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Halifax, challenger banks win big from current account switches

Saleha Riaz
·3-min read
November saw the highest number of switches take place since March. Photo: Getty Images
November saw the highest number of switches take place since March. Photo: Getty Images

UNDER EMBARGO UNTIL 00:01, 28 JAN

Halifax and challenger banks Starling and Monzo were on top when it came to which current account customers switched to in Q3 2020, new data revealed.

The Current Account Switch Service Dashboard showed that among 49 participants, Halifax had the largest net switching gain in Q3 2020. It was followed by Starling Bank, Monzo and Lloyds (LLOY.L).

Research by Pay.UK, which operators the Current Account Switch Service, showed the most commonly cited reasons for favouring a new account were all service-related, and included better online banking facilities (40%), preferable mobile banking systems (40%) and strong customer service (36%).

Of those who completed a switch using the switch service, 71% said they prefer their new current account and only 2% said it was worse.

In the final quarter of 2020 a total of 189,273 switches took place, an increase of 52,698 compared to Q3.

November saw the highest number of switches take place (80,980) since March (113,037) “as confidence slowly began to return to the market and participant incentives, such as one-off cash bonuses for switching accounts, increased,” the report said. This recovery followed a reduction in consumer switching in Q2.

Historically, the report noted, December has been a month of low switching through the service, and while this was true of personal current accounts in Q4, there was only a minimal decline in small business and charity switches from October (5,127) to December (5,073).

This “relative stability” in business current account switches can potentially be attributed to two new factors, the report said.

READ MORE: Monzo gained more customers from current account switches than any other bank

One is a targeted advertising campaign undertaken by the Current Account Switch Service to an audience which included SME owners. The second is that the ongoing pandemic and subsequent social distancing measures caused businesses to reassess their banking needs.

David Piper, head of service lines at Pay.UK, said that “like many organisations, the events of 2020 presented new challenges and as a service we’ve had to adapt to a rapidly changing financial ecosystem.

“While we saw a drop in switching figures in the second quarter of the year, the market picked up following that and switching figures steadily increased up to November as incentives returned to the forefront. It remains to be seen if this trend will continue in 2021,” he added.

Since the service launched in 2013, the Current Account Switch Service has enabled around 7 million account switches.

The report also said that from October to November 2020, the switch service ran an advertising campaign targeting those classed as financially vulnerable to reassure them they can switch account should they need to.

“We are fully aware that many consumers and businesses may be at more risk of financial vulnerability due to the economic impact of COVID-19. Our recent advertising campaign and accompanying research was focussed on this audience and understanding how, as a service, we can continue to help those who need it most,” said Piper.

WATCH: Should I pay off debt or save money during the coronavirus pandemic?