38,000 current account customers desert Co-op Bank

co-operative bank

ABOUT 38,000 Co-operative Bank customers moved their current accounts elsewhere in the first six months of 2014, the troubled bank revealed today.

Outgoing Chairman Richard Pym described the exodus as "disappointing" but pointed out that the number of customers who left is "small relative to our total number of current account customers whose continuing loyalty to the Bank is deeply appreciated".

38,000 customers represents about 3% of The Co-operative Bank's current account holders.

In addition, Pym pointed out, almost 10,000 people chose to join the Bank during the same period. The net loss of bank account customers was just 28,199, then, or just under 2% of all customers.

Considering the huge amount of negative publicity that has surrounded The Co-operative since 2012 - the discovery of huge losses in 2013 that bought it close to collapse, a credit rating downgrade, a drugs scandal involving their former chairman and many high profile resignations - that's actually not a huge amount of movement on the part of ordinary banking customers.

Not quite a customer exodus

Research group TNS has been monitoring current account switching in the UK month by month since the new seven day switching service launched in September of last year.

TNS: switching gains and losses July 2014

tns july 2014

SOURCE: TNS August 2014 report, available here.

Based on those figures, a loss of customers around this size isn't actually all that unusual.

In May and July this year, Lloyds TSB (the two are still grouped in this survey) and Natwest both experienced net losses in current account customers of between 1 and 5% of all UK current account switchers.

HSBC have been haemorrhaging current account customers for months now: in April, they had a 10% net loss and they've seen a 7% net loss in both of the two months after that.

Those banks are all bigger than The Co-operative, however, are so their losses, while large as a proportion of all consumers switching current accounts will be felt less keenly.

The TNS figures do confirm that The Co-operative Bank is making net losses in customers, after making net gains in customer numbers in the first three months of the switching service.

Despite that, the Bank's top executives said today that core banking services remained more stable than they had expected.

Continuing ethical stance

The Co-operative Bank puts this down, at least in part, to their untarnished record on ethical investment.

"Our customers have remained very loyal," Pym said. "We are extremely grateful to them for their support and the impressive response to our Values and Ethics Poll illustrates how important it is to them that they can again feel proud of banking with us."

73,000 customers and Bank employees completed the poll last month, answering questions on what they feel The Co-operative Bank's key values should be.

The poll also indicated a possible change of direction in ethical policy.

While it asked about the 'five pillars' that have always formed the basis of the bank's ethical policy - human rights; ecological impact; animal welfare; international development and social enterprises - respondents were also asked for their opinions on three new areas more closely related to banking.

Further work in those three areas - responsible banking, transparency and good customer service - is likely calculated to reassure the customers who have, or have been tempted to, leave over the past year.

But that's not to say that the bank is forgetting their core ethical values.

Today's report notes that the bank recently welcomed Laura Carstensen, a former Commissioner at the Equality and Human Rights Commission, as chair of the Board's Values and Ethics Committee which was established in a similar shoring up move at the end of 2013.

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