6th July 2014
Trust in banks may be increasing but customer loyalty to a banking brand is starting to wane.
A survey by comparison site uSwitch shows that despite numerous scandals including payment protection insurance mis-selling and Libor rigging, not to mentionthe financial crisis just six years ago, 72% of customers now trust their current account provider.
However, loyalty to one particular brand is starting to fall with only six in 10 customers having been with their bank for more than 10 years, down from 72% last year. This may partly be due to bonuses and teaser rates that are offered to new current account customers but also the implementation of a seven-day switch guarantee that means consumers will not have to reinstate their direct debits when moving bank or upset the balance of their account.
Figures from the Payments Council also show a 14% year-on-year increase in switching levels.
In its survey, online bank First Direct continues to top the list, securing first place in eight out of the nine categories consumers were surveyed on including; best current account, best overall satisfaction, most recommended, most trusted, best switching service, best customer service, best value for money and best online service.
The only category it did not take first place in was ‘best rewards’ where it came sixth – the category was won Santander.
Conversely RBS was labelled the worst bank in eight out of the nine categories, but came in 11out of 13 for ‘best rewards’. Yorkshire Bank was deemed the worst for offering consumers rewards.
After a tumultuous year in which the bank was pushed to the brink of collapse, The Co-operative Bank managed to hang on to its third place position in most of the categories and Santander, previously bottom of the table, managed to edge its way up in a number of categories – although its service still leaves a lot to be desired.
David Mann, head of money at uSwitch, said banks needed to offer customer more innovative products and services.
‘Where you keep your hard-earned cash should be as important as how much you earn in the first place – so it’s great to see a healthy level of trust between banks and their customers,’ he said.
‘It’s clear that the best bank accounts are the ones that offer tangible benefits such as incentives and rewards – but other factors such as customer service, value for money and trust are as important as ever. Many providers still have a long way to go before they are comfortably sitting in their customers’ good books.’
Mann added that increased competition in the banking sector with the launch of challenger banks would force banks to continuing upping the stakes around service and products.
‘Competition in the current account market is hotter than ever and banks can’t afford to take their foot off the pedal. Already this year we have seen high profile brands such as M&S and Tesco launch current accounts specifically designed to steal customers off the high street,’ he said. ‘With the likes of Virgin Money and Atom Bank also expected to launch in the next 12 months, it’s clear that the Big Four are no longer holding all the cards.’