The introduction of seven-day switching in September 2013 has renewed the focus on providers' current account propositions. The scope for greater consumer mobility means that retention and acquisition strategies are more important than ever. Stricter regulations and the rise of new entrants will drive product innovation as providers fight for competitive advantage.
Analyzes the likely impact of forthcoming rules designed to ease the switching process.
Assesses the relative prospects for recent and prospective new entrants.
Discusses how providers are innovating their current account propositions in response to new entrants and tighter regulation.
What impact will easier switching have on the dynamics of the UK current account market?
How will new regulations affect the sale and provision of current accounts?
How will the emergence of new entrants and new alternatives to conventional current accounts affect the market?
The immediate impact of the new switching procedures will be limited, as switching is largely driven by negative experiences with existing providers, and most consumers do not see significant benefits to be gained from switching. However, mobility will rise over time as positive feedback spreads and a switching culture starts to grow.
Over the last year, regulators have forced providers to revise their incentive schemes to minimize the risk of mis-selling, and to tighten their procedures for the sale of packaged accounts. Banks will have to find other ways to generate revenue from current accounts, prompting them to innovate their account propositions and charging structures.
Innovation will become an important weapon in the fight to acquire and retain current account customers. Mobile banking is becoming a hygiene factor, and rewards programs that offer discounts at selected retailers will boost levels of goodwill and engagement. Customization of account features will allow greater flexibility in charging structures.