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30 Jan 2020

Revealed: the bank accounts thousands are switching to

Find out which banks and building societies are the most in demand

Nationwide, Monzo, HSBC and Starling Bank gained the most current account customers between July and September 2019, according to data from Bacs. 

These providers appear to have won new customers by offering various perks such as switching bonuses, fee-free withdrawals abroad and high-tech personalised mobile banking features.

At the other end of the scale, the biggest losers from the latest switch figures were Halifax, NatWest, Lloyds Bank and Royal Bank of Scotland (RBS).

Here, Which? looks at why people have been switching and explains how to move to a new bank or building society if you're tempted by another provider.

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Which banks and building societies are we switching to?

The most recent data from Bacs shows the number of full account switches between 1 July and 30 September 2019.

Here's how the banks and building societies fared:

Nationwide was the biggest winner, with a net gain of 25,355 new current account customers in this period.

The provider had likely attracted customers with its current account perks. For example, if you pay in at least £1,000 each month into its FlexDirect account, you'll get 5% AER interest on balances up to £2,500 for the first 12 months.

Meanwhile, HSBC, which includes First Direct and M&S Bank, brought in a collective net gain of 17,204.

HSBC had been offering a £175 switching bonus, which could explain the surge.

However, it's worth noting that First Direct, HSBC and M&S Bank cut the rate on the regular savings accountsoffered as a perk to current account customers last year. The rate almost halved from a market-leading 5% to 2.75% AER, which could impact whether some customers choose to stick with the brands.

The Bacs data also shows Halifax shed the most customers in the period, with a net loss of 15,714. Halifax also saw the biggest losses between April and June 2019, with a net fall of 12,058 current account customers.

In June last year, the provider binned its £135 current account switching bonus for opening a Halifax Reward or Ultimate Reward account. This could have had an impact on how attractive the bank was to new customers.

The other biggest losers from the latest switching figures included RBS and NatWest, which shed a net of 5,122 and 9,885 customers, respectively. Meanwhile, Lloyds Bank suffered an overall loss of 8,076.

Challenger bank customers on the rise

Of the five banks with positive net gains, two of them were mobile challenger banks. These branchless, app-only banks have focused on modern design, personalisation, low fees and snappy customer service to attract new people.

Monzo enjoyed a net gain of 21,576 customers in the period, while Starling Bank - a Which? Recommended Provider - had a net gain of 7,075.

In the previous period covering 1 April to 30 June, Monzo experienced a net gain of 13,453, while Starling Bank had a net gain of 6,686 customers.

Are we being swayed by switching bonuses?

A succession of appealing cash incentives has likely been a key factor in some people's decisions to ditch their banks.

Banks currently offering a switching bonus include:

  • HSBC: £175 for Advance and Premier accounts, and £75 for the HSBC Bank Account
  • First Direct: £100 for moving to the 1st Account

Nationwide members have been able to earn up to £500 per tax year by recommending five friends to its FlexAccount, FlexPlus or FlexDirect since last June.

Indeed, Nationwide enjoyed the largest number of net gains, which shows incentives do sometimes tally with an influx of new customers.

But offering a cash incentive doesn't always mean more net gains. For example, RBS offered a switching bonus in August 2019, but still suffered a net loss of £5,122 according to the Bacs figures.

In recent months, a number of banks cut their switching bonuses including NatWest, which also previously offered £150 for its Reward Account.

However, this doesn't mean to say that banks will not reintroduce their offers. For example, HSBC relaunched its £175 switching offer earlier this month after pulling it on 2 December last year.

Meanwhile, last July, First Direct halved its switching bonus to £50, but changed it back to £100 before the end of 2019.

How to choose a current account

Your current account service is not something you're likely to think about that often, provided everything is working how it should.

However, there are some great benefits to switching your current account including receiving cash bonuses or unlocking perks such as a market-leading savings rate.

But there's no 'one size fits all' solution when it comes to choosing a current account; the best deal should match your individual circumstances.

For example, factors such as customer service and interest rates could play a part in your decision.

Each year, we survey thousands of current account customers and undertake detailed product analysis to find the best and worst banks.

Depending on what kind of account you're after, our other guides can also help pinpoint a deal to match your circumstances:

Once you've decided which bank you want to switch to, you can apply to open it online, over the phone or in a branch.

If the provider is part of the current account switch service (CASS), you'll be able to open the account in seven working days.