A new system allowing 46 million bank customers to switch current accounts in under a week is to go live next month, following hundreds of millions of pounds of investment by banks to upgrade IT infrastructure.
The Current Account Switch Service, led by the UK Payments Council, is set to launch a month from today, on 16 September, with 33 banks and building societies signed up from the start.
The service will reduce the time taken to move accounts from a current average of between 18 to 30 days. Under the new free service, outgoing payments going out such as direct debits and incoming payments such as salaries will be moved to new accounts within seven days.
The account switching service will independently controlled, based on a central platform run by Bacs and using VocaLink's automated clearing house (ACH) processing systems to automatically redirect payments from one account to another. VocaLink, a long-term partner of Oracle, already provides the infrastructure for other initiatives in the UK, including the Faster Payments service.
The account switch service operates on an entirely new, custom-developed IT platform based on the ISO 20022 message specification, the Payments Council told ComputerworldUK. For many banks, especially the main high street banks, this means that the entire switching process can be automated.
For smaller banks the service provides a web-based alternative, though the two channels are entirely integrated. This means that any bank subscribing to the service can switch an account from any other member bank – and they all use the same central, shared infrastructure to do so.
According to the Payments Council the total cost of designing, developing and implementing the new service is said to be £750 million, with the figure including costs such as a campaign to raise awareness of the service.
However the Council has stated that the majority of the expenditure has been investments made by the banks upgrading their individual internal processes and IT infrastructure to meet the switching service requirements, such as the ability to interface with the central system.
The account switching plans stop short of suggestions by the government to introduce full account portability, which would allow customers to switch banks as easily as they would move from one mobile phone provider to another. However the cost to implement such a service is significantly higher, at approximately £5 billion, due to the siloed systems owned by banks meaning that new account numbers would need to handed out to all customers.
The scheme is one of the measures recommended by the Independent Commission on Banking, with the aim of creating greater competition in the market dominated by the 'Big Four' high street banks, offering a 'hassle-free' means of swapping provider.
Adrian Kamellard, chief executive of the Payments Council, commented: "As final preparations are made for launch we look forward to a new era of account switching which will lead to greater choice for customers and wider competition in the marketplace."
The seven-day account switching plan is one of the measures recommended by the Independent Commission on Banking, with the aim of creating greater competition in the market by offering a 'hassle-free' means of swapping provider.