We’re meant to be a nation of pioneers. Back in the seventeenth century we set sail in search of exotic bounty. This was a time when most people still believed that the earth was flat, and if you sailed too far, you’d simply fall off the edge. But as we set sail into even choppier Brexit waters, a riddle remains at the heart of the banking industry: Why aren’t more of us prepared to switch current accounts?
Over the last few years it’s been hammered home that switching is easy. The Current Account Switch Guarantee, run by Bacs, claims to make it simple, reliable and stress-free. It’s even available for most businesses banking accounts, and yet us Brits are proving rather hard to dislodge from our high street banks.
While the emergence of new banks like Metro Bank, Starling and Monzo has certainly helped to bring to market more differentiated propositions that have helped to intrigue customers and to amplify the message that switching is easy, it has hardly opened up the floodgates. Even switching offers of up to £200 haven’t been enough to tempt most of us.
But perhaps there’s hope ahead. Within finance, there’s a much-vaunted ambition that customers will become co-regulators, voting with their feet if their bank is found to have significant conduct failings. After all, we’re all supposed to be increasingly driven by social purpose. The rise in veganism is cited as an example of consumers aiming to make a difference by making changes to their personal lives in order to soften the environmental impact of eating meat.
So will consumers bring the same conscience to banking? A recent survey asked consumers how non-financial misconduct – that includes things like sexual harassment and discriminatory employment practices – would affect where they choose to put their money. With the Financial Conduct Authority (FCA) being clear that non-financial misconduct is misconduct, and the way firms handle non-financial misconduct is ‘potentially relevant’ to how they’re assessed, it’s becoming a hot topic in the boardroom.
The survey found that 48% of consumers would consider switching if their bank was found to have failings around non-financial misconduct. 11% are ‘extremely likely’ to switch. When asked specifically if they’d consider switching banks if a large gender pay gap was reported at their bank, 9% of females responding said they’d be ‘extremely likely’ to do so, along with 5% of men
And yet only 4% said they had switched to date.
When asked about the barriers to switching, 37% cited ‘too much hassle’. Other prominent reasons included ‘all banks are equally bad’ and ‘I don’t know about the other options.’
Few of us would challenge the notion that money really does make the world go around. It dictates the working lives and social patterns of most of us and remains a theme many of us struggle with at some point or other. It’s also not something we really like talking about, and so when it comes to our banks, most of us have adopted the ‘if it ain’t broke, don’t fix it’ mantra.
Whether reports of non-financial misconduct will be enough to encourage millions to switch remains to be seen. But as a nation we’re thinking more about the impact of the choices we make, with many even willing to sacrifice strips of crispy bacon on a Sunday morning, a quickening of the pace around current account switching feels increasingly likely. It’s been long overdue.
Mike Fotis is the founder of Smart Money People, a financial services review and research company.