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  • FIRST POST
    • RG2015
    • By RG2015 15th Apr 18, 7:31 PM
    • 1,126Posts
    • 675Thanks
    RG2015
    Next Bank Promotion
    • #1
    • 15th Apr 18, 7:31 PM
    Next Bank Promotion 15th Apr 18 at 7:31 PM
    Lloydís and BOS have just announced that their current account interest rate is coming down to 1.50%. Earlier in the year, Natwest, uncharacteristicly, offered a £125 switching bonus incentive.

    One bad and one good for customers. Lloydís and BOS will lose customers and NatWest will gain customers although Iím not sure if many will stay.

    The question is who will be next and will it be to gain customers or reduce the cost of retaining them?

    My tip is for Virgin Money to launch a full personal current account. Okay this is not news but to succeed it will need a worthwhile USP. I have just found a new crystal ball so letís see if itís any good.
Page 1
    • ValiantSon
    • By ValiantSon 15th Apr 18, 7:57 PM
    • 1,596 Posts
    • 1,339 Thanks
    ValiantSon
    • #2
    • 15th Apr 18, 7:57 PM
    • #2
    • 15th Apr 18, 7:57 PM
    You may be right. A new player in the current account market would potentially shake things up. Starling Bank has done that to some extent, although its offering is more focused on customer experience, rather than financial gain (a noteworthy exception being their fee-free - Mastercard rate - overseas spending).

    It may be that other banks reduce the interest rate they offer on their current accounts too. Tesco are committed to paying 3% until next April, but after that the rate may drop. TSB could reduced their 3% rate, but as the maximum balance on which it is available is low (£1,500) I think that may be more sustainable. Nationwide have already closed the loophole allowing people to get the 5% rate for more than 12 months on a FlexDirect account. This may cause them some loss of customers over the medium term, although the continued availability of a linked 5% regular saver is an incentive not to leave.

    I suspect that switching incentives will continue to be offered with banks offering them from time to time, but generally excluding existing customers and those who have previously received a bonus. Some may even follow First Direct's lead by excluding from the bonus anyone who has ever been a customer in any form. The churn generated by mass switching could be a diminishing return for the banks and their interest in generating such large volumes of switchers, who then jump ship weeks later, may be waning.

    What I don't think likely is that banks will give up on trying to entice customers in. Linked regular savings accounts are an obvious boon in this regard, as they tie the customer in for a period of time. The rate needs to be attractive, however, and the maximum deposit a reasonable size. While some will be attracted to accounts offering regular savings interest rates of 2% plus, I have little interest in such low rates and would be looking for 5% as a minimum. Partly, your attitude to such accounts depends on the size of your cash holdings, and your level of aversion, or wariness, to investments.
    • ceredigion
    • By ceredigion 15th Apr 18, 7:59 PM
    • 2,660 Posts
    • 3,468 Thanks
    ceredigion
    • #3
    • 15th Apr 18, 7:59 PM
    • #3
    • 15th Apr 18, 7:59 PM
    I think the whole concept of banks offering loss leading account to entice potential customers in order to up sell other products has had its day. Or it has until they find a system that will tailor products to a customer. The penny might have dropped that because of the internet we can cherry pick from them all.
    • YorkshireBoy
    • By YorkshireBoy 15th Apr 18, 8:07 PM
    • 30,133 Posts
    • 17,986 Thanks
    YorkshireBoy
    • #4
    • 15th Apr 18, 8:07 PM
    • #4
    • 15th Apr 18, 8:07 PM
    Someone speculated the other day that Santander might consider dropping the rate on their 123 current account to 1.23% AER (1.22% gross p.a.) now Lloyds & BoS have shown their hand.

    I'm sure such a move will have been discussed by their product managers/marketing department previously, but LBG's announcement may put it back on the agenda.
    • AirlieBird
    • By AirlieBird 15th Apr 18, 8:11 PM
    • 923 Posts
    • 737 Thanks
    AirlieBird
    • #5
    • 15th Apr 18, 8:11 PM
    • #5
    • 15th Apr 18, 8:11 PM
    My tip is for Virgin Money to launch a full personal current account. Okay this is not news but to succeed it will need a worthwhile USP. I have just found a new crystal ball so letís see if itís any good.
    Originally posted by RG2015
    Virgin Money have ruled out a full current account through their branch/online network. Their full current account, or universal account as they are calling it, will only be available through their digital bank due to launch next year.
    • RG2015
    • By RG2015 15th Apr 18, 8:27 PM
    • 1,126 Posts
    • 675 Thanks
    RG2015
    • #6
    • 15th Apr 18, 8:27 PM
    • #6
    • 15th Apr 18, 8:27 PM
    Virgin Money have ruled out a full current account through their branch/online network. Their full current account, or universal account as they are calling it, will only be available through their digital bank due to launch next year.
    Originally posted by AirlieBird
    Thank you for the information. I have checked online and found out some more.

