Current account switching flops

I believe that this issue is deeper, and that the profound lack of choice is also a deterrent.

Of 45 Building societies in the UK only 5 offer current account services, yet those 40 societies manage normally the largest financial transaction that a consumer undertakes, and then they fail to manage and support their day to day finances. Agency Bank restrictive practices from the 4 incumbents that throttle competition coupled with complex and expensive IT also have a part to play in the lack of consumer choice, and the consequent failure to stimulate trust in change.  

When people in the pub chatting are able to say I moved my account today because my new provider checks my regular payments and fixes any overcharging for me (Mondo perhaps?)... a new, truly competitive and transparent market will have at last arrived.

Could be, Nick,that customers are so happy with the service improvements they've seen over the last 12 months that they don't see any need to switch!

Now it is seen - easy enough to switch anyway. The customers should understand that they pay every cent for every folly around.

Could it be that most often the first question asked in the UK when you apply for a mortgage or credit card/loan is often 'how long have you been with your current bank'? UK consumers fear damaging their chance of approval so don't switch. Its not a technical problem but an educational one.

Education needed first of all to understand that every demand has a cost - and a payer (who is not the shareholder). All costs should be calculated and charged for visibly whenever possible

The issue of supply to create competition is simply that for an existing challenger, or a new entrant to compete, they have to partner with an incumbent. In the case of Fidor Bank, a new UK challenger, their approaches were initially declined by the 4 incumbents, thus restricting, or controlling, consumer market choice. Atom Bank, another challenger, have publically stated that a significant business risk they face is their agency bank relationship.

For others who were not declined, their relationship adds cost, complexity and an unhealthy supplier competition risk to their venture.  The Telco market has some interesting parallels in the MVNO model. There the pricing structure that evolved delivered a wholesale “buy rate” that ensures competition occurred, Skype charges vs BT are an example. The consumer can easily choose. In transactional or current account banking the prices charged by the incumbent providers are substantially higher than the payment scheme fees that they are charged. This ensures that their agencies charges for consumer current account services are substantially higher than their own, which was highlighted during the ongoing CMA process. 

Soviet-style central planning is never going to increase competition. Even the FCA's own report admits that "The introduction of a potential monopoly provider of a centrally-managed core platform also introduces the risk of a single point of failure and may stifle rather than encourage innovation in payment systems". A continued obsession with account number portability will throw good money after bad (£5bn mentioned in the article) while actually derailing the real objective of increased competition between account providers. Let's focus instead on providing "new opportunities for challenger banks" who will give customers a genuine reason for changing account provider, rather than a mechanism for easily switching between uniformly mediocre financial institutions.

Neobankers might believe that this scheme would have been a big hit had the regulator permitted switch to neobanks:) 

On a more serious note, 2015 has provided a lot of reality check for the founding premises of neobanks:

1. Apple Pay usage drops in 2015 from 2014 (https://twitter.com/s_ketharaman/status/685484148631453696)
2. Nearly half of Millennials say they're more likely to pay with cash in 2015 than a few years ago (https://twitter.com/s_ketharaman/status/689798849909669888)
3. And, now, account switching drops in 2015 from 2014.

I'd switch in a jiffy if I could find a bank that paid me a decent interest on the balances I hold. The reality is that with QE, few banks actually need my money. Instead I'm forced to hold multiple accounts across several banks with varying degrees of direct debit requirements and minimum balances while juggling to ensure that no account exceeds the maximum thresholds of protection. It's all too much of a pain.