Recent research has shown that despite spending £750m on an IT system that has simplified and sped up the process of changing bank account providers, only 28% of us know that the Current Account Switching Service (CASS) exists.
What Is CASS And What Does It Do?
CASS was introduced by the Banking Commission in 2013 as a result of concerns from consumers and because of a widely recognised lack of competition in the banking industry. The service simplifies and speeds up the process of changing banks. Before CASS, this process typically took 30 days, but using CASS it now only takes a week to switch bank accounts. CASS also makes sure all payments made to the old account are redirected to the new account, thereby ensuring that payments are not lost if the old account details are erroneously used.
Less Than One-Third Aware
Recent research by the TSB has shown that, 4 years after its introduction, less than one-third of consumers are aware of CASS and its benefits.
The research revealed that CASS is underused because there has been a lack of communication to consumers about the service.
What is also revealing in the TSB’s research findings is the fact that in the past 12 months, the number of consumers using the CASS service to switch bank accounts has fallen by 14%.
The TSB research has shown that, even though are new players in the banking industry, and an increase in the visibility of so-called ‘challenger banks’ in the UK, 68% of consumers still think that there is less competition in the market compared to last year.
The TSB appears to see itself as a challenger bank, and its research does not bode well for other challengers in the banking sector.
No Informed Choice
The results of the research appear to justify the TSB’s conclusions. It found that 41% of consumers believe it’s hard to make an informed choice when switching, 38% do not see the benefits of switching, and 28% think that all products are essentially the same.
The reporting of the TSB’s research may therefore have gone some way towards making more people aware of their right to switch banks.
What Does This Mean For Your Business?
The results of the TSB research shows that, even after a 3-year long investigation by the Competition and Markets Authority (CMA) into competition in retail banking, the big banks still have a stronghold on the market, and consumers are missing out. It is of course advantageous to the big banks that this lack of awareness about CASS exists, and it appears to be getting worse. Indeed, some have accused the big banks of taking their customers for granted, trapping them on poor deals, and then making it impossible to switch.
It has been estimated that the average person could be £70 better off by switching, and that equates to a collective £10 million in savings that consumers are missing out on because of the lack of awareness about CASS.
The solution may be, therefore, to force banks to promote CASS and to explain its benefits to their customers. Many think that the CMA also needs to make more of an effort to promote the CSS and to encourage consumers to shop around for a bank account.