A new advert has launched to encourage people to switch bank accounts - but why is this important? If people refuse to switch, banks will become complacent and fail to innovate. What's the point of investing resources into modernising, when consumers will stay with you either way. This leads to a market dominated by large banks, who can do as they please as they know their customers won't leave them. It creates higher entry barriers to new market entrants, as they find it harder to attract new customers, even though they may be offering a far better deal. Consumers are missing out on a huge amount of benefits by switching and that's why these communication campaigns are so important in educating the public. If consumers start switching banks more often, the larger more established banks will be forced to innovate, and provide a better deal for their customers, creating a healthy competitive market, and breaking apart the monopoly big banks have on the consumer.
A new advertising campaign is being launched to persuade more people to switch bank accounts - because not enough people are doing so. The Switch Guarantee service was launched exactly three years ago, but the numbers using it have fallen consistently. In the year to the end of June 2016, the number of switches averaged 88,031 a month. That compares with a monthly average of 92,448 in the previous year. Most account holders have steadfastly refused to move, despite incentives worth up to £220 being offered by banks and building societies. Bacs, the organisation responsible for the switching service, will launch the new advertising campaign in newspapers, social media and online this weekend.