Do it yourself banking will only work if we can be bothered to do it

Can we?

Last week was a good one for British Banking, for both the industry and its customers. The first sale of shares in one of the part-nationalised banks – at a nominal profit, no less – marked an important first step on the road back to a healthy finance industry. At the same time the advent of the Current Account Switch Service represented a significant shift in the balance of power between retail banks and their customers. Over the next few years, we will see just how significant it is.

I say years, but it may well be longer. Research from the CEBR has predicted only a doubling of account switching frequency over ten years, which seems remarkably low, and is probably more credible, rather than less, for being commissioned by Metro, one of the key challenger banks that stand to benefit from the new service. The much-recited statistic about the average bank account lasting longer than the average marriage is no less odd than it is true, and the CEBR seem to believe that this old habit will die hard.

The truth, however, is that no-one yet knows what the impact will be. On the face of it, the new Current Account Switch Service ought to provide a huge opportunity for the challenger banks, but the established institutions will fight very hard to protect their turf. And, with the advantages of established brand networks, huge marketing budgets and massive reserves of customer data, there’s no doubt that they begin with the upper hand.

Those advantages, however, may not be as robust as they might appear. A ranking of UK banks’ customer service (admittedly assessed alongside the somewhat subjective categories of "honesty" and "integrity") released to coincide with the launch of the Current Account Switch Service, gave a damning verdict on all four of the UK’s biggest retail banks. The same customer satisfaction survey showed a very wide spread of standards as well, with marks ranging from four out of a hundred for one institution, to 89 for another, so this malaise does not affect every company in the industry.

While it may be that the smaller players, the mutuals and the challengers simply have to try harder to counter the incumbent advantages of the big four, the Account Switch Service could mean that their effort translates into growing market share for some of the industry’s smaller players.

In the long term, of course, the Current Account Switch Service will mean that all banks will need to become more customer-centric. That is the inevitable effect of pro-competitive regulation in any industry, and the voice of the customer is likely to have a great deal more influence upon the way that banks will run. The onus will then fall on us, the consumer, to make sure that we communicate clearly with our banks – by taking our custom elsewhere if necessary.

If the Current Account Switch Service works as intended, then dissatisfied customers will simply be able seek better service elsewhere, without any great inconvenience. Poor customer service and other questionable practices may persist, and the institutions that provide them may endure. If they do, however, it will be clear that UK consumers simply have other priorities. Either way, it will show the true colours of what really matters to banking customers in the UK.

For the sake of the economy, and our wellbeing, we can only hope that that is a sensible balance of good value and good service. Those few banks with high customer satisfaction scores do offer something along those lines, and the technology and business know-how needed to do so already exists in most institutions – what will hopefully change is the influence it exerts within them. If the British public do not use their new-found consumer power, then we will have missed a golden opportunity to build a banking industry more in the image of the one we’d all prefer to deal with. After the events of 2008, it was clear that we needed to reform the UK’s retail finance industry. Now that the economy is getting back to its feet, we all have the opportunity help do that.

Photograph: Getty Images

Claire Richardson is VP at Verint

How Jim Murphy's mistake cost Labour - and helped make Ruth Davidson

Scottish Labour's former leader's great mistake was to run away from Labour's Scottish referendum, not on it.

The strange revival of Conservative Scotland? Another poll from north of the border, this time from the Times and YouGov, shows the Tories experiencing a revival in Scotland, up to 28 per cent of the vote, enough to net seven extra seats from the SNP.

Adding to the Nationalists’ misery, according to the same poll, they would lose East Dunbartonshire to the Liberal Democrats, reducing their strength in the Commons to a still-formidable 47 seats.

It could be worse than the polls suggest, however. In the elections to the Scottish Parliament last year, parties which backed a No vote in the referendum did better in the first-past-the-post seats than the polls would have suggested – thanks to tactical voting by No voters, who backed whichever party had the best chance of beating the SNP.

The strategic insight of Ruth Davidson, the Conservative leader in Scotland, was to to recast her party as the loudest defender of the Union between Scotland and the rest of the United Kingdom. She has absorbed large chunks of that vote from the Liberal Democrats and Labour, but, paradoxically, at the Holyrood elections at least, the “Unionist coalition” she assembled helped those parties even though it cost the vote share.

The big thing to watch is not just where the parties of the Union make gains, but where they successfully form strong second-places against whoever the strongest pro-Union party is.

Davidson’s popularity and eye for a good photo opportunity – which came first is an interesting question – mean that the natural benefactor in most places will likely be the Tories.

But it could have been very different. The first politician to hit successfully upon the “last defender of the Union” routine was Ian Murray, the last Labour MP in Scotland, who squeezed both the  Liberal Democrat and Conservative vote in his seat of Edinburgh South.

His then-leader in Scotland, Jim Murphy, had a different idea. He fought the election in 2015 to the SNP’s left, with the slogan of “Whether you’re Yes, or No, the Tories have got to go”.  There were a couple of problems with that approach, as one  former staffer put it: “Firstly, the SNP weren’t going to put the Tories in, and everyone knew it. Secondly, no-one but us wanted to move on [from the referendum]”.

Then again under different leadership, this time under Kezia Dugdale, Scottish Labour once again fought a campaign explicitly to the left of the SNP, promising to increase taxation to blunt cuts devolved from Westminster, and an agnostic position on the referendum. Dugdale said she’d be open to voting to leave the United Kingdom if Britain left the European Union. Senior Scottish Labour figures flirted with the idea that the party might be neutral in a forthcoming election. Once again, the party tried to move on – but no-one else wanted to move on.

How different things might be if instead of running away from their referendum campaign, Jim Murphy had run towards it in 2015. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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