Four reasons why you should think about switching your bank account

 
Annabelle Williams
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Get free £100s, high-tech security or an ethical banker by switching (Source: Getty)

Banks are going to offer customers more sophisticated digital products following an order from competition chiefs. Every high street bank alongside the only-online “challenger” banks will soon have to launch an app where customers can see all of their accounts in one place. It will also allow people to see better deals among competitor banks, so they can more easily switch.

It’s called “open banking”, as it’ll require sharing of data between different banks – and customers will be able to opt in to the programme. It will be interesting to see, when the apps appear in 2018, how many people actually want their various bank accounts to share data like this.

The change is part of regulator the Competition and Markets Authority’s review into current accounts. By giving people a single banking dashboard, it’s supposed to improve transparency in the industry and, on a practical level, people could more easily avoid overdraft charges by transferring funds between accounts on a single screen.

The apps won’t be ready until 2018, but it’s a step forward in the staid and slightly musty world of UK banks.

Most people can’t be bothered to change their main bank account, which means around 70 per cent of people are with one of the Big Four – Barclays, HSBC, Lloyds, and RBS – according to the CMA. Nearly 60 per cent of people have been with the same bank for over 10 years. The reluctance to switch current account is at odds with consumer behaviour in other areas, as people will readily change mobile provider, for example.

That’s fine if customers are happy, but many say they aren’t. There were more than 100,000 complaints about banking and credit to the Financial Obudsman last year, a big increase from the 65,000 in 2011. Complaints about current accounts specifically were up 66 per cent last year.

“Many people are paying more than they should and not benefiting from new services,” the CMA report said.

The CMA is also asking banks to put in place a number of other “best practice” measures to show they’re on the customer’s side. These include frequent prompts when there’s a change to charges or to remind customers to check they’re getting the best deal on their account. So far, so good, but none of these changes will be in place imminently. In the meantime, banks are thirsty for new customers and there are plenty of good offers out there and reasons for switching now.

FREE MONEY

Banks are handing out cash bonuses as an incentive for new customers to switch over. Each of the offers has slightly different criteria in terms of how much needs to be paid into the account each month, and how generous they’ll be with overdraft facilities and other perks. So people should check the fine print.

The Co-op Bank is among the most generous, as it is paying £150 to switchers to its Standard Current Account. An extra £5.50 a month can be earned through its reward programme, which requires customers to do normal things such as use online banking or their debit card. While it’s a small sum, it’s useful to think of it as monthly “interest”, given that so many savings accounts have interest rates hovering around zero.

First Direct is also offering a free £100 credited to newcomers who sign up to its 1st Account. It requires a minimum £1,000 to be paid in each month, and in lieu of this, First Direct will levy a £10 a month charge on the account. Interestingly, this bank is considered one of the better ones for customer service. Ninety-two per cent of its customers rate it ‘great’, according to a poll from Money Saving Expert.

Similarly, there’s £100 on offer at the Halifax, and it too has a cashback scheme which gives a small monthly bonus.

BETTER TECHNOLOGY

Voice recognition for logging into banking services is becoming more common, and it’s reportedly very difficult for fraudsters to beat the software. But it’s also good news for anyone irked by the layers of passwords and memorable information necessary to view one’s affairs.

Barclays has recently added a system which identifies a customer’s unique vocal pattern, as an alternative to security questions, for people using telephone banking. First Direct is offering the safety measure too, and HSBC will start this summer.

Raising the bar in security is newcomer Atom Bank, which hasn’t yet launched but has plans to let customers log in to their accounts using face scans. It will use technology similar to that deployed in airports, as facial features – such as the distance between the nose and mouth – and are virtually impossible to fake.

ETHICS

The big banks have faced a series of scandals and unsurprisingly customers are frequently looking for a cleaner alternative. Both Triodos Bank and Co-op Bank are the leaders in this space. Triodos is a multi-national with tightly controlled lending, so customers can be sure the money in their account is only used to fund projects which make a positive impact on society.

Metro Bank isn’t an explicitly ethical bank but it ranks highly on the ratings of investigative group Ethical Consumer, which checks businesses against a scorecard of positive criteria covering every aspect of ethics. It’s only been around six years so hasn’t found itself bismirched in bad practices. Similarly, Nationwide comes out high on their rankings.

IS SWITCHING HARD WORK?

In a word, no. It’s far easier than it was in the past as, legally, the onus is on the new bank to take care of everything. All the customer needs to do is fill in the form on the new bank’s website and provide the appropriate proofs of identity. The new bank then must shift all planned incomings and outcomings over to the new account. So direct debits are transferred, alongside your salary and income from investments or a rental property . It’s part of the official Current Account Switching Service which mandates that the switch has to be completed in seven days, and it’ll close your old account too. The CMA is also calling for changes to make this service even slicker in future, so hopefully it’ll be easier for people to try out different banks to find the one that’s right for them, or jump between offers to catch the best rates.

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