The introduction of a seven day account switching service will almost double the number of people moving between banks, a Metro Bank-backed report has claimed.
According to the report, conducted by the Centre for Economic and Business Research (Cebr), the forthcoming account switching service will open the doors for an additional one million people to move between banks each year by 2023. This will mean that within a decade, 2.5 million customers in the UK will change bank provider each year, up from 1.3 million people in 2012.
The increase would mean that the rate of account switching will rise to around 5 percent of bank customers, up from a current rate of 2.8 percent.
The government-backed seven day accounting service, being put in place by the UK Payments Council, is set to benefit a number of smaller banks such as Metro Bank which are competing against the established high street lenders.
The service operates on an entirely new, custom-developed IT platform based on the ISO 20022 message specification, allowing accounts to be quickly and automatically switched, significantly reducing the amount of time needed to move between providers.
The intention is to provide a 'hassle-free' means of switching banks, with the current systems taking weeks. This would provide greater choice to customers, and help in the government's aim of opening up the high street lending market to a raft of new banks. The new service is due to go live on Monday 16th September.
In addition to seven day switching, the Metro Bank report claims that the introduction of other measures could further increase the number of people moving to new providers.
Account number portability, which would make switching bank like swapping mobile provider, would increase the switching rate by a further 2.1 percent, it is estimated. Whether such a system is likely to be introduced in the short term is unclear however, with the major banks not keen to adopt a system which the Independent Commission on Banking has previously claimed could cost billions of pounds to set up.
Standardised comparison tables would also make it easier to compare current accounts, the report claims.
“An efficient current account switching market is essential for a competitive banking sector. Increased competition forces banks to work harder to innovate, differentiate themselves and keep their customers happy," said Craig Donaldson, chief executive, Metro Bank.
“At the moment, far too many consumers put up with poor service from their bank simply because they believe switching to be too complicated.
“We expect that Current Account Switch Service (CASS) will help to breakdown this perception and encourage consumers to find a bank that best suits their needs. As the research demonstrates, with switching numbers predicted to almost double in the next decade, CASS is certainly a great first step to achieving an open current account market.”