6th July 2012
Customers are notoriously slow to change their bank accounts. A piece in yesterdays Guardian by Zoe Williams suggests that this might be changing. She writes that the recent scandal has finally prompted her to change her account, though admits it has taken her 20 years.
Her piece quotes Bruce Davis, who co-founded Zopa: "It is the people who have the power to change banks, not the politicians and certainly not the regulators. It's more than a consumer choice, it is a democratic one. It is about moving the power of money away from those who take it for granted."
Williams also quotes figures from the Building Societies Association, showing Nationwide had reported an 85% week-on-week rise in its online applications for new accounts while the Co-op had a 25% increase: "The Ecology Building Society said visits to its website were up 50% on Monday compared to a week ago and visits to the site over the past week were up 266% compared to the same week last year."
The views found resonance on the comment boards. Agent 80 said: "There is nothing a bank can do that other places (like building societies) can't do better. Other than the jobs they provide for the poor sods who work in them, 'The Big 4' provide absolutely no benefits to normal people whatsoever and should be driven off the High Street as soon as possible."
There are now whole organisations dedicated to encouraging people not to bank with the large banks. For example, and its US equivalent aim to support ‘mutually owned, community-focused or ethically minded banks'. It adds: "Any money you do move will help to support the alternative banking sector and send a message to the "big 5" that you are not happy with the way that they use your money." It points to high fees, a more personal service and better deals for small businesses.
Martin Lewis doesn't factor in the moral element when comparing bank accounts, but does give some indication of how easy it is to change accounts. The discussion boards also provide useful real life experiences of switching.
Barclays has been here before. In February, there were customer protests over executive bonuses: "Leomi Potter, a 25-year-old supply teacher in London, said she would ditch the bank tomorrow as part of the "Move Your Money" campaign…Branches in London, Oxford, Leeds and Sheffield will be targeted as part of the campaign to "change the culture of banking".
There was even a whole Facebook page dedicated to the protests.
However, it is unlikely to bring down Barclays in a stroke. Corporate clients will need to take similar action and this is unlikely to happen quickly. In his book ‘Liar's Poker' Michael Lewis chronicles poor practice in investment banking. As his says in this interview – – he thought that once the abuses were made clear, corporate clients would stop doing business with investment banks, but that has not happened. "When I wrote Liar's Poker [published in 1989] I thought it was about a period that was coming to an end."
Equally, there are those who will choose to maintain their banking relationships for other reasons. CheshireSalt: "People are able to separate the morals, attitudes and general helpfulness of the clerks they see in their local bank branch from those of people six pay grades above them. That is why they tend to stick with the people they know. It maybe also explains why on-line purely banking has not taken off quite as predicted."
At the margin, customers are looking for alternatives, but not in sufficient numbers to break the robust profit lines of the major banks. If corporate customers finally tire of being duped, there may be a real challenge to the business model of big banking.
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