10 Million Dormant Accounts Suggests Major Problem for Incumbents Says Gretel Research

5 days ago 51

New analysis by Gretel, the free online service which aims to help banks and building societies solve their legacy data problems in a uniquely centralised way, reveals more than £4.5 billion is estimated to be sat inactive in dormant bank and building society accounts in the UK.

Industry data analysed by Gretel suggests that more than 10 million people in the UK could have a bank or building society account sat dormant. Yet, when polled by Gretel about lost accounts, significantly more – over a quarter of all adults (26%), believed they had at least one lost or dormant bank or building society account. However, the vast majority of banks and building societies offer products that go beyond current and savings accounts currently covered by the existing Dormant Accounts Act – such as ISAs, pensions, shares – and under the proposed expansion of the Dormant Assets Scheme, these organisations do not have a centralised scheme through which their customers can find all lost products.

Duncan Stevens, Chief Executive of Gretel said: “We are working with the financial services industry to show how our exclusive technology can help solve a number of challenges ranging from lowering the cost of customer reconnection, to digitisation of vulnerable customer journeys, to rectifying legacy data quality issues and to restart financial conversations. Importantly for the banking industry, Gretel will cover the entire financial services industry which we estimate has £50 billion sat in lost and dormant accounts from bank accounts to pensions and life insurance, so it can uniquely support them to help customers reconnect in a centralised way across all products and solve many of its customer data issues.”

There are many reasons that someone can become disconnected from a bank or building society account, ranging from someone else setting up the account for them, major life events and changes in the banking landscape from mergers to consolidation. In recent years, we have seen many popular banking brands evolve and disappear from our high street such as Royal Bank of Scotland, Clydesdale and Abbey National, rebranding as NatWest, Virgin Money and Santander respectively. We have also seen the re-birth of other well-known brands such as TSB, once again an independent bank, following its demerger from Lloyds Banking Group after a period of 18 years.

Gretel estimates that the average value of a lost or dormant bank account is £450. Bank and building society accounts are the financial services product with the greatest number of lost and dormant accounts – estimated at 10 million vs 3 million in shares and investment funds and 2.5 million life insurance policies.

Duncan Stevens, added: “The retail banking sector has seen so much change and transformation in recent years from consolidation through to heightened competition and the emergence of new, challenger brands, and the meteoric rise of digital banking that has just changed the banking landscape forever. While this brings many benefits, one impact has been that as more people have switched accounts or opened multiple accounts, this has in part, led to the outcome of more than 10 million bank and building society accounts today sitting dormant and inactive.”

There are numerous regulatory drivers around customer treatment and the obligations on financial services companies to make comprehensive efforts to stay engaged with their customers. By creating a centralised hub where consumers can search for lost accounts at no cost, the launch of Gretel supports these regulatory requirements and in addition, Gretel has been architected to address the recommendations of the Government’s Independent Commission on Dormant Assets. The commission is calling for the extension of the scheme beyond banking to include the rest of the financial services industry, including shares and pensions, and has made it a priority for firms to attempt to reunify dormant assets with their rightful owners.

Once Gretel is fully launched, consumers will be able to identify lost pots of money in old financial accounts in less than three minutes. Once lost accounts are flagged to the customer, Gretel provides an easy path for them to reclaim it. Uniquely, once a customer has signed up with Gretel, the service will keep working for them to constantly look for lost monies and flag any new accounts as and when they are identified.

The post 10 Million Dormant Accounts Suggests Major Problem for Incumbents Says Gretel Research appeared first on The Fintech Times.

Read Entire Article