Surveys
Fee Charging Current Accounts Are On The Rise - Survey
The number of current accounts charging a fee increased by 33 per cent, revealed a recent research by WhiteConcierge, the UK-based business-to-business concierge and lifestyle management company.
As of April 2010, there were 44 current accounts charging fees, which represents a 33 per cent increase in comparison with March 2008 when the amount of these accounts totalled 30.
Although the survey refers to retail banking, the broad thrust of the report will interest people in the mass affluent and high net worth categories when it comes to checking the deals they get from private banking current accounts.
It’s also been revealed that the average monthly fee increased by 29 per cent during this period, bringing the average service charge to £14.88 ($21.57) from £11.50 two years ago.
WhiteConcierge also said there is a growing trend for financial services companies to increasingly only offer its products to its most profitable customers.
“There is a general decline in free banking as financial services companies look to protect and grow their revenue streams. This means that they are increasingly trying to persuade existing customers to pay for products and services they currently receive for ‘free’, or charge more for those they already pay for. This will require financial services companies to expand their product proposition, which is likely to include concierge services,” said Jonathan Breeze, managing director of WhiteConcierge.
The research also reveals that over 43 million financial services products have been switched by customers over the past two years, but that over 17 million of these accounts could have been profitable for the companies offering them.
In the aftermath of the financial crisis, there has been a greater shift towards customer retention as opposed to customer acquisition, concludes the research.
“A one per cent increase in customer loyalty is equivalent to a 10 per cent cost reduction. As the focus on reducing costs increases, the retention of the most attractive customers becomes even more important,” added Breeze.