Halifax and Starling Draw Current Account Switchers


November 2021

Halifax and Starling Draw Current Account Switchers

A flashy digital bank favoured by millennials and a high-street institution with a £125 switch offer posted the largest gains of current account customers this spring.

After losing a net 1,600 accounts in the first quarter of the year, Halifax dangled a carrot in the form of a switching bonus and bounded to the top of the current account league tables, with net gains of 16,684 between April and June.

But app-based bank Starling didn’t need a cash incentive to climb into second place, gaining a net 13,720 current accounts. The spring quarter continued Starling’s stellar run: it gained the most current account customers in the first quarter of the year and the second-most in the last quarter of 2020. The fintech firm, valued at £1.3 billion, this week suggested it will launch a public offering within two years—but could be tempted away from the London Stock Exchange.

The data is from Pay.UK. Its seven-day Current Account Switch Service (CASS) doesn’t represent all current account switching but can map general trends.

Other winners this spring include Starling's app-store rival Monzo (net gains of 5,707 accounts) and Virgin Money (net gains of 6,915 accounts), which this week announced it will accelerate its own digital transition. Virgin was also boosted by the £150 gift card it began offering new joiners toward the end of the quarter in June.

The prevalence of switching offers this spring and summer is “a strong sign of confidence returning to the market,” said David Piper, head of service lines at Pay.UK.

Meanwhile, HSBC’s launch of its own switch offer—£125 in cash plus a £20 Uber Eats voucher—led to the largest number of signups in the spring: 50,192 accounts. However, the bank haemorrhaged 66,756 current account customers in the same period, making it the quarter’s biggest loser.

Other high street banks similarly suffered: Santander ended the quarter with 11,176 fewer current accounts, while TSB lost a net 9,491.

In addition to the wins and losses from the spring quarter, Pay.UK also published data reflecting wider movements in the current account market over the summer. Between July and September, 212,600 people used CASS to find new current accounts, up 16% compared to the spring. 

While some of this reflected a cavalcade of switching offers banks rolled out this summer, consumers were also motivated by the search for better digital banking platforms. 52% of customers said they switched to find better digital banking facilities, while 39% were looking for ease of mobile or app-based banking systems. Those figures suggest Starling and its fellow digital challengers—and high-street banks which make the tricky transition—will continue to steamroll the competition when more specific figures for the summer are released later this year.

Current account holders were always looking for stronger customer service (32%) and favourable interest rates (23%). But the location of branches slipped into the fifth-biggest reason for switching, motivating just 22% of movers. 

Banks with physical footprints—which Starling and Monzo pointedly lack—have been shuttering locations to meet this growing customer preference for digital banking and slash costs. Most recently, Lloyds Banking Group announced it will shutter an additional 48 Lloyds and Halifax branches in 2022, in addition to the 100 locations it retired this year. Virgin Money will also close 31 locations in early 2022.