Scottish consumers want more choice when it comes to banks

According to a recent report consumers in Scotland would be keen to see increased competition when it comes to High Street banks, and would like to see a greater choice of High Street banks. A survey was carried out by accountancy firm Deloitte, and the results showed that consumers would like to see more banks entering the market so that they have more choice with regards to which bank to use.

This comes despite the fact that consumer confidence in the banking industry is still low following the global financial crisis and the recession. However, whilst consumers are looking for more choice when it comes to the banking industry it also emerged that many would be worried about handing their money over to a new entrant in the market, especially in the current financial climate.

The Independent Commission on Banking has already launched an investigation into the state of competition in the UK’s banking system, and there is particular concern over competition amongst banks in Scotland because the Royal Bank of Scotland and Lloyds TSB are the dominant players in the sector.

The survey showed that around 30 percent of Scottish consumers wanted to see more choice when it came to High Street banks, and around 17 percent have switched some part of their banking to a rival provider, such as their savings accounts or mortgages. Deloitte officials said that these factors showed that there was room for new entrants to the banking sector in Scotland.

One official from the accountancy group said: “Our findings suggest that consumers will look to more established and recognised brands who extend into banking, with one in 10 saying they would be happy to bank with any large ‘household brand’. Further, consumers are more likely to take out certain products such as savings accounts from new entrants, but remain cautious about committing to longer term products such as mortgages.”

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Record deposits in banks for April

According to recent reports April saw consumers in the UK deposit record savings in high street banks, with many rushing to take advantage of higher returns on deposits. Reports show that there was a surge in the level of deposits made by savers in the UK, with many trying to put money aside in order to try and combat the increases in living costs. However, the report also showed that only 50% of consumers see the need to put money aside in savings. Read more

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Private accounts taken up for package rather than rate

Premier private bank accounts do not have a very high interest rate compared to high street banks and are often taken out for the additional benefits they provide, says an expert.

Samantha Owens, head of personal finance at Moneyfacts, said customers must have high balances to receive any credit interest, which would not be particularly high compared to other accounts.

However, she noted that people open premier private bank accounts because of the benefits they offer, such as investment advice and access to bank managers.

Commenting on who might find this type of account most useful, Ms Owens said: “People who are worth a lot of money, basically… They’re not really for people to just walk in off the street.”

Yet such accounts appear to be gaining in popularity, with Schroders reporting earlier this month that its private banking pre-tax profits were up 54 per cent with a net income rise of 11 per cent.

Ms Owens said that Coutts pays 0.15 per cent on a balance of £5,000 and offers free banking for customers who have over £2,500 in their accounts.

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Consumers need to do a ’shopping list’ before choosing a bank account

Consumers need to create a “shopping list” to help them choose a bank account which suits them best, one financial expert has claimed.

The British Bankers Association (BBA) recommends that spenders need to look beyond the headline rate when examining the pros and cons of various bank accounts to ensure that they are aware of any conditions or limitations that apply.

Brain Capon, a spokesperson for the BBA, said: “When opening any account, regardless of who it is with – a British bank or a bank that is based abroad, you need to really decide what it is that you want from that bank overall.”

He added that the fact increasing numbers of banks from abroad are offering accounts in the UK is a good thing as competition between providers can enable consumers to get better deals.

According to the latest figures released for Britain’s high street banks, personal deposits have shown stronger growth than past months. The figures, from January 2008, show that the net change was up by £2.9 billion.

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