Starling and Monzo top the charts for current account switches

The number of people swapping current accounts between July and September using the official switch service rose almost two-fifths on the previous three months, data shows.

136,575 switches took place during the latest three month period as banks brought back three-figure welcome bonuses which had vanished over the coronavirus lockdown.

With only 98,192 people switching during the first three months of lockdown, several high street banks have since begun re-offering cash incentives in a bid to entice new customers.

Lockdown winner: Starling Bank managed to bag the most amount of switching customers, while losing the least between April and June, data shows

NatWest and HSBC are currently incentivising new customers to switch with a £125 switch offer. 

RBS and Lloyds Bank meanwhile are similarly teasing new customers with a £100 incentive.

The switching service revealed that while the number of switchers grew in the summer, more people switched in January and March pre-pandemic, than the six month period afterwards. 

Andrew Hagger, from the personal finance site Moneycomms, said: ‘Between April and June the numbers of people switching dropped off a cliff but this data shows that it’s starting to pick up again.

‘When you think of the 113,000 people who switched in March alone this year, it’s clear we are a long way from normal.

‘People have a lot more to worry about at the moment so switching bank account is probably not that high on the list of priorities, but with more banks beginning to offer incentives that could change.’ 

The move for banks to reintroduce bribes comes after the digital smartphone banks won the switching battle between April and June, the most up-to-date figures its provides. 

That means we’ll have a clearer picture in the next set of figures as to just how important these incentives are to snag customers.  

Monzo and Starling winning switching customers is key for the challengers, as they battle to get people to use it as their main current account, rather than just a secondary one. 

Starling proved the most popular. It gained 12,786 customers and lost just 788.

Although more customers switched to Nationwide, Britain’s biggest building society also saw 6,270 switch away from it between April and June. 

Online and mobile banking offerings and better customer service were reported as the most common reasons why customers would switch bank accounts, rather than upfront welcome bonuses.

This is potentially one reason why Monzo and Starling continue to perform strongly and steal customers away from the established banks.

Jon Ostler, chief executive of the personal finance comparison site Finder, said: ‘The lack of switching incentives from the big banks over lockdown is a likely explanation as to why digital-only banks take the top two positions for net gains.’

Ostler added, that the parity between current account offerings during lockdown gives a more natural indication of consumer preference. 

He believes that although Monzo and Starling will be delighted with the top two spots, both now face a challenge from the main high street banks whose switching incentives have historically driven up their customer numbers at the expense of others.

With the news on Tuesday that HSBC could begin charging for current accounts people may be incentivised in future months to switch just to avoid losing money.

John Crossley, head of money at Compare the Market, said: ‘If the demise of free current accounts becomes a reality this may further increase the numbers switching.

‘Customers deserve easy access to their finances and value for money, and the increase in switching in the most recent quarter suggests that many people are dissatisfied with their current provider and voting with their feet.’  

The two banks which performed the worst were Santander and Halifax, two providers that until recently regularly topped the charts.

Santander lost a net 12,532 customers and Halifax 10,019. Santander and its 123 current have seen a number of perk cuts in recent years, including some this week which saw change in cashback terms.  

This post first appeared on Dailymail.co.uk