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When will there be switch bonuses?
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Bazzalona13295 said:Ever so slightly off topic but how do banks make these switches pay? Especially as there are so many who use switches as a means to make money.
If would imagine many (could well be a sizable majority) of people who are looking to switch do so because they've had a bad experience with another bank, indeed my grandparents are living proof of this. Back in the 1980s Lloyds charged them for something in error (I can't remember the exact details, it may have been due to a budgeting error on my Grandma's part reading between the lines) and they switched to Midland bank (now HSBC) as a result. They still bank with them to this day and currently keep the bulk of their savings in a premier savings account as well as investments, credit cards etc.
Offering, say a £200 switching incentive can be a deciding factor in someone's choice of bank.
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It would be nice to see some offers from banks that haven’t offered for a while like Bank of Scotland & Virgin Money and maybe some new options like Chase, Monzo and Starling Bank.I would expect to see offers return again this year from the following banks/building societies:
Royal Bank of Scotland
NatWest
Ulster Bank
Lloyds Bank
Halifax
Santander
first direct
HSBC UK
TSB
Nationwide
The co-operative bank
But I think that the offers will be more restricted like banks from the same banking group will only be eligible for one payment (i.e. switching to Lloyds Bank, Bank of Scotland or Halifax and receiving an incentive will count as having received it already if you try to switch to another in the same group after the first switch).0 -
Bridlington1 said:Bazzalona13295 said:Ever so slightly off topic but how do banks make these switches pay? Especially as there are so many who use switches as a means to make money.
If would imagine many (could well be a sizable majority) of people who are looking to switch do so because they've had a bad experience with another bank, indeed my grandparents are living proof of this. Back in the 1980s Lloyds charged them for something in error (I can't remember the exact details, it may have been due to a budgeting error on my Grandma's part reading between the lines) and they switched to Midland bank (now HSBC) as a result. They still bank with them to this day and currently keep the bulk of their savings in a premier savings account as well as investments, credit cards etc.
Offering, say a £200 switching incentive can be a deciding factor in someone's choice of bank.
They (the banks) must be acutely aware of this, even more so with the exposure on TV money saving/making gets.....
which makes me wonder if this possible slowing/halting of switches is linked.
You mentioning your Grandparents is interesting, the older generation I know (and many younger ones) can be so against changing banks the £200 would need to be very much bettered.0 -
I think that the issue is that nowadays much more people are looking to save money or make more money due to the cost of living and so banks have probably seen their highest number of payouts recently. The co-operative bank had to withdraw their offer after just a small number of days last month due to the unprecedented demand.0
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Bazzalona13295 said:Ever so slightly off topic but how do banks make these switches pay? Especially as there are so many who use switches as a means to make money.
The stipulations associated with them (direct debits, debit card spend etc) are usually aligned to internal definitions of successful acquisitions/reactivations.1 -
Bazzalona13295 said:Bridlington1 said:Bazzalona13295 said:Ever so slightly off topic but how do banks make these switches pay? Especially as there are so many who use switches as a means to make money.
If would imagine many (could well be a sizable majority) of people who are looking to switch do so because they've had a bad experience with another bank, indeed my grandparents are living proof of this. Back in the 1980s Lloyds charged them for something in error (I can't remember the exact details, it may have been due to a budgeting error on my Grandma's part reading between the lines) and they switched to Midland bank (now HSBC) as a result. They still bank with them to this day and currently keep the bulk of their savings in a premier savings account as well as investments, credit cards etc.
Offering, say a £200 switching incentive can be a deciding factor in someone's choice of bank.
They (the banks) must be acutely aware of this, even more so with the exposure on TV money saving/making gets.....
which makes me wonder if this possible slowing/halting of switches is linked.
You mentioning your Grandparents is interesting, the older generation I know (and many younger ones) can be so against changing banks the £200 would need to be very much bettered.
But if someone has had issues with their only bank for whatever reason, be it a charge they've incurred that was perceived as unfair or even if they've just had a payment blocked (I seem to recall there was a thread on here a while back where this was the reason why someone was switching) they could well decide to switch on this basis alone. In this scenario they would then be looking at other banks to switch to. If they are undecided over which one to switch to and one suddenly starts offering £200 to switch to them and the other offers nothing the £200 could well be the deciding factor.
Yes you will invariably get some (myself included) who will quite happily switch a donor account as soon as they see an offer they are eligible for and not make the bank much (if any) money as a result but all the bank needs to do is get enough profitable customers switching to them and overall they will make money from the switching offer in the long run. Quite what the distribution between these two groups of possible switchers (and everything in between) is and how profitable/unprofitable each group is I do not know.0 -
Just to add some numerical perspective, only about 2% of all personal current accounts were switched in 2023, many of which wouldn't have been to take advantage of an incentive....3
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£3270 made in 2023 alone by bank switches between OH and I. We missed the Santander one, I was not able to bank the Halifax one (they closed my accounts) and we still have £75 each outstanding from TSB for the "Switch and Stay" bit. Revolut paid a £70 refer a friend bonus and their (now NLA) learn and receive free crypto offering was another ca £25 for each of us and is not even reflected in the above number.
Anyhow, I guess we are dry for the next 1-2 years. Monthly rewards, cinema tickets and other perks have to do in the meantime.
I guess it is not only about getting profitable customers (credit cards, mortgages, etc.) it is also about market share.0 -
They usually come around every quarter in some shape or form. Probably March/April we’ll see a Halifax return0
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Bazzalona13295 said:Ever so slightly off topic but how do banks make these switches pay? Especially as there are so many who use switches as a means to make money.
So they are a form of advertising and, almost certainly, corporate target-keeping. Even if that target is only temporarily reached (as some people switch away again) or is illusory (as some people never really switch their main account).
Advertising budgets are huge. And difficult to fathom in cost-benefit terms.
It's all expensive, but how much new business does a series of television ads generate? A complete re-branding? A switching incentive scheme? All banks do at least some of these from time to time. Only the banks know (and some of that knowing will be guesswork) whether they are cost-effective.2
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