Current Account Switch Service Annual Report 2018 · In May 2018, Bacs legally became a wholly...

Current Account Switch Service Annual Report 2018

Current Account Switch Service Annual Report 2018

ContentsForeword – Jo Kenrick 1

Introduction – Paul Horlock 2

Performance in 2018 3

Operational delivery and new CASS participants 4

CASS Governance 5

CASS Strategy 5

Ecosystem Engagement 6

Customer Engagement 8

Performance Metrics 9

Conclusion 10

1Current Account Switch Service Annual Report 2018

Foreword

As I enter my third year as Chair of the Current Account Switch Service (CASS) I am delighted to present the 2018 Annual Report. In the five years since launch, CASS has delivered over 5 million successful switches, and in 2018 we continued to meet the responsibilities placed on us by our regulators. This report explains in more detail how we have performed and what has been achieved.

As well as delivering on our core purpose, we also take very seriously the impact we can have on the entire ecosystem across financial services which provides current accounts to the individuals and small businesses of the UK. With that in mind, it has always been important to CASS to have in depth research and a thorough understanding of exactly how switching works, and we use this expert knowledge not only to ensure that the service runs flawlessly, but also to act as trusted partner to key influencers in the finance industry, consumer groups, regulators and government.

This is demonstrated by discussion papers, stakeholder engagement activity and wider relationships. For example, in 2018 the CASS team supported the Israeli Finance Ministry by providing best practice advice to help them develop their own switching service, positioning CASS as best in class on a worldwide basis.

CASS also has a critical role to play in ensuring that, as financial services become more sophisticated and move increasingly online, no one is left behind or excluded. We have worked hard to engage across the widest possible group of stakeholders to ensure that financial inclusion is a core part of CASS strategy and we will continue to position this at the heart of our work.

I am proud to continue to lead CASS, and now as part of Pay.UK, the leading retail payments authority, we have even greater opportunities. We will continue to deliver an excellent switching service and do everything we can to ensure consumers receive better outcomes from their financial providers.

Our mission is clear

‘To foster a simple and stress free way to get the best from my financial providers through effective engagement, trusted reputation and choice’.

Jo KenrickChair, CASS Executive Committee

Pay.UK

CASS also has a critical role to play in ensuring that, as financial services become more sophisticated and move increasingly online, no one is left behind or excluded.

2 Current Account Switch Service Annual Report 2018

2018 saw the official launch of Pay.UK, the leading retail payments authority responsible for the UK’s payments infrastructure and standards.

Introduction

2018 saw the official launch of Pay.UK, the leading retail payments authority responsible for the UK’s payments infrastructure and standards. CASS is an important Pay.UK managed service and will continue to deliver its unique objective led by the CASS Executive Committee, under Pay.UK Board supervision.

In 2018, CASS has continued to ensure that it is at the heart of the financial inclusion debate in the UK with its rich knowledge base and research, and its achievements over the past five years speak for themselves.

Paul HorlockChief Executive Officer

Pay.UK


CASS is a clear asset to Pay.UK, and we look forward to ensuring that CASS continues to meet its high performance standards and delivers value for the consumer, allowing them to take full advantage of the emerging products that come to market.

CASS has continued to ensure that it is at the heart of the financial inclusion debate in the UK with its rich knowledge base and research.


In 2018 CASS continued to play an important role in ensuring all consumers can exercise choice in the current account market and switch to the right account that suits their needs.

Performance in 2018

CASS has delivered strongly against its Key Performance Indicators (KPIs)1. Customer satisfaction with the service averages at 92.5% across the year; awareness of the service was over the 75% target for all of 2018, and averaging at 80% across the year; and, the 7-day switch completion target was reached 99.4% of the time. For the advertising reach KPI, in 2018 CASS reached 96.3% of UK adults and 97.3% of the ‘DE’ social demographic segment (the financially disadvantaged) in its January marketing campaign and 93% of Small and Medium sized Enterprises (SMEs)2 in its mid-March to mid-April activity. In the second half of last year, CASS ran two dedicated awareness-raising campaigns. Between August and October, 94% of 18-24 year olds were reached, and between September and October 88% of the ‘DE’ socio demographic were reached by this activity.

CASS has continued to deliver against its regulatory objectives. We are delighted to confirm that the service continues to be designated by the Payment Systems Regulator (PSR) and that the Service successfully delivers against the undertakings accepted from the Competition and Markets Authority (CMA) in 2016.

While measuring success is more complex than measuring the number of people switching, 929,070 people switched their current account in 2018, taking the total number of CASS switches since launch in 2013 to over 5 ¼ million. The 2018 full switch total is broadly in line with the previous year, with no slow-down in switching year-on-year. Each switch is supported by the proven and reliable processes on which CASS is built.

