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Fresh data is out from Pay.UK's Current Account Switch Service (CASS), and it's quite the reveal. From January to March 2023, 341,075 people chose to switch their bank accounts. That's a staggering 70% increase compared to the same timeframe in 2022!
Let's face it; the COVID pandemic threw a wrench into everything, including account switches. Amidst the uncertainty, in the first half of 2020, the number of bank switches understandably took a nosedive. There was a slight recovery in the autumn, but by December, the number was still down at a measly 41,357.
The beginning of 2021 also saw a rocky start, with 31,854 switches in January and 42,398 in February, just as the UK was hit with its third lockdown. Things started to pick up in March 2021 as people began to see the light at the end of the COVID tunnel, but still, switching levels were well below the norm.
As life post-COVID started to become the new norm, businesses and individuals started to check in on their financial situations, and the result was a record-breaking Q4 for banking switches.
In Q4 of 2022, 376,107 people switched their bank
In the last quarter of 2022, CASS processed a whopping 376,107 current account switches, a substantial leap from the 222,108 in the preceding quarter.
November 2022 was also a record-breaking month with 157,376 switches, a 73% increase from the previous year, highlighting a sudden resurgence in banking activity and putting a spotlight back on consumer incentives as a means of attracting and retaining customers.
As we delve deeper into the financial behaviors that emerged post-COVID-19, we cannot overlook the rising importance of switching incentives in banking.
An array of monetary rewards are already being offered by banks to attract new customers and keep their current ones satisfied, and if the figures listed above are anything to go by, they appear to be working.
The banking industry is becoming increasingly competitive, with new digital banks and fintech companies entering the market and offering enticing features such as improved digital interfaces, faster payment processing, and personalized financial insights. To stay competitive, banks have got to up their game and offer something that will draw new customers in and away from their competitors – incentives for switching.
Switching incentives are a win-win for both banks and customers. For banks, it's an opportunity to acquire new customers, increase deposits, and generate more revenue. For customers, the monetary rewards can be a welcome boost, particularly during times of economic hardship, such as the ongoing cost of living crisis.
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In the wake of the global pandemic, the UK is grappling with a cost of living crisis. Inflation is rising, and household bills are soaring, leaving many families feeling the pinch. It's in these trying times that switching incentives can make a real difference to a person's daily life.
Monetary rewards such as digital gift cards can help cover essential bills and grocery shopping or even be held onto to help cover the cost of Christmas, birthdays, or holidays.
Given the current economic climate, it's not surprising that many people are considering their financial options and making small savings and changes where they can. The surge in account switches in 2022 is a testament to this, and as the cost of living crisis surges on, it's something we're likely going to continue to see in 2023.
Switching incentives have proven their worth and are likely to play a significant role in the banking sector moving forward, which poses the question - how can banks continue to stand out?
The answer is digital gift cards.
Digital gift cards offer an unparalleled level of convenience and flexibility. They can be sent and received instantly, used online or in-store, and they offer a wide range of choices for the recipient. This makes them an excellent tool for banks looking to create highly personalized switching incentives that their customers actually want to receive.
To find out more and discover how Tillo can help connect banks and fintechs to a global network of 2000+ brands, get in touch with us today.