Banks launch 'Midata' current account comparison tool
Current account holders will soon be alerted to whether they could be getting a better deal with another bank.
From 26 March 2015, online banking customers will be given access to "midata" - a year-long record of their banking transactions.
By hitting the midata button displayed on their account page, they will be able to download a CSV file (a "machine-readable" file similar to an excel spreadsheet) that breaks down their account usage into areas such as overdraft fees, in-credit interest and foreign usage.
Customers will then be able to upload the file into a midata comparison tool powered by Gocompare.com - which has developed the technology - where they will be able to see how their account stacks up against the rest of those available from all other UK banks.
However, to begin with, only customers of the UK's biggest six banks will be able to use the service. Those banks are Barclays, HSBC, Lloyds, RBS (including NatWest) and Santander. The rest of the banks are expected to adopt the technology in the near future.
The accounts are ranked by how much better off the customer would be by switching. By selecting an individual account to view, more information will be displayed such as how much the customer could save in terms of fees and how much more they could earn in terms of interest.
Encouraged to switch
Midata is the result of a government initiative to give consumers the ability to see what data organisations have about them in order to be able to find products and services that are most suitable for them.
It is also hoped it will encourage consumers to switch bank accounts more often.
Despite the introduction of the seven-day current account switching guarantee in September 2013, just 6% of consumers switched their bank accounts in 2014, according to Gocompare.
Nearly half (49%) of consumers surveyed by the comparison site confessed to always having had the same bank account, while 81% had been with the same bank for four years or longer.
Matt Sanders, Gocompare.com's banking spokesperson, said: "People are still reluctant to switch away from their under-performing banks, with just 8% having done so in the last 12 months.
"Helping people use midata will simplify and improve current account switching by matching up individuals with the right deals based on their banking history."
The midata initiative is also being adopted by other industries including energy and telecoms with Google, British Gas and O2 all working on the project led by the Department for Business, Innovation & Skills.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.