Challenger banks winning current account war

21 May 2015
Bank customers who use the government-backed current account comparison tool 'midata', are overwhelmingly rejecting the big high street banks in favour of smaller challengers. Analysis of the midata switching service - that features within a number of high street banks' online banking facilities - indicates that five smaller current account providers accounted for 66% of switching click-throughs in the first month of the service's life. Those accounts and providers in detail are: Yorkshire Bank's Current Account Direct; the TSB Classic Account Direct; Halifax's Reward Account; the Santander 123 Account; and Clydesdale Bank's Current Account Direct. Since March 2015, online banking customers of Barclays, HSBC, Lloyds, RBS (including NatWest) and Santander have been able to view the midata switching tool when logged-in. When they click on the midata button, they are able to download a file 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 the midata comparison tool powered by - which has developed the technology with the government's backing – where they will be able to see how their account stacks up against the rest of those available from all other UK banks. The data is able to tell them how much better or worse off they would be with a different account. They can then choose to switch should they wish. Gocompare says customers are behaving differently using the midata tool than they do when they use a more traditional comparison website service to look at current account alternatives. The Payments Council switching service indicates that Halifax was the most popular home for a new current account in the first quarter of 2015, with Santander and Lloyds coming in second and third. But Yorkshire Bank or Clydesdale Bank did not feature in that top five.Find the best bank account with Moneywise Best Buys Tailored accountsMatt Sanders,'s money spokesman, said: "Rather than being swayed by seemingly attractive switching incentives and marketing messages, [midata] customers can actually see in pounds and pence which current accounts are best suited to their banking habits and financial circumstances. "We hoped that the midata comparison service would make the banks design accounts tailored to what customers really want and need, and it seems that some of the challenger banks have already made their mark in this regard. "It's early days but, it's interesting to see that only two of the big six banks or building societies features in the midata top five - I believe that shows that there's still a lot more work to be done in the current account market to design accounts that truly suit customers and their needs." Gocompare was unable to reveal how many people had used the service or what the average saving they had made when switching with midata, because it does not collect that information during the process. Instead, it deletes all data as soon as users have finished with the comparison service.

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