Greg Kilminster
Head of Product - Content
Monzo and Starling top CMA's banking satisfaction survey
Monzo and Starling Bank are the top-rated providers in the UK Competition and Markets Authority’s (CMA) latest banking satisfaction survey, which measures the quality of services offered by personal and business current account providers across Great Britain and Northern Ireland.
The survey, now in its 13th iteration since its inception following the CMA's 2016 retail banking market investigation, is part of the ongoing effort to enhance transparency and competition within the sector. The findings, which cover the period from July 2023 to June 2024, provide a comprehensive assessment of customer satisfaction across various service categories, including online and mobile banking, overdrafts, and in-branch experiences.
Leading the way
In Great Britain, Monzo took the top spot in both the personal and business banking categories, with Starling Bank closely following in second place. These digital-first banks have consistently ranked highly, reflecting their strong focus on user experience and innovation.
Chase, a new entrant in this year’s survey, secured third place among personal account providers in Great Britain, marking a significant achievement for the relatively recent market participant. For business accounts, Tide and Handelsbanken tied for third place, further demonstrating the competitive edge of challenger banks in the UK’s financial landscape.
Traditional banks lag behind
Conversely, several traditional banks continue to struggle with customer satisfaction. The Co-operative Bank, Virgin Money, and Royal Bank of Scotland (RBS) were ranked the lowest for personal current accounts in Great Britain. In the business banking category, RBS, The Co-operative Bank, Barclays, and HSBC found themselves at the bottom of the rankings.
Northern Ireland results
In Northern Ireland, Monzo, Starling Bank, and Nationwide topped the rankings for personal accounts, while Ulster Bank, Bank of Ireland UK, and Allied Irish Banks were rated the lowest. For business accounts, Santander emerged as the highest-ranked provider, with Bank of Ireland UK falling to the bottom.
Call for greater competition
Dan Turnbull, Senior Director of Markets at the CMA, stressed the importance of competition in driving improvements in customer service. He highlighted the role of the survey in providing consumers with the transparency needed to make informed decisions about their banking providers.
The CMA requires that banks and building societies prominently display these results both online and in their branches, allowing customers to see how their current provider compares with others in the market. This transparency is intended to encourage banks to improve their service standards and offer better value to their customers.
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Payment Systems Regulator Panel Report: navigating a complex payments landscape
The Payment Systems Regulator (PSR) Panel has published its annual report. The Panel, which serves as an independent advisory body to the PSR, has provided critical insights and guidance across various strategic and policy areas, from the ongoing evolution of payment systems to the pressing need for effective anti-fraud measures.
Strategic challenges in an evolving payments landscape
This year, the PSR Panel played a key role in shaping the PSR’s annual work programme. Emphasising the need for flexibility, the Panel stressed the importance of being able to swiftly address unexpected developments in the payments sector. The current environment demands a nimble approach, particularly given the potential for unforeseen challenges.
The Panel also commended the PSR’s growing social media presence but encouraged further exploration of informal feedback mechanisms, such as online polls, to engage a wider audience. This could help the PSR connect more effectively with the general public, many of whom are unaware of the intricacies of payment systems but are directly impacted by them.
Risk management and the PSR’s new strategic division
In May 2023, the PSR introduced its new Strategy and Intelligence Division, responsible for developing the regulator’s overarching strategy. The Panel discussed how it could support this division by providing continuous insights to help the PSR stay responsive and agile.
The Panel also identified key risks that could hinder the PSR’s ability to meet its objectives, including delays in the New Payments Architecture (NPA), potential competition issues due to big tech dominance, and the challenge of educating consumers vulnerable to Authorised Push Payment (APP) scams.
Combatting APP fraud
APP scams have been a major focus for the PSR and the Panel. In July 2023, the Panel reviewed upcoming reimbursement requirements, stressing the importance of clear communication to consumers about their rights and responsibilities. The Panel also emphasised the need for industry collaboration to ensure a consistent approach to handling complaints and complex cases.
