James Moore: TSB is getting twitchy over switching

Outlook

If there is a "new" bank that might put a dent in the dominance of the big four, TSB might be it.

But while it has a powerful advantage in having no history of ripping customers off and being fined for doing so, TSB would like a little help.

It is currently picking up nearly 8.5 per cent of new current accounts, well ahead of its “natural” market share of a little above 4 per cent and its own target of snaffling 6 per cent.

The problem is that while it has become easier to switch, more could still be done. Seven days is all very well, but there are lots of automated payments done with cards that people might still have to handle themselves. It’s also down to your new bank to get them their new cards on time.

Switching is still easier than it was. But it is still a pain, which is why people are reluctant to do it, if they’ve even heard about the service (and most people haven’t). They’re probably only going to try if they’re really annoyed with their existing bank, of if a competitor comes up with a really compelling offer.

Most banks probably tell the Competition & Markets Authority there are all sorts of reasons why it can’t really be made any easier, with cost at the top of the list. Banks will also moan that current accounts are loss-making, but they’d still quite like people to stay put so they can sell them other products to make lots of money on.

For now, at least, TSB is going to have to help itself if it wants to win new business.

It’s not doing a bad job. Profits were a little better than expected. It has started dealing with mortgage brokers and allows them to speak directly to TSB underwriters. That is a rare service, and while it’s costly to provide, it is starting to pay dividends.

There is talk of deals to get TSB growing quicker, and arguably it needs a merger given it has the cost base and infrastructure of a rather larger bank. But it should have a care: M&A activity can be disruptive and it would be a shame were it to damage a core offering that people seem to like.