Banks beware as customers threaten to switch

A growing number of bank customers are ready to jump ship, according to an online survey by independent personal finance website Fool.co.uk. In particular, customers who belong to one of the ‘Big Five’ high street banks, namely HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS say they will not hesitate to leave for a smaller rival.

The survey of over 1,000 readers found that on average, four out of five customers of the ‘Big Five’ banks are primed to switch to one of the smaller banks if they need to. Royal Bank of Scotland fared marginally better than the rest with only three out of four of its customers saying they may defect.

It also seems that banks can no longer rely on customer loyalty. One in six potential defectors has been with their bank between six and 10 years, one in four has been with the same bank for 11-20 years, and one in three has remained loyal to their bank for over 20 years!

The survey confirmed that people who have switched banks in the past are more likely to do so again. However, two out of five people who have never switched banks say they are now ready to leave.

David Kuo, Head of Personal Finance at Fool.co.uk, says: “There is tremendous tension between banks and their customers. This has not been helped by the embarrassing exposure of punishing charges at a time when banks are also reporting huge annual profits.

“Our survey shows how delicate the situation is with four in five customers prepared to switch to one of the smaller banks if they need to. The prospect of customer backlash is likely to buy us some time before banks actually carry out their threat of imposing fees.

“For now, customers need to be vigilant against stealth charges, which may present themselves in the form of fees for credit cards, poorer rates on interest-bearing accounts, and elevated overdraft costs.

“Customers can easily guard against sneaky charges by checking best-buy tables frequently to ensure that they are getting the best deals available. We are only enjoying free banking whilst banks are caught between the dog and the fire hydrant – eventually the dog will move and so must we.”