As the industry prepares for these new rules, the Panel discussed how the PSR could work with Pay.UK to develop a robust compliance monitoring system, essential for maintaining consumer confidence in the Faster Payments Scheme.
ESG considerations in payments
The Panel engaged in a debate on the role of Environmental, Social, and Governance (ESG) factors within the PSR’s remit. While views varied, the Panel recommended that the PSR continue monitoring ESG developments and consider future regulatory interventions if needed. The potential role of the PSR in educating consumers about the environmental impact of different payment methods was also discussed, though the Panel recognised the complexity of this task.
Advancing variable recurring payments (VRPs)
In October 2023, the Panel reviewed the progress of Variable Recurring Payments (VRPs), a new digital payment method. The Panel supported the initiative, noting the potential for VRPs to offer a more convenient and cost-effective alternative to existing payment options. However, it stressed the need for robust consumer protection measures to support the widespread adoption of VRPs.
Access to cash in a digital world
As digital payments rise, ensuring access to cash remains a priority, particularly for those affected by the cost-of-living crisis. The Panel urged the PSR to continue its efforts to ensure that ATMs and other cash distribution mechanisms are accessible to all communities. Additionally, the Panel highlighted the need for a fairer distribution of the costs associated with maintaining the ATM network.
Cross-border interchange fees under scrutiny
The rising costs of cross-border interchange fees were another significant issue discussed by the Panel in 2023. These increases have led to changes in consumer and retailer behaviour, with some companies ceasing to offer services to UK customers due to high costs. The Panel agreed that this issue requires close monitoring, particularly in the post-Brexit regulatory environment.
Conclusion
The past year has been marked by significant developments in the UK payments landscape, and the PSR Panel has provided crucial insights that will shape the industry’s future. From addressing fraud and ensuring access to cash to exploring ESG considerations and new payment technologies, the Panel’s work will continue to guide the PSR through an increasingly complex environment. Looking ahead, the Panel remains committed to addressing the critical issues that lie ahead in 2024 and beyond.
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PSR response to call for views on VRPs expansion
The Payment Systems Regulator (PSR) has issued a response to its call for views (CP23/12) on the expansion of variable recurring payments (VRPs).
Some context
VRPs enable customers to securely connect authorised payment providers to their bank account using open banking, allowing them to initiate recurring payments with express customer consent. These payments can be made at flexible intervals and within pre-agreed limits.
In April 2023, the PSR committed to consulting on changes to Faster Payments (FPS) rules, with a potential phased roll-out of VRPs by 2024. The initial proposal aimed to enable VRPs for payments to regulated financial services, regulated utilities sectors, and local and central government in Phase 1.
The call for views, issued in December, set the stage for discussions on necessary changes to extend VRPs by Q3 2024 and invited feedback on the proposals.
Key takeaways
- The need for a multilateral agreement (MLA) and potential mandated participation: Over half of the respondents agreed that participation should be mandatory for some firms, while a quarter disagreed. The PSR will continue to explore the rules and provisions an MLA should include and who might operate it.
- Pricing principles and possible price intervention: There was no clear majority for or against pricing principles, but respondents generally agreed on the need to establish a sustainable commercial model. The PSR will consider challenges regarding the pricing principles and their interaction with the Consumer Duty and publish updated thinking at the next consultation.
- Alternative ways of pricing VRP API access: Views differed on the need for a central API access price and how it should be determined. While the PSR agrees that there is competition in the provision of current account services, concerns remain about firms' control over TPP access to VRP APIs. The PSR will evaluate alternative approaches and update stakeholders when updated proposals are published for consultation in the autumn.
Next steps
The PSR aims to share updated proposals in the autumn, including:
- Specific rules and provisions for an MLA, if deemed necessary.
- The organisation best placed to operate any such MLA.
- PSR's view on whether mandated participation may be required and whom to mandate in Phase 1.
- Plans for determining a VRP API access price if required.
Click here to read the full RegInsight on CUBE’s RegPlatform