Banks to Tackle Current Account Competition Concerns
This is a guest post.
After a detailed report into personal current accounts by the Office of Fair Trading showed that customers still found current account charges far too complex to understand, banks have been told to focus more on their customers’ needs and the lack of real competition in the market.
Since the last time it reviewed the current accounts market, the Office of Fair Trading has found that banks have further increased their share of that market, and there were hardly any entries by new competitors. It was also discovered that because of this lack of competition, the majority of banking customers throughout the United Kingdom tended to stick with the same bank rather than switching to a better deal.
Improving The Current Banking System
There was some good news in the report however. Customers had saved a total of £928 million in overdraft charges between the years 2007 and 2011, and although the OFT was quick to point that the system in place for overdraft charging was still too difficult, the savings were impressive.
Since the birth of price comparison websites, comparing current accounts continues to remain quite a challenge for many customers. Not only do they not trust the account switching process, but they also believe that loyalty to their bank will be rewarded with benefits and interest savings. This is why they stick with their current bank, however the loyalty is never rewarded.
The report by the OFT, which generated an overall feeling of dismay, revealed that there was a severe lack of customer apathy and a lack of innovation by the banks. Furthermore, because of complicated costs, Illegal charges and confusing banking structures, as well as no real competition in the current account market, banking systems are not working as well for customers as they were designed to.
Reinventing Customer Services
The Office of Fair Trading has advised the banking sector to continue working on the positive initiatives, and to also look into ways of making costs and charges on current accounts clearer for customers. In the coming months and years the banking world will continue to change as both RBOS and Lloyds are being sold, and a new automatic account switching process is being introduced.
Looking After The Customer’s Needs
The main message contained in the report from the OFT, is that banks need to make sure the services and products they offer are linked to what their customers actually need. For the time being, the banks have narrowly avoided a full investigation from the Competition Commission, however the OFT is booked to review the market again in 2015.
The Chief Executive of the OFT, Clive Maxwell, stated that there needed to be a variety of improvements across the banking sector, ensuring that customers’ needs come first. Although there will be huge changes across a number of accounts advertised in the consumer market in the months ahead, these changes will only improve the competitive side of the banking market.