‘Biggest banking shake-up’ hasn’t made more customers switch
Just 15,000 extra banking customers switched their current accounts last year despite a new scheme described as the biggest shake-up for banks.
Open Banking was launched a year ago after the Government’s competition watchdog urged high-street banks to be more competitive and promote switching. It means banks must hold customer data in a standardised way so it can be easily accessed by third parties with the consumer’s consent.
This was supposed to make it easier to shop around for deals, but analysis of industry switching data by Telegraph Money has revealed that switching activity increased by just 1.5pc in 2018.
Removing the 16,000 people who left TSB after its highly publicised IT meltdown, the number of current account switches actually decreased.
Research by Splendid Unlimited, a technology firm, shows that public awareness of Open Banking is extremely low, with just over one in five saying they had heard of it.
Imran Gulamhuseinwala, a trustee of the group tasked with implementing the process, said it was too early to judge the systems but that the progress made so far was “a step in the right direction”.
A spokesman for the Competition and Markets Authority, which ordered the shake-up, said Open Banking would eventually “revolutionise” how people manage their money.
He added: “It has made huge strides over the past 12 months, though it is still in the fairly early stages of the roll-out.”
Last year the major banks were accused by new digital rivals of dragging their heels over Open Banking for fear it would cost them customers as it became easier for consumers to switch current account provider. HSBC was the first major bank to embrace the software when it launched its Connected Money app in May, which has since been downloaded 200,000 times.
This allows customers to view all their financial information, including investment or savings accounts, in one place. Barclays followed suit in September by adapting its existing mobile app to incorporate this.
HSBC said consumers would soon be able to “round up” their purchases to the nearest pound using its app, meaning someone buying a coffee for £2.50 would automatically put 50p into a savings account.
Nationwide and RBS, which owns NatWest, both said they planned to allow mobile app users to view all their accounts in one place this year.
Yolt, a money management app that was the first to make use of Open Banking, said it was working on allowing users to make payments from their accounts using the app. In future it also hopes to be able to notify users when they could save on expenditures such as energy bills based on their spending data.