By Daniel Hunter
New research from GfK reveals that over three-quarters of people (78%) say the introduction of the ‘hassle free’ seven-day Current Account Switch Service today (Monday) is unlikely to tempt them to change banks.
The GfK Current Account Switching Report shows that few of us have switched banks in the past year anyway. In the past 12 months, only 3% of bank users have switched a current account to another bank. Among those that do switch to another bank, the most common reason for their choice of bank is branch location with 34% of bank users citing a ‘convenient location near to work or home’ as a factor behind their decision.
An increasingly important driver is a financial incentive for opening or using an account. This has been growing in importance over the last few years; it was mentioned by 9% of bank users in 2010 and the figure had increased to 13% overall YTD July 2013 (16% for online bankers).
“It’s surprising that in this digital age, branch location is still the most important reason for choice of bank amongst switchers — even among those who do their banking online," Nick Watkins, Managing Director of Financial Services at GfK, said.
“While the seven-day switching service may make the transition quicker and easier, this initiative alone will not significantly increase the numbers of people switching from one bank to another. At the moment few see strong positive reasons to switch — switching tends to be prompted by a bad experience such as poor service or high charges.
"Encouraging consumers to switch their account depends more on a compelling and differentiated offer than merely the speed with which a bank can arrange the transfer. That offer may increasingly involve rewards and incentives, but we believe it will also continue to be about the physical presence on the high street.”
Another reason for customers’ reluctance to switch current accounts is that general customer satisfaction levels are high for services provided by their branch. They ranged from 63% who were either “extremely satisfied” or “very satisfied” for enquiries about a new financial product, and the same figure for cash withdrawals or payments at the counter, to the lowest - 55% - for paying in a cheque or cash at a machine.
The most popular reason for visiting a bank branch is to draw out cash at an ATM (60% of respondents in the survey said they had done this in the past week; rising to 80% in the last month). One quarter of bank customers (27%) had visited the branch in the last month to make a query about their account.
A nearly identical percentage (25%) of customers who bank online had also visited their branch within the last month to make a query. In addition, 9% of bank customers generally had enquired about a new product in a branch while 6% had completed a financial review in a branch. These figures were again similar for online bankers (9% and 5% respectively).
Despite the reluctance to switch banks following the imminent introduction of the Current Account Switch Service, bank customers have clear ideas on how they’d like their bank branch to change.
The top ‘real improvement’ chosen by one third of people (34%) was longer opening hours on Saturdays followed by longer opening hours during the week (31%). One quarter (26%) wanted more qualified staff who can offer help and advice. 24% thought better parking facilities would be a real improvement; 15% said Sunday opening.
“There is a latent demand for longer weekend opening hours and the opportunity to discuss finances with qualified staff that isn’t currently being met. That is true whether customers bank online or not," Nick Watkins added.
“Despite the growth of mobile and online banking, the vast majority of customers are still looking for the reassurance of the physical branch. Customers need a positive reason to move bank accounts, and while incentives clearly do have an effect, the branch still has a very important role to play. Whether in the long-run promotions will prove more appealing than extended opening hours and qualified staff, only time will tell.”
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