UK current account switching collapses 65% in Q2 as Covid-19 bites

By Oliver Smith on Thursday 30 July 2020

Digital Banking

A record quarter, for all the wrong reasons.

UK current account switching collapses 65% in Q2 as Covid-19 bites
Image source: Adrià Tormo/Unsplash.

Brits put switching bank account on ice during the second quarter of 2020 as Covid-19 and social distancing measures pushed the number of account switches to record lows.

Just 98,192 switches took place between April and June, down 65 per cent from the first quarter when 280,520 switches were completed.

“We realise that the impact of COVID-19 on individuals and businesses is high, in particular for those classed as financially vulnerable,” said Matthew Hunt, COO of Pay.UK which operates the Current Account Switch Service.

“The pandemic clearly impacts people way beyond payments, but we are nevertheless doing our part to try and help, and ensuring that the Current Account Switch Service is always available to those who wish to manage their finances more flexibly by switching their current account in a stress-free way.”

Pay.UK also pointed out that many banks have “increased their support for existing customers”, with offers like mortgage holidays, free overdrafts and loan holidays, all of which additionally may have stopped people from shopping around.

The fall is possibly bad news for challenger banks looking to gain market share during the quarter, despite both Monzo and Starling Bank reporting strong downloads since the Covid-19 lockdown began.

Looking back to the first quarter of 2020, Pay.UK also published per bank switching figures, showing that HSBC and Nationwide took the top spots netting 33,994 and 22,993 current account switches respectively.

Monzo came third adding a net 19,049 current accounts, Starling Bank fifth with 15,153 accounts, and Triodos Bank in sixth with 489 accounts.

Next quarter it’ll be interesting to look back at this quiet period of just 100,000 switches and see which banks captured the lions share, and whether the digital challengers were able to capitalise on the opportunity.

Sign up for our newsletters

Your daily 7am download of all things alternative finance and fintech.

Fintech and alternative finance headlines with an exclusive Editor's Note each week. Delivered Monday at midday.

AltFi's new weekly US newsletter breaking down the ins and outs of America's burgeoning fintech sector. Delivered Monday 9am EST/ 6am PST.