Let’s switch again
The other day, I stood on the London tube, and my eye was drawn to an advert.
Current account switching is on the rise as more people are becoming multi-banked
It featured a picture of a man with an extreme mullet. The copy said: “Mullets—they’re like your bank account. They might not be right forever.” Looking closer, I saw it was an advert for the Current Account Switch Service. I had completely forgotten that this service existed.
Launched 2013 in the UK, the service is designed to simplify switching current accounts between banks and building societies. Apparently, since its launch, it has facilitated over 10 million account switches.
I was intrigued by the advert, mainly because I recently wrote about how the UK is becoming multi-banked without people necessarily switching. I hypothesise that most people stick with their primary bank account and apply for digital bank services to augment their needs on an as-and-when basis. Was I right? What was going on? Time for a ponder!
The universe heard me, and coincidentally, a press release from a company called Curinos landed in my inbox. Curinos is a research, insights and strategy company focused on financial institutions. It had recently conducted a first-of-its-kind shopper survey to analyse primary current account switching behaviour among GB consumers.
The survey gathered insights from 2,252 individuals across Great Britain who had switched their primary current account within the past three years, exploring how customers decide when selecting a new current account.
Among all types of switchers, incentives proved to be the most common reason for leaving a previous bank, with 28% of respondents citing offers as their primary motivator. This was followed by dissatisfaction with low interest rates (22%) and poor customer service (18%).
Interestingly, poor service emerged as a more potent driver of churn for older generations. Boomers were significantly more likely to switch banks due to bad service (25%) compared to Gen Z (18%), Gen X (17%), and Millennials (16%).
When it came to selecting a new bank, the top priority for consumers was finding a provider that made it easy to manage their finances (49%). This was closely followed by the desire for a provider capable of meeting all their banking needs (46%) and the importance of choosing a respected and trusted brand (38%).
I contacted the report’s author, Kurt Vogt Gwerder, a strategy consultant at Curinos, to find out more. He told me: “We are seeing a huge number of banks offering cash incentives to entice customers, and it’s proving effective. The UK’s account switch service eliminates the headache associated with swapping your current account provider, meaning that customers can focus on the value a new bank can offer rather than the pain it would create to change.”
Kurt also mentioned that they have run the shopping survey in the US and Canada for several years. I was keen to understand the difference between consumer behaviour in the markets, and Kurt talked me through some of the latest research, which revealed some stark differences.
The US leads in the percentage of switchers choosing a digital bank as their primary current account, with nearly 47% opting for one. In comparison, 27% of GB consumers and only 14% of Canadians have done the same. Traditional banking still reigns supreme in Canada, with 71% of switchers moving to one of the country’s “big five” banks. Similarly, 59% of people in GB switched to one of the “big seven” banks, primarily driven by the incentives they offer.
The US tells a different story: just 22% of switchers move to the largest banks, while community and regional banks account for 15% of switches.
The factors driving these differences are interesting. According to Kurt: “Demographically, the US switching population is heavily represented by the segment of the mass market struggling with liquidity—58% of switchers earn less than $100,000 and have less than one month’s gross income in deposits.”
In contrast, more switchers in GB and Canada are mass-market consumers with better liquidity management.
In the US, many consumers are drawn to digital banks that offer flexibility and tailored products for those with liquidity challenges, such as earned wage access.
Other interesting nuggets from the research include:
- US consumers tend to feel less confident about their finances and struggle with bills compared to people in the GB and Canada (percentages of those strongly or somewhat agreeing to ‘I always have enough to pay my bills’ were US 50%, CA 62%, GB 70%, and those selecting strongly/somewhat agreeing to ‘I feel like I’m doing as well or better financially than people like me’ were US 40%, CA 48%, GB 53%).
- Factors such as monthly fees and poor customer service are the primary reasons for switching banks in the US and Canada. Meanwhile, switch incentives and interest rates are the main drivers of customer attrition in GB.
- In the US and GB, primary current account customers fragment their current account relationships across FIs to a much higher degree (average 2.19 and 2.08 current account relationships on average, respectively) than Canadians, with 1.61 current account relationships on average.
- Americans and Brits have shifted to virtual channels to open their primary current accounts (72% and 83%, respectively), while 41% of Canadians still opened their accounts via bank branches.
Having looked closely at the data (thank you, Kurt), I reached the following conclusions:
- People in the UK are increasingly multi-banked, with digital banks picking up more customers.
- Increasingly, these digital banks are making up a significant proportion of primary bank accounts.
- The US is seeing a consumer movement towards digital banks, and access to liquidity is a crucial driving force behind this.
- Incentives are critical drivers of switching in the UK. However, incentives do not guarantee loyalty. They may lead to further switching behaviour.
- Canada is well behind the curve from a digital banking perspective.
Comparing consumers across the US, GB and Canada has provided invaluable insights, highlighting how digitalisation is shaped by consumer behaviour and what the financial industry must do to accelerate the shift towards a more digital future.
Britain emerges as the most advanced market for digital banking among the three countries. Key developments such as the Current Account Switch Guarantee, a highly competitive market driven by high-profile new entrants, the adoption of open banking and widespread branch closures have fostered a consumer base far more receptive to moving away from traditional banks.
A recent survey by CRIF, a consumer credit and information firm, underscores this shift, revealing that only one in four Brits now consider having a nearby bank branch important. GB’s openness to digital banking sets it apart from the US and, more so, Canada, where traditional banking structures and preferences remain more entrenched.
About the author
Dave Wallace is a user experience and marketing professional who has spent the last 30 years helping financial services companies design, launch and evolve digital customer experiences.
He is a passionate customer advocate and champion and a successful entrepreneur.
Follow him on X at @davejvwallace and connect with him on LinkedIn.
