Return of the One Account
Like most people, I wish I was better at managing my money. All too often I leave a balance in my current account that is surely better placed in a savings account…or so I thought! A recent switch to a current account that pays more interest than most savings accounts has made things much simpler and made me question the future of savings.
Back in 1997, Virgin Direct in partnership with RBS launched one of the most celebrated banking innovations of the past 20 years. By 2002, The Virgin One account scooped both Best Mortgage provider and Best Current Account provider at the Guardian/Observer Consumer Finance awards. So why, 15 years later, do so many of us still have so many different accounts, each covering a different aspect of our finances?
The promise of so-called Current Account Mortgage is that by consolidating the balances of your mortgage, current accounts, personal loans and saving accounts into one, you can cut the cost of borrowing. The reality is that most people, encouraged by a silo mentality in most banks, keep everything separate and miss out on the benefits.
Even if you don’t combine a mortgage in this mix, accounts like the 1-2-3 Account from Santander or Vantage from Lloyds, pay a healthy interest rate on balances as high as £20,000. This eliminates the need for an easy access savings account for most consumers and saves all the time and hassle of constantly moving money back and forwards between accounts. This is just one example where better product design based on broader customer needs can improve retention and profitability.
So come on banks, now is the time from some more innovation and maybe a return to the One Account?
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