By Trevor Clawson

Online Bank, Monzo has become a full member of the UK’s Current Account Switching Service (CASS), a move that will enable those signing up to the mobile-first challenger to move payment and direct debit arrangements seamlessly from their existing account providers.

Monzo had a good year in 2017, with almost 500,000 people opening an account between January and December. But as the bank, acknowledges, opening a new bank account is not an all or nothing process. Many of those who signed up with Monzo may well have kept open their old accounts, not least to ensure that payments, such as salaries, and direct debits continued to be processed as normal, with no interruptions during the handover process. By joining CASS, the bank hopes to attract more new customers, while also encouraging existing users to see Monzo as their primary (and perhaps only) account provider.

Rapid Migration

According to recent research by the TSB, switching account providers can save retail bank customers as much as £70 a year in fees. But concerns that a change of bank might be followed by weeks or even months of direct debits being missed or employers trying to pay a monthly salary into an old account are thought to deter many consumers from seeking a better deal. Enter the Current Account Switching Service. Set up 2013, CASS is designed to make it easier for bank customers to migrate their accounts without becoming embroiled in a lengthy process of administration and transfer. Once a customer has opened a new account,  the incoming provider carries out all the administration, using CASS to ensure that the process takes place quickly and without errors being made. Crucially, the system also allows for all existing arrangements to be carried over, including direct debits, payments and also, when appropriate, overdraft facilities.

As Monzo’s Engineering Lead for CASS, Daniel Cannon, explains, membership of the switching system will make it much simpler for consumers to transfer their banking to his company.

“The Current Account Switch Service allows a smoother transition for customers who want to change banks. CASS allows customers to move their accounts, without the paperwork that usually comes with switching banks. it’s a smooth, and free, service,” he says.

Data-Driven Features

The Full Monzo - Digital Bank Joins Current Account Switching Service

The company is also hoping that CASS will prompt existing customers to go the whole hog in choosing  Monzo is their only bank.

“Customers can choose if they want a partial or full switch. A full switch means the account they are moving from will be closed when the switch is complete,” Cannon adds.

As Cannon sees it, by switching all their current account banking to Monzo, customers will ultimately play a part in helping the bank deliver better services.  In common with a number of other digital financial service providers,  Monzo’s offer to customers includes an analysis of money coming in and going out. That, in turn, underpins features such as spending notifications and spending targets. The more information the bank has about a particular customer, the more accurate and effective these data-driven features can be.

“This is very important for us. When customers switch to Monzo we have better insights into how people manage their money. Using this information we can build products and features that work for customers. This could be finding cheaper utility providers or spotting areas where they can save money on everyday things like public transport,” says Cannon.

As a mobile-only bank, switching can be initiated via Monzo’s app.

The Customer Mainstream

Historically at least – we Brits have been notoriously reluctant to switch bank accounts, but things are changing a little.

According to the latest figures published by the Current Account Switching Service itself, a total of 4.7 million people have used CASS to move banks since the system was set up in 2013. In the first three months of 2018 alone,  273,000 switches were executed.

In terms of driving greater competition in the banking sector, that is – on the face of it –  good news. But challenger banks, in particular, face some real hurdles as they seek to extend their reach beyond early adopters and into the customer mainstream.

For instance, it’s often said that in the case of digital-only banks, the migration revolution will be driven by millennials who have no particular loyalty to, say, Barclays, HSBC, or Lloyds, and simply want a better and more personalised service delivered to the handset of their choice. The same is said to be true of the up and coming ‘generation Z’.

The Full Monzo - Digital Bank Joins Current Account Switching Service

However, young adults may not be quite so revolutionary. A survey published last month by TSB – which is also positioning itself as a challenger bank – found that the switching revolution has yet to really take off.

For instance, four out of five account holders say the big banks do “as little as possible” for them, but despite that, the rather upbeat switching figures from CASS disguise the fact that only 2% of consumers changed banks in 2017.

Meanwhile, TSB found that a significant number (39%) of young people continue to use the banks their parents’ chose for them.  Only one in ten told the TSB that they had actively rebelled against the choice made for them by ‘Mum and Dad’.

If newer players are to operate on a level playing field, it is important, that the CASS system embraces not only the big High Street banks but also the up and coming digital challengers. Some progress is being made. Commenting on the Monzo move,  Anne Pieckielon, Director of Products And Strategy at CASS, said 47 banking brands have now joined the service.

“We’re drawing ever closer to offering 100% coverage of the UK current account market, giving banking customers real choice,” she added.

So arguably this is an opportune time for Monzo to get on board. Digital only banks are becoming more popular but it is not a given that the great mass of retail and small business banking customers will warm to the digital-only option. If all goes according to plan, joining CASS removes one of the barriers to migration, making it more likely that consumers will choose Monzo as their primary bank. Meanwhile, other challengers – including TSB – are also keen to encourage the switching revolution, with CASS playing a key role.