UK consumers using the midata bank account comparison tool to assess the value of their day-to-day banking services are five times more likely to switch providers than those tempted by financial incentives in standard 'best buy' tables, according to data from Gocompare.com
Launched in March 2015, Gocompare.com’s current account comparison service is the only tool that makes use of the Government-driven midata initiative. A customer’s midata file will contain 12 months’ worth of their actual banking data, including all transactions made, interest earned, and fees incurred to provide a pounds-and-pence value to help people determine which account is the most appropriate one for them to switch to.
The most popular current account for people who use their midata file to run a comparison is Halifax’s Reward Current Account, which is the seventh most selected account in a standard ‘best buy’ table. Nationwide’s FlexDirect Account is the top account in a ‘best buy’ table, but is only the eighth most popular when people make use of their midata file.
Matt Sanders, Gocompare.com’s banking spokesman, says: “Some of the main drivers of current account switching have been the proliferation of incentives, cashback rewards and in-credit interest earnings. These are understandably attractive, and may well be ideal for some people, but they don’t provide a clear picture of the pros and cons of the current account. Being given £100 for switching, for example, is all well and good, but if you’re going to rack up foreign usage fees and overdraft charges then that incentive could quickly be cancelled out."
Midata-enabled comparisons lay bare the true benefits and drawbacks of current accounts by attributing a monetary value to each account, he says.
“With midata it’s clear to see how an account will perform in year one, two, three, four and five, based on how a customer has used their current account over the last 12 months," he adds.
At the moment, only customers of RBS, Lloyds Banking Group, Nationwide, Santander, HSBC, Barclays and Tesco Bank provide midata files for comparison purposes.
"We’d like to see more banks and building societies letting their customers make use of this data so that they can carry out meaningful current account comparisons," says Sanders. “We believe that improved access to and use of midata will increase competition between providers and lead to the creation of more current accounts that are genuinely useful for consumers’ day-to-day banking requirements.”