New ease of bank switching flies under many customers' radars despite Kiwibank and ASB's promotion of it

New ease of bank switching flies under many customers' radars despite Kiwibank and ASB's promotion of it

By Gareth Vaughan

Although many bank customers are quick to take some of their business to a new bank when they see a lower mortgage rate or higher term deposit rate on offer elsewhere, a new simplified switching system introduced in late 2010 still doesn't appear to be well understood by most people wanting to move their basic transactional business to a new bank.

Only two of the major banks - Kiwibank and ASB - are promoting the simplified switching, where the banks rather than customers do the work, by openly and actively targeting other banks' customers. The two are Kiwibank through its Easyswitch campaign and ASB through its Experience ASB campaign. Kiwibank spokesman Bruce Thompson says the simplified bank switching process, introduced in late 2010, has only resulted in about 5,000 people moving all their banking to the state owned bank. However, tens of thousands of others have moved to Kiwibank by doing the work themselves, although many have only moved some of their banking.

Anna Curzon, ASB's general manager for brand experience and digital channels, says since the Experience ASB campaign was launched last October there has been a "significant increase" in the number of customers' from both within and outside Auckland moving to ASB and closing their accounts at other banks, although she won't provide any specific numbers.

A new system introduced in November 2010 simplified bank switching. Customers now merely need to notify the bank they want to take their business to and fill out a form and sign it, and then their existing bank must hand over all the customer's details, including any direct debit payments, to the new bank.

Moving automatic payments and direct debits previously required both assistance of the customer’s new bank and cooperation from the bank being dumped. The changes were an attempt to simplify the traditionally headache inducing concept of switching banks.

The new system is overseen by Payments NZ which is owned by ANZ, Westpac, ASB, BNZ, Kiwibank, HSBC, TSB and Citibank.

Kiwibank's Thompson says most people aren't aware of how easy it is now to switch and that they don't actually have to do the work themselves. Therefore of the about 80,000 new customers Kiwibank gets annually, most do the work themselves.

Unlike the telecommunications industry - which has had number portability since 2007 whereby customers' can keep their existing number when switching between service providers - and the electricity industry, there's no definitive measure of how many people are switching between banks. And of course, some of the customers switching may take out a mortgage or open an account with a new bank, for example, but keep their remaining banking business with their old bank.

The Telecommunications Carriers Forum tracks the number of people switching between phone providers with the latest figures showing a total of 325,958 users have switched their landline and 507,941 their mobile. And boosted by its What's My Number? campaign, which is funded with taxpayers' money, the Electricity Authority says 340,220 customers switched power companies between May 29, 2011 and March 31, 2012.

But in banking no one, including Payments NZ or the Reserve Bank, tracks the number of customers moving between banks.

Payments NZ senior payments advisor Martin Quin says an industry review of the new standards for account switching was done last September.

"The main finding of the review was the identification of issues around consistent collation of information required to efficiently transfer information between banks," says Quin. "Consequently a standard industry form was developed and introduced in October 2011."

Quin said with some banks actively promoting switching to them and others not openly doing so,  more than others, it was hard to measure success for the various banks.

"Payments NZ does not hold information on the number of accounts switched - this is confidential to each bank," Quin added.

Thompson says, without naming any, that some major direct debit companies are proving to be slow adapters to the new standards, being unfamiliar with the process and creating "hassles" when Kiwibank is trying to switch a customer’s payments.

"Also we’d like to see a bit more cooperation and consistency from the other banks around their switching process. Sometimes the responses have been a little slow."

He says with around 800,000 customers, Kiwibank - which  launched in 2002 - is now "ambitiously" targeting one million with the Easyswitch campaign a key element in getting there.

"I think it'll take  another two or three years, or maybe less. It just really depends if Easyswitch gains the momentum we would like, it will be quicker. But we're still adding about 80,000 a year and we're up over 800,000 now so maybe two and a half years," Thompson says.

Meanwhile, Curzon says the new system sets "very clear" guidelines for banks to follow to ensure people have consistency across the banking industry. ASB has what she calls "personal switchers" in its contact centre who handle the logistics for customers.

"Anything that enables New Zealanders to have a choice and make things simpler in terms of realising that choice we continue to support," Curzon adds.

(Update adds link to the standard bank switching form).

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