Such banks must not only offer powerfully attractive alternatives and improvements, but also foster trust in order to drive significant numbers of customers to change banks. The trouble, however, lies in the fact that despite bosses possibly offering better interest rates and lower bank charges, very few UK customers switch banks each year.In fact, according to the latest figures from BACS, significantly fewer people chose to move their personal current account (PCAs) in the last 12 months. Some 1m people switched their current account suppliers in the year to October, 11 per cent less than the previous year, even though several banks offered cash incentives of up to £150 to encourage switching. And as the Competition and Markets Authority (CMA)’s Retail Banking Market Investigation in 2015 suggested, there are more than 68m active PCAs in the UK, so 1m people (three per cent) changing suppliers in a year seems a relatively small proportion. By contrast, Mintel reported that a quarter of households now change energy supplier each year. Encouraging for the new banks is news that those who switch usually move their current accounts away from Barclays, NatWest/ RBS, Lloyds and HSBC. However, the main beneficiaries are banks such as Santander, Nationwide and Halifax, hardly new names on the high street or the market, with some moving to new banks such as Metro, Fidor, Atom, Starling, Monese, Mondo, Simple, Osper, Hello or Tesco.
Building trustTrust is a core issue in the banking sector – and theoretically, a potential opportunity for new banks. It is at a very low level; according to a PwC survey in 2014, only 32 per cent of consumers trust retail banks. However a measure of the challenge that smaller, newer banks face is that a recent YouGov poll showed that only 22 per cent of consumers trust them. Read more about trust at work:We take a look at the growing importance of logo and design in the digital age. Zehra Chudry is head of content for PayExpo Europe 2016, part of the Payments World Series. Image: Shutterstock
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