Only weeks ago the Competition and Markets Authority announced its decision to launch an in-depth market investigation into the difficulties customers face in switching banks, and the lack of smaller competitors to the “big four” banks.
Some say that the inquiry has the potential to majorly shake-up current accounts, putting an end to this ‘free banking’ era we have become so accustomed to over the last 40 years.
Some people argue that ‘free banking’ never even existed, and that we just didn’t know we were paying in the first place!
The first time consumers were offered ‘free banking’ was in 1974, when the Co-operative claimed to provide the service for its customers who remained in credit.
But perhaps the term ‘free banking’ stuck in everybody’s minds since a cheesy television advertisement in 1984 by the Midland Bank (now part of HSBC). In it, the audience are excitedly told that personal account customers can now enjoy cheques, statements, ATM withdrawals and standing orders free of charge, as long they stay in credit.
Shortly after this, authorities argued that ‘free banking’ was misleading. However the term remained stuck in the minds of UK consumers.
This ultimately lead to a whole generation growing up with ‘free banking’ who believed that they were receiving their current account at no charge – but what the industry has known for years is that consumers are simply paying for the service in other, often hidden, ways.
In 2012, Ed Balls (Shadow Chancellor & MP for Morley & Outwood) famously quoted “People switch [their bank account] on average every 26 years. You‘re more likely to be divorced than you are to change your bank account”.
The end to the ‘free banking’ era will leave us seeing more and more UK consumers begin to look around for the best offers in bank accounts. This therefore leads us to ask: is the prepaid card market becoming a real alternative for you than your current bank account?
It goes without saying that UK banks, over recent years, have given themselves a bad reputation and consumer trust continues to decline. The Global Consumer Banking Survey from accountancy firm Ernst & Young found that 37% of respondents said that their trust in banks had declined, and 15% also said they had minimal or no trust in their bank over the last year. These figures are double the levels seen in Germany, France and the US.
Pockit understands how consumers today are feeling and we want to do something about it!
Pockit is not a bank, and therefore we believe that we hold a real alternative for consumers. However, like a bank account, Pockit helps our customers to manage and save their own money; we just don’t rip you off! The Pockit card only allows you to spend what you have, so our customers do not have to worry about overdraft fees and other hidden charges that banks can sneak in.
At Pockit, we strongly believe in rewarding our customers, so we have partnered with 35 (and growing) leading UK retailers offering cashback on in-store and online purchases. Our cashback deals range from 2-10%, all you have to do is just use your Pockit card when making payment.
In the last 6 years banks have paid out £166 BILLION in fines, this is a colossal amount of money for doing something wrong! To put this number into context, that is a fine of £877.30 EVERY SECOND! That’s more than the average monthly mortgage repayment in the UK (£750), or the average monthly rent in the UK (£728).
It used to be the case that your bank had to ‘trust’ you to offer its services. However, after the most recent recession and the numerous scandals that are plastered across our news channels, it doesn’t shock you that now consumers have to ‘trust’ their banks. This is a huge power shift.
Consumers are being 'ripped off’ time and time again by their bank or bank account, opening the door to the prepaid card market. Here at Pockit, we want to change consumer attitudes and perspectives to what 'friendly’ money management should really look like!
The outcome of the Competition and Markets Authority inquiry will, without a doubt, be a demand for more transparency over bank account fees, such as overdraft charges, and any proposals that could potentially affect the future of ‘free banking’.
Transparency is something that the banking system could really use; and something that Pockit prides itself on. We do not charge any hidden fees, and anything you will be charged is clear from the get-go.
We will continue to share on this blog anything from important updates to who the Pockit team are, and any interesting stories in the news that affect you; being as transparent to our customers as we possibly can.
Grenville Paull-Sales Team-http://cdn.pockit.com/images/gren_headshot.png