HSBC losing out in UK account switching battle
HSBC has lost more customers since the introduction of the UK’s account switching service than any other major retail bank, according to figures published by advisory firm TNS.
The monthly TNS Current Account survey examines the number of UK current account holders who used the UK Payments Council’s account switching service, introduced in September, to transfer their account to an alternative provider. Of these, 14% left HSBC, while only 2% joined the bank.
The December numbers are even worse than HSBC’s result in November, when it lost 11% of all switchers and gained just 4%. The bank also fared poorly in comparison to its direct competitors, which nearly all saw gains or neutral figures.
The biggest winner was Santander, which signed up 19% of all switchers, although it also lost 8% over the same period. Halifax gained 16% and lost 12%, while Nationwide Building Society gained 10% of switchers and lost 4%.
Banks that saw their position stabilise included Barclays and NatWest, which both saw the numbers coming and going reach neutral ground. Some 10% of switchers left Barclays, but this was cancelled out by the 10% that joined. NatWest experienced the same phenomenon with 11% moving away from the bank and 11% joining it.
Other notable changes were the downward trend (lost 5%, gained 2%) at the Cooperative, which ended its previous upward trajectory in the wake of a high profile leadership scandal and its takeover by US hedge funds; and huge customer turnover at Lloyds and TSB, which lost 17% of all switchers but recouped 15%. Finally RBS which lost 5% and gained just 2% of all switchers.
The biggest single reason cited by those leaving was customer service (25%), followed by no special offer (12%) and charges (10%). The biggest ‘pull’ factors drawing in new customers were having a local branch and opening hours (22%), followed by customer service (14%) and rewards (11%). Santander offers customers a cash incentive, claiming to provide “cashback” on household bills, while Halifax offers customers £100 to switch. Nationwide pays customers 5% on their balance.
Santander saw the greatest number of customers leave specifically because of poor customer service (around one in three), while First Direct saw the least leave for this reason (less than 10%). Interest rates on credit were the primary attraction for customers joining Santander, while reputation and expectations of improved customer service were the main factors for 60% of customers joining First Direct.
“It is impossible to draw firm conclusions from a single month, and we will have to wait to see whether the improvement seen by the traditional banks in December can be sustained,” said Maureen Duffy, chief executive at TNS UK. “It may be that the traditional banks are working harder to give their customers no reason to leave. We now have a full quarter’s data since SWITCH. The picture will become much clearer by the end of March 2014 when we will have another quarter’s data and may then be able to see trends emerging.”
Despite the dramatic figures, the total number of customers switching their accounts remains small. According to the UK Payments Council, 89,000 customers switched their account during the first month of the new service, beginning on 16 September.
Based on the above, at its current rate of loss HSBC risks losing approximately 0.08% of its 15 million UK customers per month. In addition, the TNS figures do not include Metro Bank, which is currently rolling out across the southeast of England.