Understanding value of existing account is key to increasing switching, Tesco Bank

Understanding value of existing account is key to increasing switching, Tesco Bank

The difficulties UK current account customers experience in understanding the value of their account is a critical barrier to increasing switching levels, research published by Tesco Bank and TNS has found.

The research, published today as part of a Tesco Bank/TNS White Paper – ‘Current Account Switching – The Consumer Reality’ identifies five conditions that need to be met before a customer will switch any products or service.  It sets out the barriers to switching that exist within the current account market in relation to each of the five conditions, and concludes that while good progress has been made in addressing some of the barriers, there remain significant issues that must be addressed before customers will begin switching their current accounts in larger numbers.

The majority of current account customers (55%), for example, find it impossible to determine the value of their account – one of the earliest conditions that must be met before customers will consider switching. Furthermore, there were stark differences between ‘stickers’ (people who are not considering switching), of whom 62% cannot determine the value of their current account, and switchers, of whom only 24% cannot determine the value of their current account.

Tesco Bank has provided the findings to the UK Competition and Markets Authority to support their review into the current account market, and has called for the industry to make it easier for customers to see the true cost of their accounts and the value of what they receive in return.

Amy Cashman, Head of the Finance Division at TNS said, “The lack of understanding of the charges and interest paid on an existing current account means that consumers have no effective basis for comparing and assessing the benefits of switching.  Most informed and confident decision making begins with a clear understanding of what you have or where you are today and this condition is clearly not in place for current accounts.”

Benny Higgins, Tesco Bank Chief Executive, said, “Customers are telling us that more needs to be done to enable them to understand the true cost and value of their current account. Only then will customers be able to make sure that they are choosing an account that is right for them. Only then will customers be able to secure a fair return on their money, and avoid paying excessive overdraft charges.”

During a visit to Tesco Bank’s office in Glasgow on Tuesday, Economic Secretary to the Treasury, Harriet Baldwin MP said, “The Government is committed to increasing competition in banking to improve outcomes for consumers: more competition means banks have to strive to offer the best possible products and services to their customers. I welcome this research from Tesco Bank which provides a valuable contribution to the debate.”