Why switching bank accounts is changing forever

Turbo piggybank
Current account switching is about to get hot, hot, hot!
"Midata will force banks and building societies into offering bank accounts that customers really want and need" Matt Sanders, Gocompare.com
  • | by Emily Bater

You may not know what midata for bank accounts is now, but over the next few weeks that'll change. It could be the biggest thing to happen to current accounts since, well, ever.

Announced by the chancellor in his 2014 Autumn Statement, midata comparison for current accounts is a new government-backed initiative which is set to launch in April.

Rather than relying on assumptions about account use when shopping around for a new deal, midata makes comparison better by using details of your actual account use over the previous 12 months to project the future benefits you could expect if you switched to a particular product.

Midata will safely and securely look at a person's spending habits to help them identify the right account for their needs... and Gocompare.com will be the first comparison site to offer it.

So why is midata comparison so great for the current account market? Well, here are five reasons…

It's easy to use

Midata tells you in pounds and pence what the right current account is for you – plain and simple.

Gocompare.com will walk you through the simple stages that will either see you upload a file provided by your bank, or give permission for your encrypted data to be accessed securely for the purposes of building the enhanced comparison table.

By the time the table is built the encrypted data will already have been securely disposed of, meaning that it can't be used for any other purpose.

All the UK's major banks have already signed up to the service and others are expected to follow suit, meaning most people will be able to use it.

It's ridiculously thorough

Midata makes over 1,500 calculations relating to customer's spending habits, examining 33 different types of transactions which are basically the things that banks charge you for – all foreign usage fees, for example, plus any overdraft charges, cheque return fees and standing order charges.

"By enabling our customers to use their actual current account data we can provide more meaningful product comparisons and help them to find what's really right for them," said Gocompare.com's Matt Sanders.

It'll change the banking industry

The government has been pushing for improved competition in the banking industry for a number of years and it's hoped that midata will help achieve that by making customers better informed and more likely to switch.

Seven-day switching, introduced in 2013, made limited impact in encouraging more people to switch, but it was preparing the way for further changes such as midata. Gocompare.com research from July 2014 stated that only 6% of customers switched in the nine months following the government's change in rules and just 19% had heard of the new rules.

"Despite initiatives such as the seven-day switch guarantee, consumers are reluctant to ditch under-performing banks," said Sanders.

"Midata will force banks and building societies into offering bank accounts that customers really want and need."

It's free and private

Midata costs nothing to use. Comparison sites won't be able to read or store your encrypted account data, so customers can be sure that their details won't be passed on to any third parties.

It's just the beginning…

Current accounts are just the start for midata – it's hoped that it'll eventually be introduced into energy shopping, credit cards, credit reports and other consumer comparison activities, making the switching process quicker, simpler and more exact.