    I am not enticed by app only bank accounts but if the VM Universal account included full online functionality and a decent app that would suit me. The suggestion of partitioning the account is intriguing but not the sort of USP to hook me in. I just wonder if they may come in with something more innovative.
    • ValiantSon
    • By ValiantSon 15th Apr 18, 8:28 PM
    • 1,596 Posts
    • 1,339 Thanks
    ValiantSon
    • #7
    • 15th Apr 18, 8:28 PM
    • #7
    • 15th Apr 18, 8:28 PM
    Someone speculated the other day that Santander might consider dropping the rate on their 123 current account to 1.23% AER (1.22% gross p.a.) now Lloyds & BoS have shown their hand.

    I'm sure such a move will have been discussed by their product managers/marketing department previously, but LBG's announcement may put it back on the agenda.
    Originally posted by YorkshireBoy
    If they did then I suspect that most people still using a 123 account would jump ship. The reduction of the interest rate to 1.5% (and the preceding increase in the account fee to £5 per month) was not popular, but the account remained attractive for certain types of customers. At the time, speculation was that they would reduce the rate to 2%, so the reduction to 1.5% was greater than expected, and it was suggested had been done so that they would not have to make another rate reduction for the foreseeable future.

    Of course, this does not mean that they won't reduce the rate on the 123 account, but I think they would only do so if their intention was to kill the account off over the medium term. The reputational damage would be quite significant.

    Perhaps a more likely possibility would be a reduction in the maximum balance on which interest is payable. At £20,000 this is well above what can be achieved elsewhere.

    My suspicion is that Santander won't touch the interest rate on the 123 account for quite some time. I may be wrong, but I don't see it happening at present.
    • ValiantSon
    • By ValiantSon 15th Apr 18, 8:35 PM
    • 1,596 Posts
    • 1,339 Thanks
    ValiantSon
    • #8
    • 15th Apr 18, 8:35 PM
    • #8
    • 15th Apr 18, 8:35 PM
    Thank you for the information. I have checked online and found out some more.

    I am not enticed by app only bank accounts but if the VM Universal account included full online functionality and a decent app that would suit me. The suggestion of partitioning the account is intriguing but not the sort of USP to hook me in. I just wonder if they may come in with something more innovative.
    Originally posted by RG2015
    There's some meaningless guff from the CEO about, "personalised accounts". What that actually turns out to mean remains to be seen. I doubt it will be all that interesting.
    • EachPenny
    • By EachPenny 15th Apr 18, 8:40 PM
    • 4,586 Posts
    • 11,788 Thanks
    EachPenny
    • #9
    • 15th Apr 18, 8:40 PM
    • #9
    • 15th Apr 18, 8:40 PM
    RBS and Barclays are the two banks sitting very quietly in a corner not doing much to attract current account customers.

    It remains to be seen if NatWest's toe in the water of a switching bonus was some kind of pilot for RBS to follow with later.... but if lots of people make a fuss about late payments, and switch away immediately, then it might be a warning to RBS against doing the same.

    So that leaves Barclays.... often near the top of the switch 'net loss' table, how long can they sustain that without it impacting on the business? (with no decent savings accounts to tempt people in either).
    "In the future, everyone will be rich for 15 minutes"
    • AirlieBird
    • By AirlieBird 15th Apr 18, 8:53 PM
    • 923 Posts
    • 737 Thanks
    AirlieBird
    Thank you for the information. I have checked online and found out some more.

    I am not enticed by app only bank accounts but if the VM Universal account included full online functionality and a decent app that would suit me. The suggestion of partitioning the account is intriguing but not the sort of USP to hook me in. I just wonder if they may come in with something more innovative.
    Originally posted by RG2015
    This presentation is probably best for what they are planning.
    https://uk.virginmoney.com/virgin/investor-relations/2017/vm-capital-markets-day-presentation.pdf
    • YorkshireBoy
    • By YorkshireBoy 15th Apr 18, 8:55 PM
    • 30,133 Posts
    • 17,986 Thanks
    YorkshireBoy
    Perhaps a more likely possibility would be a reduction in the maximum balance on which interest is payable. At £20,000 this is well above what can be achieved elsewhere.
    Originally posted by ValiantSon
    I'm on record on here as speculating that in the past, several times. Indeed, I thought they'd do that instead of cutting the rate last time.
    My suspicion is that Santander won't touch the interest rate on the 123 account for quite some time. I may be wrong, but I don't see it happening at present.
    I hope you're right, because it's my main hub account and also a feeder account for many regular savers. I'd have some major admin work to do if I was forced to close it due to a 1.23% rate.
    So that leaves Barclays
    by EachPenny
    That's where my money is for the next switching offer (that I'd qualify for), and I have several accounts ready to switch if the T&Cs are lax!
    • RG2015
    • By RG2015 15th Apr 18, 8:59 PM
    • 1,126 Posts
    • 675 Thanks
    RG2015
    RBS and Barclays are the two banks sitting very quietly in a corner not doing much to attract current account customers.

