Challenger banks gain ground with switchers
Written by Hannah McGrath
Challenger banks are enticing increasing numbers of customers to switch to their current accounts, according to the latest figures from the Current Account Switch Service (CASS).
Third quarter figures showed incumbent Nationwide recording the most gains, with 40,565 switches and 8,883 losses, followed by HSBC with 38,477 switches and losses of 22,047.
CASS suggested that incentives such as cash rewards for recruiting friends and gifts - offered by HSBC-owned First Direct - could be behind the growth in numbers.
However, the third quarter results also showed the UK’s leading digital banking challengers gaining pace on their traditional rivals. Monzo, which last year claimed to have reached its target of one million accounts, added 5,588 switchers and lost 225, while Starling saw a rise of 2,362 current account switchers and 246 losses.
The picture was less rosy for TSB, which last year saw its chief executive Paul Pester stand down following a series of outages in its online and mobile banking services, due to the botched migration to a new IT system in April.
The complications saw 18,022 current account losses for the three months from July to September, compared to 1,880 additions.
Among other challengers in the 47 banks featured in the CASS data, sustainable lending FinTech Triodos bank, which launched in 2017, added 306 switchers and counted 22 losses.
Reflecting on the data, CASS said that app-based challenger banks were “continuing to achieve noteworthy net gains for new players in the market”.
Gareth Shaw, head of money at consumer watchdog Which?, said: “Our research has shown that fresh thinking and innovation from some of the challenger banks has shaken up the market and put them ahead of some of the biggest banking brands for customer satisfaction.
“After a turbulent year of IT meltdowns that caused inconvenience to millions of people, anyone feeling frustrated with their bank should consider switching – as there has never been an easier time to move to a new provider.”