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High street banks see tough competition for current accounts


Competition in the current account market is picking up as major banks come under pressure to offer perks and rewards.

HSBC, Barclays, Lloyds Banking Group and RBS have so far dominated the current account market, holding 75% of all accounts. Since the seven day switch guarantee was introduced in September 2013, some smaller firms have widened their elements of competition, offering rewards and highly competitive interest rates. The four big banks have taken notice as competition continues to get fiercer. For example, Barclays, which saw its overall share of the current account market fall by 2% last year, is launching its new online "Blue Rewards" account this week.

Kevin Mountford, of, said:
"There has always been a perception that the current account is a valuable asset because clearly then the banks have our transactional data.
"But what we have seen with the start of the [seven-day] current account switching service, is greater awareness and a political agenda to bring in more competition.
"I think the big four banks have now realised they can no longer rest on their laurels. Ultimately we as consumers are going to get more choice and that can only be a good thing."

A total of 1.6 million people have switched their bank account since the seven day switch guarantee service was introduced in September 2013. Transfers hit their peak in November 2013, when 105,802 people switched - compared to 91,615 in February this year.

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