With the Halifax due to start closing branches in May and Postbank ceasing operations by the end of the year, more than 200,000 customers will soon be hitting the streets in search of new current accounts.
Over 200,000 customers switching in one year is an extraordinary number when you consider that only 70,000 people have switched accounts in the past five years.
Although Halifax and Postbank customers are being "forced" to switch, it should have a positive effect on the market and encourage additional consumers to look for a better deal. Many banks are now actively advertising for Halifax and Postbank customers and promising to make the switchover process as easy as possible.
The thing is, switching is actually much easier than most people think, and the difference between current accounts can be considerable; overdraft rates can vary by up to 5 per cent, many institutions offer fee-free banking and some accounts actually pay interest on balances.
So why have so few people switched current accounts in Ireland when there can be huge benefits to changing?
According to research, customers feel that changing accounts will be inconvenient and time-consuming. Amongst the biggest concerns are changing over direct debits, completing paperwork, and having to visit each of the banks several times. Customers also feel that they have already made their decision and will put up with charges and high interest because they feel that it is too difficult to change.
What is little known is that the Irish Banking Federation developed the Personal Account Switching Code in 2005 which was designed to make switching accounts as easy and convenient as possible. All of the major banks trading in Ireland have signed up to the code and since it's inception, 1150 customers a month have used the process to switch.
For customers that need to switch, the first step is to find the right account. bonkers.ie does a good job of comparing current accounts and gives all the details that new customers need including fees, interest rates on balances and overdrafts and shows features like eStatements and Internet Banking. You can also start the application process online through bonkers.ie.
Once you've decided on the right account and start your application to switch, you can decide on the best day to begin the process with your new bank. This would usually be the time of month when there's the least standing order and direct debit activity. Then your new bank will notify your old bank that you're switching so you don't have to. Next your new bank will request a list of standing orders and direct debits from your old bank and let companies like Bord Gais and the ESB know your new details. The new bank will even help make sure payments like your salary are switched over.
The biggest benefit of the code is that it has standardised the switching process across all banks so no matter which bank you choose, it should be smooth and easy. You should also be up and running in about seven days with all of your payments and direct debits ready to go. Best of all, the banks will do most of the work for you.