Banks need to Switch off Switching and Switch into the Consumer Instead
To those of you who read me before it will sound strange that after I spent so long complaining about the fact that people do not switch banks and remain prisoners of an abusive relationship, I would do anything other but rejoice to see this week’s news that current account switching is up by 13% bringing us up to a total of 2.8M customers in 3 years split chiefly between 7 banks.
The reason my eyes rolled when I read it, is that it’s not the mobility based on merit we were hoping for, but in effect, the consumer’s turn to scam the bank.
Take “Switching Stephen” in this article – he openly admits his goal is to make as much money as possible by playing the system and switching as many times as possible as a pure money saving scheme. As such which of these banks will end up being the one he stays with once he’s exhausted his options? Who “owns” Steven? Who should count him in the success metrics of their acquisition campaign?
How engaged is our hero? How much does he believe that any of these banks are a brand he believes in who will serve his financial needs and accompany him as a trusted advisor through life rather than a mere pawn in his penny chasing game?
If I were the 7 banks in the article I’d -rightfully- feel used. If I were on the board of directors of any of them I’d wonder what got into me to approve that as a strategy (or indeed why I never even knew about it). If I were serious about changing things I’d stop trying to find shortcuts and find better things to do with the 280M this exercise in futility cost.
The sad bit is that the consumer part of any of the bankers reading this, will punch the air and grin at Steven’s ingenuity -and maybe even consider making a move themselves- because we all know “banks deserve it, they’ve been shoving their hands in our pockets for long enough, time to do the same” but also because they know the service they provide is no different from the other guys and the degree to which it can delight the consumer is equally non-existent so they can’t help but sympathise.
But sympathy won’t get us anywhere. Neither will £400M a year to the tune of £100 a pop. In the infographic below I outline some of the things that money would have bought any of these banks. 40 Incubators. 4M custom development hours. 5 x Bank Simple or mBank. Half a new backend (don’t scoff, a Savings Goal and two years later they’d avoid salaries missing and ATMs crushing). 4 new BODs? Let’s stop wasting money by throwing bonuses at it and instead, create delightfully addictive or at least reasonably sticky experiences for poor Switchin’ Stephen, it’s high time.