1 CASS KPI’s are agreed between CASS and Her Majesty’s Treasury and reviewed annually Summary. FCA. July 2018. 2 Using the AB 35-54 demographic proxy for SMEs


Operational Delivery and New Participants

During 2018, CASS continued to welcome new participants and introduced Think Money to the CASS community. We are seeing more interest from other banking service providers who provide budgeting services with their current accounts, enabling their customers to effectively manage their finances. CASS is seeing continued interest to join the Service from both new entrants to the market and existing providers.


Governance

CASS is now a service delivered by Pay.UK. In recognition of its specific regulatory obligations the CASS Executive Committee retain responsibility for managing the service and executing strategy, as agreed with Pay.UK Board on an annual basis.

In May 2018, Bacs legally became a wholly owned subsidiary of Pay.UK.

Strategy

The CMA’s investigation into retail banking in 2016 has had lasting implications for the market. CASS accepted undertakings from the CMA which we have continued to deliver against in 2018 as part of our commitment to securing better consumer outcomes in retail banking. These included improvements to CASS operations and governance, and CASS continued to maintain an indefinite redirection period to provide a safety net for those who need it.

CASS has a clear focus on the potential impact of open banking functionality on the market. To help us understand the changing consumer behaviour and expectations of the market we have undertaken a number of activities.

Consumer behaviour is likely to be influenced by the opportunities for new consumer–centric services that open banking functionality offers, and CASS has begun to review its strategy to ensure it continues to meet consumer needs in the future.

To support this work CASS held two strategy days in 2018 with the switching ecosystem to ensure a wider consumer view. In September 2018, we also published a white paper exploring the challenges and opportunities within the switching ecosystem generated by the CMA’s 2016 package of remedies.

The white paper recognised that in the future open banking functionality should offer a wider choice of services to consumers, enabling more interest in switching to new products and providers. CASS’ strategic approach is to explore how we can work with others to maximise the benefit to consumers whilst maintaining resilience and confidence in the market.

CASS’ strategic approach is built on three pillars: customer value, innovation, and operational excellence.

The CASS Executive Committee is independently Chaired and is formed of nine representative participants, and two elected independent non-executives to ensure our responsibilities for consumer representation are at the heart of our decision making process.


CASS DiSCuSSion PAPer, SePTeMBer 2018

1

Current Account Switch Service Discussion Paper - September 2018

CONSUMER SwitChiNg

Challenges and opportunities for current account switching from the Competition and Markets Authority retail banking reform

Ecosystem Engagement

CASS is in a unique position to help marshal and take full advantage of further market innovation, and over the last year CASS has refocused its work to ensure that it is effectively engaged and can use its knowledge to influence the switching ecosystem as it continues to foster competition in an evolving market. This work will continue to be a priority in 2019, with CASS looking to work closely with the Open Banking Implementation Entity (OBIE) and other market sources such as Price Comparison Websites (PCWs) to ensure new innovation can benefit every consumer.

CASS’ 2018 white paper outlined the potential opportunities and challenges that the use of data and in particular open banking will have on switching. This was well–received by the ecosystem and helped CASS engage positivity at roundtable events CASS delivered at the Conservative and Labour party conferences.

In addition, CASS supported the Prospect Magazine publication ‘Banking on Change’, a collection of articles analysing how the industry can supervise the emergence of mass market financial technology without stifling its potential. The report included pieces from Economic Secretary to the Treasury, John Glen MP, Minister for Pensions and Financial Inclusion, Guy Opperman MP, and Shadow Chief Secretary to the Treasury, Peter Dowd MP, as well as other backbenchers and specialists from across the industry. The report and accompanying debates provided a platform on which multiple stakeholders could identify the opportunities, innovations and risks associated with further data-sharing.

With digital solutions becoming mainstream, it is more important than ever for the industry, regulators and politicians to ensure no consumer is excluded or left behind.

In 2018, CASS has demonstrated our commitment to inclusion by working with stakeholders across the ecosystem to break down the perceived barriers to accessing good financial services. CASS plays a crucial role in an ever developing market to enable consumers to make the most of their money.

The switching ecosystem includes all those who are either a supplier or receiver of switching services and those who influence its success; for example, service providers, intermediaries and third party providers, consumers and their representation, relevant official bodies such as regulators and government, relevant trade bodies and thought leaders. They all have a role to play in understanding the opportunities and challenges market innovations present to consumers.

CASS is working to examine how FinTechs and other new entrants to the market can support inclusion. This has led to CASS exploring work with others on possible accreditation for products and how this could be to the benefit of people on the margins of exclusion, helping consumers comparing the best financial products.

