When it comes to the big things in business we tend to be creatures of habit, sticking with the same insurance company or bank even when we know there are better deals to be had. This is down to a number of factors, including caution and a belief that loyalty will be rewarded if there are problems. The facts say otherwise. Businesses depend on our inertia about moving, so that they can offer better deals to attract new customers. If you are being served, as is increasingly the case, by a remote call centre rather than a local bank it makes little difference whether you have been a customer for 10 minutes or 10 years. Survey after survey shows that banks are among the most unpopular businesses in the UK, thanks to how they triggered the recession, yet ironically we stick with them through misplaced loyalty.
One of the reasons for inertia with banks in the past was because moving seemed so complicated. However, last year a new switching guarantee was put in place by all the banks. This guaranteed a timetable for the process of closing an account and moving it to another branch, including transferring direct debits and other regular payments within seven days. This guarantee covers personal accounts, small -businesses and charities. The hope was that this would encourage more people to test the market and switch accounts, which in turn would put banks under pressure to improve their services. The latest figures suggest this is beginning to work, although a 20% increase in the number of accounts switching still leaves a lot of scope for more people to become more hard-hearted in their dealings with banks.
Not surprisingly the biggest number of accounts were lost by the bigger banks – NatWest, Barclays, Lloyds and HSBC. This is partly simple arithmetic, in that the more accounts you have the more you have to lose. The figures suggests Santander and Halifax were the big winners in attracting new business, mainly because of some of the innovative things they offer around paying interest on credit balances and parallel discounts on credit card use. This has forced the traditional banks to look to what they offer. With a trend established for people to move accounts, the tactics used to sell us things we did not need, which annoyed people intensely, have now switched to heading off this exodus of customers.
It is easy for farmers to conclude that farm accounts and borrowings are too complex to move to another bank. However, banks are ultimately organisations that make money from lending, and over the years farming has been good business for them. In most cases farms will have assets as security that other businesses cannot match, and this makes agriculture and businesses associated with it a very attractive prospect.
The lesson with all things in business is that you will not know what is on offer in the market unless you test it. It may be that things do not work out, but if your own bank knows you are asking around it might surprise you the degree to which their service can improve. At best testing the market might open the way to a better deal and, perhaps more importantly, better service.
The trump card you now have is that your bank can no longer make a big thing of the complexities of moving. It, and the new bank, have a timetable they must stick to, and if they do not you are protected against missed direct debit payments. It seems more and more people are voting with their feet about moving their bank, and there is no reason for misplaced loyalty to exclude farmers from that trend.