MSE News: New 7-day bank switching era begins: Full Q&A

SkyandSun

Fair enough, well £125 is a pretty good amount and I don't have particular loyalty to HSBC - though I've never had any problems with them, either. I notice First Direct also say they have a £10 monthly fee to use their banking? I definitely don't want that, as someone who is newly self-employed with not much money to spare - any new bank would have to be free to me as a user...

So the Halifax deal offers £100 for the switch, then £5 monthly? That seems pretty good... (looking at the Halifax offer, though, you have to be paying in £750 a month to get the £5 monthly, which at the moment I am not).

DragonQ

The £5 monthly reward requires £750pm deposit from an external account (or salary) and 2 DDs going out each month. It's inclusive of tax so would be £6.25pm if you don't pay tax and can be bothered to claim it back.

You can avoid the First Direct monthly fee by opening a basic savings account and putting £1 in it.

Archi_Bald

heloid wrote: »

The switching service isn't targeted at people who use this website.

You might be right there - it seems certainly designed to keep people in the dark, and of the view that they should only have one current account at anyone point in time.

The banks could have used the enormous amount of money they have sunk into bringing this new service to life for educating consumers about Direct Debits and SOs, and how easy it is to change one or all of your DDs and SOs.

I also entirely agree with jamesd's assessment of the new service.

jamesd

DragonQ wrote: »

Both DD companies show the new bank details so I assume they've done everything correctly and won't take two payments by mistake. The old account is meant to be closed anyway but I have no idea whether this'll actually happen or when!

Then you should be fine and the new account used. If not, the Direct debit Guarantee protects you.

Archi_Bald

I have just read the MSE article and am perplexed why MSE don't even mention that people can do their own DD/SO/incoming payments changes. MSE make it sound as if you had to use some bank switching service. Very misleading.

EarthBoy

heloid wrote: »

Anyway, give me bank account number portability ......Phone companies can do it....

Phone companies can only keep your same number if you stay in the same house, or at least in the same dialling code area. You can't keep your old phone number if you move outside the area, e.g. from Bristol to Leeds. Sort codes are similar to dialling codes, and to keep them when you move banks would require a complete re-engineering of the banking system.

It could also cause problems with payments going missing and falling through the gap when you change from bank A to bank B. e.g. if you send a payment from another account into your account near to the transfer date/time you can't guarantee exactly what time it will arrive in your account. If both banks say they didn't receive it, which one do you get to investigate?

jamesd

EarthBoy wrote: »

Phone companies can only keep your same number if you stay in the same house, or at least in the same dialling code area

UK phone companies routinely handle 82 million phone numbers moving around. The number of mobile phone subscriptions in the UK. The numbers have to be tracked to individual phone masts and calls routed to and from them.

There are challenges to moving landline numbers around but just looking up a phone number and working out where a call to it should be routed should not be one of them. It's both easier and smaller scale than doing the same job for the larger number of mobile phones.

EarthBoy wrote: »

It could also cause problems with payments going missing and falling through the gap when you change from bank A to bank B. e.g. if you send a payment from another account into your account near to the transfer date/time you can't guarantee exactly what time it will arrive in your account. If both banks say they didn't receive it, which one do you get to investigate?

The one that the payment was routed from, which asks the redirection service where it sent the payment and then passes on the question to the identified recipient. The recipient could in theory be changing every few seconds, based on other large-scale systems in routine use today. Or could be different for every payer or payee, using rules-based logic set up by the customer so that some transactions involving the number go to one account and others to different account(s).

Sometimes people just don't know that even moderately powerful commodity systems can handle a billion read database transactions a minute. Or 110 million update transactions per minute. On just eight commodity Intel servers. But that's an old version, you might find the more recent DBT2 benchmark numbers of interest.

For context, page 436 of the BIS Red Book shows only 17.8 billion transactions by non-banks in the UK for the whole year of 2011 (that's credit and debit cards and such). Bank transactions were around 34 million CHAPS Sterling, 62 million cheque/credit and 2,394 million BACS.

The combination of the two sets is less than six hours of work for the smaller eight server system I mentioned earlier. That system is used for things like mobile phone networks, as well as handling shopping transactions from app stores.

Of course, there are plenty of technical challenges in the banking system, not least interfacing with existing systems. But the technical capacity to just find out where an account number should go shouldn't be one of the hard problems.

Best to focus on the tougher problems, not just on the small numbers of transactions involved in the UK banking system and the small- to medium-scale systems that it would take to handle them. There certainly are tough problems involved, just not looking up where money should go. Auditing and fraud prevention and interfacing and... all sorts of other stuff that make it a messy problem.

So, to get started, why not introduce a non-geographic IBAN range that always requires a per-account destination lookup to know where to route the transaction? After all, the UK banking system is already going to be using IBANs.

