Compare Prepaid recently brought you the news that new rules are due to come into force later this year that make it easier to switch bank accounts.
The Payments Council announced its plans for seven-day switching in 2011 and the scheme is set to go ahead in September, after it emerged that only 8% of customers switched or attempted to switch their personal account over the past five years.
Consumers choose not to switch because they are concerned their direct debits and payments will not be transferred, or that something will go wrong during the process. Others do not switch bank accounts simply due to inertia.
However, it is hoped the new rules will encourage more people to switch and get the most out of their bank account.
New research reveals that nearly four in ten bank customers would consider abandoning the big five lenders for newer competitors when the easier switching service comes into force.
A study shows that 37% of respondents would consider switching to Virgin Money, Tesco Bank, M&S Money or another ‘challenger’ brand, rather than stick with the big banks (HSBC, Lloyds, RBS, Barclays and Santander).
This is according to research by consultancy Simon-Kucher & Partners, which found that Virgin Money – which has 70 branches acquired from Northern Rock – was the most popular of these ‘challenger’ brands.
Ben Snowman, the author of the study, said: “The dominance of the big five is set to be challenged by more competition on the high street and the greater ease and speed of switching. Whether their dominance is simply dented or substantially reduced remains to be seen.”
Figures from the study suggest that the dominance of the big five is not hugely at risk, with 73% of participants saying they would consider switching to one of these.
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