People "Stubbornly Resistant" To Switch From Big Four Banks
The government's efforts to encourage people to switch their accounts away from the big high street banks are not seeing much success as they would have wished. The aims to increase competition in the personal banking sector have been scuppered by the fact that customers appear to be "stubbornly resistant" to the idea of changing away from their current banks.
It is believed that only 16% of people would consider changing to a competitor bank in the coming two years, the so-called "challenger" banks include firms like TSB and Metro. This number is a slight increase on the 13% that was reported by Pinsent Masons and YouGov.
However, around 75% of people believe that they will still be banking with one of the big four organisations in two years from now. There has also been a big decrease in the number of people who said that they would be willing to bank with payment providers such as PayPal, the number of people who would do this has dropped to 18% from 24% last year.
A recent survey by the competition watchdog said that the Royal Bank of Scotland, Barclays, HSBC, and Lloyds were in control of more than 70% of the current accounts in the UK.
The watchdog's recent efforts to simplify the current account switching service and to increase people's understanding of the new system and the amount that they could stand to gain from switching, have been widely criticised by the challenger banks for not being far reaching enough.
The payment company Bacs, has just released a number of figures that revealed that there were only 1.1 million people who switched bank account in the year up until June. This represents only a marginal increase on the number of people who changed provider in the year previous.
According to the CMA (Competition and Markets Authority), nearly 80% of people in the UK have not even checked to see how much they could benefit from switching to a different bank.
The head of financial services at Pinsent Masons, John Salmon, commented saying:
"There is a level of intransigence surrounding customer attitudes to retail banking, which sits awkwardly against prolonged public anger over past transgressions."
He went on to say that, even though a massive amount of financial resources and time have been spent on increasing competition within the banking market, the British public are still "disengaged at best, and downright sceptical at worst".
He also said that he believed that the banks which were most likely to provide some sort of competition to the big four were established challenger organisations, as opposed to payment providers like PayPal.
Research suggests that around 60% of people were reluctant to use what are known as "open data" banking services, which have been put forward by government. These open data services would allow banks to share information about their accounts more easily.
There was also an interesting revelation produced by research from Pinsent Masons, which showed that the majority of people would be more open to the idea of banking online if there were a larger combination of security measures being used.