    It remains to be seen if NatWest's toe in the water of a switching bonus was some kind of pilot for RBS to follow with later.... but if lots of people make a fuss about late payments, and switch away immediately, then it might be a warning to RBS against doing the same.

    So that leaves Barclays.... often near the top of the switch 'net loss' table, how long can they sustain that without it impacting on the business? (with no decent savings accounts to tempt people in either).
    Originally posted by EachPenny
    According to the RBS Group website, NatWest have 14 million customers and RBS has 1.8 million personal customers.

    I cannot say how accurate and comparable these figures are but they are what I would have imagined. Therefore, it would appear odd to perform a pilot this way round. Therefore, I would expect RBS to steer clear of any potential minefields.

    Ulster bank last year offered a (then) market leading 1.25% internet saver. As a toe in the water it should have told them that their customer services were woefully inadequate. Sadly, they learned nothing from that and now appear to be in the middle of another PR disaster as the £125 payments are likely to be delayed for many.
    • ValiantSon
    • By ValiantSon 15th Apr 18, 9:06 PM
    • 1,596 Posts
    • 1,339 Thanks
    ValiantSon
    I'm on record on here as speculating that in the past, several times. Indeed, I thought they'd do that instead of cutting the rate last time.
    Originally posted by YorkshireBoy
    It would make more sense, if they really felt they had to tinker with the account any further. Of course, I'd prefer it if they didn't do so, but the result would just be that I moved some money out to an easy access account and have to accept a little bit less interest (I get the full 1.5% due to cashback covering the fee).

    I hope you're right, because it's my main hub account and also a feeder account for many regular savers. I'd have some major admin work to do if I was forced to close it due to a 1.23% rate.
    Originally posted by YorkshireBoy
    I hope I'm right too! Similar situation to you.

    That's where my money is for the next switching offer (that I'd qualify for), and I have several accounts ready to switch if the T&Cs are lax!
    Originally posted by YorkshireBoy
    I hope they're lax enough that it doesn't matter if you have previously had an account with them!
    • EachPenny
    • By EachPenny 15th Apr 18, 9:28 PM
    • 4,586 Posts
    • 11,788 Thanks
    EachPenny
    According to the RBS Group website, NatWest have 14 million customers and RBS has 1.8 million personal customers.
    Originally posted by RG2015
    Maybe 'pilot' wasn't a good choice of word

    What I meant was RBS are still under something of a cloud, its a brand that people attach some quite negative feelings towards. At some point I'd expect RBS to do something to rehabilitate themselves and finally throw off the pongy odour still lingering on after the Goodwin years.

    A generous switching offer might be one way of achieving this... but a risky strategy if it goes wrong. Hence my feeling they are testing the water (aka doing a pilot) to see what the effect is. If they went in all guns blazing with an RBS offer and it went wrong, the damage to the RBS brand would be far greater than the impact the same mistakes might have on NatWest.
    "In the future, everyone will be rich for 15 minutes"
    • msallen
    • By msallen 15th Apr 18, 9:30 PM
    • 775 Posts
    • 839 Thanks
    msallen
    My tip is for Virgin Money to launch a full personal current account. Okay this is not news but to succeed it will need a worthwhile USP. I have just found a new crystal ball so letís see if itís any good.
    Originally posted by RG2015
    I work for a company that provides automated cash management systems to banks (until my redundancy in a few weeks) and I was involved with some early stage talks with Virgin about running a pilot of our product about 5 or 6 years ago. It was put on hold for 6 months "while they rolled out their innovative new current account". This still hasn't happened so I wouldn't have any great confidence in them doing anything "exciting".
    • YorkshireBoy
    • By YorkshireBoy 15th Apr 18, 9:33 PM
    • 30,133 Posts
    • 17,986 Thanks
    YorkshireBoy
    I hope they're lax enough that it doesn't matter if you have previously had an account with them!
    Originally posted by ValiantSon
    I have had an account with them previously, for which I was paid an incentive (to open and fund £1K per month for 3 months IIRC, not switch), although long before the CASS.

    They were so lax then, that they paid the £100 twice. When I wanted to close the account a short time later I asked them by telephone to take it back - they didn't. When I went to branch to close it, I asked them to give me £1 of the £101 balance - they didn't/couldn't...and said, not in so many words, have it on us!
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