The Payments Council in partnership with 17 banking groups that manage the accounts of the vast majority of Britain’s 46 million current account holders will next week (16 Monday) launch its free current account switching service to make switching, the Payments Council says, “simpler, more reliable hassle free”.
The launch of the service was prompted by a 2011 recommendation from the Independent Commission on banking that said more needed to be done to bolster switching levels. People only changed their current account once every 26 years on average, it claimed.
The Payments Council will launch a multi-million pound campaign on Monday (16 September) to raise awareness of the service and its benefits. The UK’s biggest bank brands are also stepping up marketing activity in preparation with a flurry of incentives and ads to put them front of mind for anyone looking to use the switching service.
Halifax is promoting its ‘£100 to switch’ offer and its own switching service heavily, while direct bank First Direct as upped its incentive to prospective customers to £125 from £100.
Others have added loyalty elements to their debit cards both as an incentive to switch and a reason to stay. Halifax launched a ‘cashback debit card’ last month offering mobile and online banking customers the chance to earn up to 15 per cent cashback when they shop with participating retailers. The launch came soon after Royal Bank of Scotland announced its own “Cashback Plus” debit card, which offers between 1and 20 per cent cashback to customers when shopping at participating retailers.
Financial services marketers say the changes provide banks with an opportunity to demonstrate the value and service they offer to existing customers both as a tool to acquire customers but as importantly to make sure customers are not tempted by cash incentives.
Nationwide is planning to launch a multi-media campaign using its “You need a bank account, you don’t need a bank” umbrella positioning. Marketing director Andy McQueen told Marketing Week the switching service will provide the people with the “nudge they need to actually move” but warns brands will need to do more to keep customers.
“I’m sure lots of banks will take this opportunity to market their wares. But the proof of the pudding will be in the eating – those providers that offer good value, great service and innovative accounts that meet the needs of modern consumers with things like mobile banking, will be the ones that win long-term customers.”
Lloyds Banking Group’s chief marketing officer Eva Eisenschimmel says the banks she oversees marketing for, such as Lloyds Bank, HBOS and Halifax, will do what is possible to keep switching levels low.
“You can’t have a competitive market or sector that can genuinely delight customers unless switching is possible and a genuine alternative is accessible. We [Lloyds Banking Group] are embracing it and we will do our best to make sure our customers are loved and have no desire to test it.
“Halifax’s Cashback Plus and other [similar schemes] are maybe about loyalty but it is also about value, which is key in banking. I hope switching stays low because people are happy but there will be nowhere to hide and nor should there be.”
Gavin Dein executive director of Reward, which worked with Royal Bank of Scotland on developing CashBack Plus, says banks need to go back to basics to ensure they do not lose customers.
“You want to avoid a situation where account switching is the norm. The focus will be on retention not acquisition over the next three years, about understanding what customers need.”