CHOOSING CURRENT ACCOUNTS: HAS THE PANDEMIC CHANGED THE NEEDS OF FINANCIALLY VULNERABLE CUSTOMERS?

I'm a Senior Service Lines Manager at Pay.UK, the UK’s leading retail payments authority. Within my role I manage the Current Account Switch Service (CASS).

As 2020 draws to a close, CASS commissioned new research to understand more about the rapidly-evolving needs of the financially vulnerable and the role switching your current account can play. Last week we delivered a fascinating online panel debate to talk about the research.

Chris Pond, Chair of the Financial Inclusion Committee and CASS Independent Director, chaired the panel and I was joined by Dougie Belmore, Head of Payments at Virgin Money, Joe Lane, Principle Policy Manager at Citizens Advice and Phil Sneade, Associate Director at Frontier Economics.

CASS enables a well-functioning market for current accounts and delivers a simple way for consumers, SMEs and charities to fully switch their current account. Our research, completed for us by Frontier Economics, looked at how the current account market changed in 2020 and how the switching behaviours and attitudes of customers are different than in the past.

The main focus of the research was on attitudes to switching, and whether actions from account providers have influenced their interest in looking at and choosing different current accounts.

Current account switch volumes fell this year because the pandemic influenced what current account providers offered in the market and how people felt about switching. In a period of economic uncertainty that’s not surprising. It’s also highly likely that 2020 has led to growth in the number of people who are financially vulnerable, and those higher numbers will likely be with us for some time.

In the panel discussion, we heard that the impact of the pandemic on the economy has led to changes in behaviour in ways we might not have expected. In my view, it is clear people’s behaviours are changing rapidly – six million people have downloaded digital banking apps over recent months and people with no knowledge of technology are learning to use tools like FaceTime to talk to friends and relatives.

Joe Lane, from Citizens Advice said people needed clear advice and relevant information, remarking that the Citizens Advice website was receiving over two million visits a week at the start of the pandemic. He noted people’s contact with their banks has increased and people are now more active in seeking help and advice. 

Dougie Belmore, from Virgin Money, said the crisis has reinforced his view that it is vital banks are available for customers when they need them most and that vulnerable people must not be treated any differently from others and have access to the full range of bank services, especially advice and tools to help with budgeting.

Phil Sneade from Frontier Economics noted that consumer confidence seems to be returning, and more people are starting to switch their accounts again.

One thing that the research was clear about was that there are more perceived barriers to switching among those who are financially vulnerable. Some fear they may be rejected. Others are concerned about overdraft charges.

There is no single action highlighted from the report which could fix the issues and there is a need to avoid a “one-size fits all” approach. People’s needs differ widely and it is vital the services that are offered are relevant to them as individuals. Young people and the financially vulnerable in particular require targeted engagement, so that they can understand which products are best for them, while SMEs look for digital features and access to a relationship manager.

I am looking forward to 2021 and working together with the switching ecosystem to further enable a well-functioning market for current accounts. I’d very much like to hear your ideas and comments on the future of switching. And, as we develop our future strategy, it is vital that we use the findings of this research, together with further insight from the switching ecosystem, to understand more about the future landscape, so that we can adapt our strategy accordingly.