Are portable bank account numbers the answer to the switching conundrum?

 CI's Head of Campaigns, Justin Macmullan, looks at three ways to encourage consumers to change banks

Consumer surveys conducted by several CI members to mark World Consumer Rights Day last month threw up some interesting results. One of which was that allowing consumers to take their bank account number with them should they decide to leave their bank may be the best way to get them to make the switch.

In a nutshell, the surveys revealed that the majority of consumers who have switched banks found the process relatively straightforward and easy, however, of these, a significant minority experienced problems. The perception among consumers who haven’t switched is that it is going to be difficult, risky and time consuming.

My own straw poll of friends and colleagues backed these findings up. One colleague who recently switched bank accounts claimed it was “a doddle” (a not very technical British term for ‘very easy’), but the overwhelming response was a slight frown and, “I’ve been meaning to do that for ages”.

But perhaps the most revealing comment came when I explained the results to a non-switching friend and their response was, “Yes, but I don’t want to be part of that minority that has a problem”.

Of course these surveys were only conducted in a relatively small number of countries, but if we really want to encourage more people to switch there is a message in there for every country.

Basically, three things need to happen.

First, the minority of cases where there are problems needs to become absolutely as small as possible. People are always more likely to hear about failures than successes, and, understandably, one of the last things people want to take any risk with is their bank account.

In many countries there are plenty of recommendations and guidelines for improving the process of switching but banks need to implement them better. See this report from CI’s European sister organisation BEUC for examples.

Second, consumers need some encouragement and advice – see, for example, the online efforts of these CI members in Spain, Italy, Portugal, and Belgium.

Third, the introduction of portable bank account numbers, something a number of CI members are calling for, could make a major difference. This would not only make it easier for the consumer, but it could radically change consumers’ perceptions according to the surveys.

With this system, the consumer would keep a personal number and the banks would be responsible for making all the behind-the-scenes changes and linking their new account to that number. The consumer could then continue to use the same number for all transactions. .

A similar idea has already been introduced in Sweden and, with help from consumer organisations, the concept is gaining ground in other countries too, for instance India. There is even some evidence that banks’ opposition to the idea appears to be weakening somewhat.

What I did find striking in my own straw poll was the number of people who said, “I’ve been meaning to do that” not “I’m happy with my bank”.

In many countries, banks and other financial service providers are the focus of a very high number of complaints. And CI members are regularly highlighting how consumers could get a better deal if they switched, including in the US and Belgium to name just two.

It certainly appears that many consumers would like to change banks and the act of changing banks would, in turn, encourage better service and lower charges. That’s why portable account numbers are well worth considering.