THE YORKSHIRE Building Society wants to become a challenger in the current account market, but its boss yesterday said it cannot because the switching service is not working.
Seven-day switching helped the numbers moving between banks rise to 1.16m last year, but chief executive Chris Pilling told City A.M. that this is not the “game-changing shift” the sector needs.
He has asked the Competition and Markets Authority to look at ways to make the switching service quicker and easier, and that he hopes the new government after the election will also take a keener interest.
“Until customers can move their account number and port their relationships quickly, simply and easily to a new provider, the market can never be liberated,” he said.
Pilling argued that the transparent competition found online in other markets – he gives the example of buying flight tickets – has not yet opened up the banking market.
“We have got a tiny current account proposition which we acquired three years ago,” said Pilling.
“It would make a more compelling case to grow the business with the infrastructure costs and training if we knew it was a market with, say, 30 per cent of customers switching per year, rather than three per cent.”
Pilling believes the switching process is still too slow to appeal to many customers, leaving the incumbent big banks with a major advantage and creating a serious barrier to entry.
He was speaking as Britain’s second-largest building society reported record lending volumes and operating profits for 2014.
Its net lending rose 32 per cent on the year to £2.6bn, with gross lending up 13 per cent to £7.6bn.
The mutual’s core operating profit rose 19 per cent on the year to £178.8m, and its capital ratio increased from 14.3 per cent to 16.1 per cent.
The 150-year-old lender increased mortgages to first time buyers from 7,400 in 2013 to 8,200 in 2014.