around (through customers' experiences, rather than banks saying so) that account switching is straightforward more will follow. 

Of course, the other driver to increase these levels of switching would be for banks to offer something better.  A recent survey has shown that the ability to make payments more quickly and easily would be a factor.  So providing to challenger banks easy access to payment systems is a vital next step towards increased competition, following on from CASS.

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A Finextra member
A Finextra member | 24 July, 2015, 12:40

Hmmm - after reading the above post, this forum needs a 'thumbs down' icon

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 24 July, 2015, 13:10

@FinextraMember: +1. Meanwhile, I've given your comment a Thumbs Up!

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Dean Wallace
Dean Wallace - ACI - Global | 25 July, 2015, 18:43 It's an interesting way to attempt to increase competition in the ecosystem by improving the way customers can move around. Process is important, but rarely a clincher. I saw this about 10 years ago in Utilities who wanted to make it easier for customers to change provider. The issue for them is the same as is for banks; consumers will switch when something compelling makes them switch. With utilities they do it as someone (Marin Lewis, an agent, their mate in the pub / on Facebook) alerts them to the possibility. For banking its things like a great mortgage deal if you move to the current account product (that one got me). As consumers we expect pain, but we don't move just because its painless to move. At the time I moved (a few years ago) it was also because I wanted mobile banking. I'd move again to the same provider now because they now do Apple Pay and my standard (most used) debt card isn't contact less enabled unless I buy the next account up, which I won't do as I have that product already on my the joint account.
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