Current accounts play a cornerstone role in retail banking and yet are a major barrier to greater competition in the sector. All too often customers say it is just too much hassle to change.
As a result, inertia rules. Switching rates on current accounts are as low as six per cent, compared to 20 per cent or even 30 per cent for other financial products like credit cards and mortgages.
At the Co-operative Bank, we’ve seen a 38 per cent increase (in 2009) in current account sales, with a big rise in customers moving from the big four banks.
While this is testimony to the strength of and trust in our brand, the fact remains that the UK continues to have one of the lowest switching rates for primary bank accounts in the EU.
This matters because if the banking crisis has taught us anything, it is the need for greater diversity in financial services.
As a member-owned business Co-operative Financial Services has an important role to play in providing more diversity – and choice – to customers.
So we really need to find a solution that makes switching your current account as easy as changing your utility provider or your mobile phone number. I believe there is a need for a dedicated working group to find a way to make switching easier. One issue it should consider is the introduction of a portable bank account for personal customers.
Neville Richardson is chief executive of Co-Operative Financial Services