DaveO

jamesd wrote: »

The one that the payment was routed from, which asks the redirection service where it sent the payment and then passes on the question to the identified recipient. The recipient could in theory be changing every few seconds, based on other large-scale systems in routine use today. Or could be different for every payer or payee, using rules-based logic set up by the customer so that some transactions involving the number go to one account and others to different account(s).

I don't understand what you are trying to say here. The recipient won't be changing every few seconds because the "recipient" is a bank account and in this case it will be the "new" bank account.

Sometimes people just don't know that even moderately powerful commodity systems can handle a billion read database transactions a minute. Or 110 million update transactions per minute. On just eight commodity Intel servers. But that's an old version, you might find the more recent DBT2 benchmark numbers of interest.

I don't see why that is relevant either. Payments are not made in batches at the same time. Standing orders are processed in this way in the early hours of the morning but single payments can be made at any time during the defined hours of business. The capacity of the system is sized to match peak transaction volumes and the fact other systems in the world process whatever they do faster is irrelevant.

Every payment has to be checked to see if it is subject to redirection and the current view is in any one 13 month period we will have 5% of all UK bank accounts switched via this service so 95% of payments won't be affected.

What this means is each time a payment is made you have to search up to 5 million entries in a table for a match and 95% of the time you won't get a match.

Sounds terrible but in computing terms searching 5 million items of data for a match is trivial so there is absolutely no need for some hugely powerful computer system or sophisticated algorithm.

And in fact there isn't. It has been done by a simple modification to the Faster Payments System.

Of course, there are plenty of technical challenges in the banking system, not least interfacing with existing systems. But the technical capacity to just find out where an account number should go shouldn't be one of the hard problems.

The technical challenges of interfacing to existing systems are not great because there is essentially only one interface per-bank for payments to the FPS system and most of the money will have been spent on testing.

So, to get started, why not introduce a non-geographic IBAN range that always requires a per-account destination lookup to know where to route the transaction? After all, the UK banking system is already going to be using IBANs.

The redirection service is coded to work with IBAN's already but only as the simple searching it does now.

You seem to be making the problem out to be much greater than is it because you want to retain the same bank account number and sort code or IBAN. I can't really see the need for that which would justify the much more extensive software development costs this would entail.

Whether the new switching service will do as predicted and encourage competition time will tell but I can't see why being able to retain your bank account number and sort code would make it any more likely people would switch bank accounts.

jamesd

DaveO wrote: »

I don't understand what you are trying to say here. The recipient won't be changing every few seconds because the "recipient" is a bank account and in this case it will be the "new" bank account.

You're assuming that there is a rule that one account number can only go to one destination bank account. I'm not making that assumption because it is not a necessary restriction on such a system. No technical problem to have logic that says if it's an incoming transaction from x it should go to account a and if it's from y it should go to account b.

DaveO wrote: »

I don't see why that is relevant either.

It illustrates the small number of transactions handled by the UK banking system. Some people think the UK banking system is big or handles a lot of transactions, when neither is true.

DaveO wrote: »

What this means is each time a payment is made you have to search up to 5 million entries in a table for a match and 95% of the time you won't get a match. ... Sounds terrible but in computing terms searching 5 million items of data for a match is trivial so there is absolutely no need for some hugely powerful computer system or sophisticated algorithm. ... And in fact there isn't. It has been done by a simple modification to the Faster Payments System.

I agree with you that it is trivial in computing power terms. A hash or btree lookup can do it trivially.

DaveO wrote: »

The technical challenges of interfacing to existing systems are not great because there is essentially only one interface per-bank for payments to the FPS system and most of the money will have been spent on testing. ... The redirection service is coded to work with IBAN's already but only as the simple searching it does now.

Thanks, good to read.

DaveO wrote: »

You seem to be making the problem out to be much greater than is it because you want to retain the same bank account number and sort code or IBAN. I can't really see the need for that which would justify the much more extensive software development costs this would entail.

It being hard was EarthBoy's argument, not mine. I think it's fundamentally easy in computing power terms to have every account in the country redirect to any other account and have the destination change for every transaction.

DaveO wrote: »

Whether the new switching service will do as predicted and encourage competition time will tell but I can't see why being able to retain your bank account number and sort code would make it any more likely people would switch bank accounts.

Because that's easier for consumers, who don't need to tell everyone who has their details to change them. That is not limited to only direct debits and standing orders, it includes friends and family and others who have the details.

There's a lot of focus on what the new system does but not on what it doesn't do, like tell your mother that the payment she made 14 months after you switched didn't make it because redirection stopped after 13 months. For whatever reason 13 months instead of 13 years or 130 years was picked.

Goldust

A quick query - I've got a Halifax account with a savings and credit card as well and these all come up on my direct banking screen.

If I close my Halifax account automatically as part of this process will the other accounts still remain as normal and just the current account disappears? I know this is a stupid question but just checking!