CASS operational success and expertise is recognised across the UK and across the globe. Since 2013 we have kept in touch with other countries’ to promote our approach to switching, and we have hosted officials from Australia and Korea.

In 2018 the CASS team was invited to Israel to utilise our expertise of consumer behaviour and switching services. The team met with officials from the Israeli Finance Ministry and the Central Bank to outline our approach.

The CMA’s package of remedies delivered significant market developments that produced immediate opportunities to improve outcomes for customers. Capturing the benefits fully is dependent on cooperation and coordination throughout the switching ecosystem.


CASS plays a crucial role in an ever developing market to enable consumers to make the most of their money.



Customer Engagement

Engaging with the financially vulnerable

SME Targeting 18-24 year old targeting

Building on the campaign success of 2017 and continuing to deliver to our CMA undertakings, this year CASS’ marketing activity was tailored to specific audiences who had previously proved harder to reach and had been identified by the CMA as audiences who could benefit from switching. Research shows that the Switch Guarantee Guy figurehead for our advertising resonated with people; 82% of people found him to be likeable, 74% found him to be charismatic and 70% found him to be trustworthy3.

The CMA identified that the financially vulnerable could benefit most from switching their account and therefore they are a key audience for CASS. In January 2018, we launched a nationwide marketing campaign that targeted this group using specific messages which were tailored to resonate, based on research that revealed how best to engage with them. Our research showed that this customer segment was likely to be attracted by benefits they might get if they switched, and that the rewards associated with switching should be promoted in the CASS marketing activity. As a result, we launched ‘Rewards all round’ - a creative and ambitious TV-led campaign, with support on social channels that saw Switch Guarantee Guy strolling through a carousel of rewards. This approach explained that a wide range of benefits and rewards could be available to those who switch, aiming to increase consideration of switching.

Our message testing for this audience showed that SMEs on the whole were cautious about using CASS and less aware that CASS applied to business accounts too. The campaign focused on the smooth nature of the service and seamless support for small business owners. The marketing campaign was coordinated with the launch of the CMA-mandated Standardised Information Set (SIS), designed to make the process of opening business current accounts easier. Collaborating with the rest of the industry, CASS was able to ensure that messages from both parties were aligned, providing factual information for SMEs that enabled an easier end-to-end journey including account opening and the switching process.

CASS targeting of 18-24 year olds built on the ‘Switch Your Situation’ campaign from 2017. Previous research showed that this audience wanted to know how they could benefit from switching, and the focus was to bring to life the variety of rewards and benefits for this audience.

Our campaign ensured that the messages within the adverts were entertaining and easy to understand.

To successfully achieve CASS’ role to enable competition and remove any perceived barriers from the customer decision making process, customers need to be aware the service exists. Therefore our marketing approach aims to drive awareness and consideration of switching.

3 Populus Campaign Creative Effectiveness Post-campaign Report, December 2018

Our marketing approach aims to drive awareness and consideration of switching


Performance Metrics 2018 The Current Account Switch Service tracks a range of data points to report on the performance of the Service.

92.5%* Customer satisfaction

Target 90%

80%*Awareness of the serviceTarget 75%

x3Targeted campaigns at SMEs, the financially vulnerable and 18-24 year olds

99.4%*7-day Switch completionTarget 99%

*average figure across the year

47

Bank and building society brands accessible through CASS



Conclusion

CASS remains committed to working across the switching ecosystem to determine the feasibility and potential benefits of a range of innovations to create a more seamless switching process from search to switch, and to make sure that CASS continues to meet the needs of all consumers.

With some use-cases already articulated, in 2019 CASS aims to work with OBIE and other market influencers such as PCWs and industry forums to ensure the switch service can anticipate how to make the most of the new technology and ensure switching is delivered effectively in the future.

Our strategic approach for 2019 includes expanding our product offering by exploring the switch proposition, ensuring the central CASS product is fit for purpose in an open banking world.

Our immediate research plans will explore if a switch could be started from a third party provider (TPP) or Price Comparison Website (PCW), allowing customers to initiate a switch seamlessly from their preferred starting point. We will explore Multi-banking, which allows customers to move selected payments between providers, and we will examine how best to incorporate consents into the switch journey. This would allow customers to move the relevant TPP consents automatically, and could reduce barriers to consideration of other products.

These workstreams will be presented to the switching ecosystem at a strategy development day in Spring 2019 so that the whole community can engage with our work and inform the debate.

In 2018 CASS consolidated on the activities undertaken in previous years and focussed on understanding what a well-functioning market looks like in the future.


Notes

Email [email protected]

CASS Press enquiries [email protected]

Telephone +44 (0)20 3217 8200

www. wearepay.uk

Twitter @WeArePayUK

Address 2 Thomas More SquareLondon E1W 1YN

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