Current account switching in the UK fell around 30% last year as the pandemic raged in the country, per AltFi. In total, 704,560 switches occurred throughout 2020, compared with over 1 million in the previous year. The figure was aided by a strong rebound in Q4, with nearly 190,000 switches taking place—including the highest monthly total since the crisis began. For context, current accounts are akin to checking accounts in the US.
The decline was likely driven by a reduction in marketing efforts by banks—highlighting the importance of switching incentives. Surprisingly, the pandemic appeared to have a more significant impact on banks’ end than on consumer sentiment. Customers actually switched the most when coronavirus cases were at their highest; even when the country was in lockdown for all of November—which was the service’s best month since March 2020. According to the chair of the Customer Account Switching Service (CASS), banks withdrew some incentives in response to the pandemic and didn’t reinstate them until late summer. It is possible that some customers are just less inclined to switch banks in the middle of a crisis, but the timing of the rebound indicates that switching bonuses remain a powerful customer acquisition tool.
Cash incentives help entice customers to leave their bank, but institutions need to offer more value-added services to retain them. Here are two ways banks could achieve this: