UK Bank Customers Restless

Five million people in the UK are considering changing their current account provider in the next couple of years, according to the new Current Accounts report from consumer, product and media intelligence provider MINTEL. This equates to some 13% of all current account holders, up from just 7% in 2002.

MINTEL estimates that there were some 70.5m UK current accounts in 2003, up from just 57.1m in 1998. This is expected to rise to 71.6m this year and then up to 74m by 2007. 10 - 15% of current accounts are now dormant - no longer used but have not yet been closed.

Telephone banking has boomed in the last 5 years - in 1998 only 9.5m current accounts were accessible by telephone. This had risen to some 33m in 2003. Online access has increased from a much smaller base, of course, with explosive growth from 0.4m in 1998 to 17.2m in 2003.

The key reasons account holders would switch banks for current accounts are higher interest rates (21%) and better service (20%). The main reason for choosing a particular bank is the provision of an interest free overdraft facility, with almost two in five (37%) wanting this from their current account provider. A bank's reputation is the next most common reason, given by just under one in three (32%). Other important factors when choosing a bank are not being charged for going over an overdraft limit (27%) and a good credit interest rate (25%).

Overdraft advances have risen from £4.69bn in 1998 to some £8.10bn in 2003.

Paul Davies, senior finance analyst at MINTEL International says that on the credit side, people are now more aware of the better rates available and of how easy it is to change their accounts. However, overdraft rates are at least as likely to be the key: 'Price wars between banks have now developed in the form of lowest interest rates for authorised and unauthorised overdrafts, which is in line with the debt culture that is so prevalent in the UK today'.

Mintel's Web site is at www.mintel.com

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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