Customer Inertia — Why are we content with mere pennies from high street banks for holding our hard-earned savings?

Remaining stuck on default may make life a little easier, but is it good for our money? Let’s find out!

Customer inertia is often defined as a tendency to stick to the status quo, opting for default options which result in a simpler life that doesn’t however provide the best possible solution. It’s not a problem when it comes to shopping for groceries, but savings products are another kettle of fish.

High-street banks take advantage of customer inertia

A recent study found that almost 62% of customers stay with their banks just because they “have no issues”. This situation is perfect for high-street banks, because it means they don’t need to concern themselves with providing the best offers on banking products for their customers. Customer inertia has ensured that these businesses don’t have to become customer-friendly.

This approach hits customers hardest when it comes to savings products. Interest rates offered by high-street banks are at their lowest possible level — 0.01% — and recently the Bank Of England admitted that it’s considering negative interest rates. Remaining in inertia in these circumstances can be dangerous for your personal finance.

A survey conducted by YouGov found that 42% of people would be willing to change their savings account if the difference between them was at least one percentage point. Despite these claims their behaviour shows just how strong customer inertia is, because during the study the difference between the market-leading and lowest-rate instant access accounts was already one percentage point.

Further results from the same study show that UK households have £1.3 trillion invested in accounts in the big five banks, which usually offer them the lowest possible interest rate. Why is that? People are put off by the complexity of opening a new savings account and how time-consuming this process is.

That’s exactly why things need to change…

FinTech to the rescue!

The FinTech revolution is getting stronger every year. There are many reasons for this growth but one of them is its ability to break through customer inertia. Solutions that are accessible through a mobile app, are easy to use and are more likely to get people to try them. Another important factor is that FinTech is consumer-oriented, which ensures far better offers than high-street banks.

The Depoway team is proud to be a part of that revolution.

A savings solution that eliminates customer inertia

The idea that led to the inception of Depoway came from our frustration with high-street banks offering savings products that presented unsatisfactory terms, especially when it came to really low interest rates, that in fact, don’t allow us to save for anything. Our app was developed in response to this problem.

With Depoway you’ll be able to earn 1.20% (AER) annual interest with no fees, unlimited transfers, and higher FSCS deposit protection. That’s up to 100x more interest than the biggest banks. We want to enable our users to achieve their savings goals more easily which is why we’re developing features like setting up your custom goals and smart recommendations that suggest how to grow your savings effortlessly.

We’re launching at the end of 2020 but you can join our waitlist now. Each person that signs up plants one tree in Australia thanks to our partnership with One Tree Planted.