Financially vulnerable need support to switch bank accounts

Financially vulnerable consumers would benefit from more information and support to overcome negative associations with switching their bank accounts, according to research commissioned by the Current Account Switch Service (CASS).

A study of 1,000 banking customers by Frontier Economic revealed the effect the Coronavirus pandemic on attitudes to bank accounts among those in CASS priority groups (financially vulnerable people, 18-24s and SMEs).

The research found several factors have had an impact on switching volumes. The strongest driver for switching is the prospect of receiving some type of switching benefit, with 76 per cent of consumers motivated to switch for a reward, and 70 per cent motivated by a cashback offer.

Consumers are also motivated by better interest rates (68 per cent of consumers) and by better product deals (57 per cent of consumers).

Ease of switching and the prospect of better customer service are also important considerations for 57 per cent of consumers.

Since the launch of CASS in 2013, over 6.7 million accounts have been switched and more than 100 million payments have been successfully redirected by the service.

Over the course of the pandemic, CASS has seen a significant drop in the number of switches that have been conducted, most notably between March and April 2020, at the peak of initial lockdowns.

The IAT research results also show the considerations consumers make when switching accounts. Trust in the new bank is important to just over half of consumers, while only 39 per cent of consumers consider a recommendation from family or friends to be important in the decision to switch.

People who are financially vulnerable are 7 per cent more likely to fear that they could be rejected by a bank and 5 per cent are more likely to worry about getting the same overdraft facility than other customers.

These figures were even higher for regular overdraft users who were 9 per cent more worried about being rejected and 18 per cent more worried about getting the same overdraft.

The research suggested that financially vulnerable customers are also more likely than other groups to feel less positive, with the research suggesting they associate switching with words such as ‘confusing’ and ‘complicated’.

A total of 43 per cent of those who undertook IAT polling associated the word ‘stressful’ with switching current accounts, while 56 per cent associated switching with the words ‘time consuming’, and 52 per cent with the words ‘hard work’.

Maha El Dimachki, chief payments officer of Pay.UK, owner and operator of the Current Account Switch Service, said: “The long-term impact of the COVID-19 pandemic could potentially lead to sustained higher levels of financial vulnerability for some time. It is vital those who could benefit from switching have access to information that allows them to fully understand the process. That is why we are committed to continue to raise awareness among this group.”

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