This retail bank has drawn a huge flurry of new users. Here’s why.
The retail banking market has heated up hugely in the UK in recent years, with the rise of digital-native banks like Monzo and Starling winning awards and customers – over seven million, three million respectively.)
They hit the market with minimal technology debt, having built new stacks from the ground up, and millions of customers have switched accounts to them, lured by user-friendly applications, high quality customer service and features, and helpful pressure from regulators on banks to make switching accounts easier.
Over the past quarter, current account switches continued to gain steam. Data from industry group Pay.uk shows that from January and March this year, 341,075 switches took place – 70% higher than Q1 of 2023.
What is driving the sudden surge in current account switching activity?
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Looking more closely at the numbers, (which are delayed by three months, i.e. they refer to October - December 2022) there is one clear winner, securing 20 times more switches than its nearest rival: Nationwide.
Nationwide saw 111,941 current account switching gains, followed by NatWest with 5,646, Starling Bank with 1,810, and Triodos Bank with a modest 151. Can we understand why? Correlation may not imply causation and without deeper investigation we’d struggle to stand this up in court, but it seems notable that Nationwide in early October 2022 launched a current account switching service that gives new customers £200.
In these straightened times, money talks and it looks like the offer has been a colossal success for the bank.
Nationwide’s most recent earnings, for the period 5 April 2022 to 30 September 2022, show that the bank reported profit after tax for the six months of £728 million, slightly up year-on-year. Expenses meanwhile increased by £58 million to £1,083 billion in the period. An earnings presentation shows that of this increase, “investment in financial crime controls and the future resilience of payment systems increased expenses by £24 million and impairment charges relating to property estate restructure were £16 million.”
