Reluctance to Switch Banks Despite Eco Benefits

Beyond cutting back on meat or making the jump to an electric vehicle, another way consumers can reduce their environmental impact is to switch to a green bank. It's a lifestyle change that could deliver powerful effects - removing money from the fossil fuels pipeline - for little effort or inconvenience.

Yet it has been claimed that people in the UK are more likely to get divorced than switch banks - despite there being services that make changing your current account easy.

The UK's seven-day Current Account Switch Service (Cass), in operation since 2013, has completed more than 11.6 million switches, including over a million in the year to March 2025. The service switches your incoming and outgoing payments including salary payments, direct debits and standing orders.

Cass reports that 99.7% of these account switches were completed within seven working days - and nearly 90% of people who used the service were satisfied with it. Yet relative to the whole UK population, the number of people actually switching remains modest. The process works, but behaviour lags.

A set of well-documented psychological tendencies help to explain this gap.

"Prospect theory" shows that people weigh any potential losses more heavily than equivalent gains. This tilts people toward staying with their familiar provider when a change involves any chance of disruption or error .

The "endowment effect" increases the subjective value of someone's existing bank account, simply because they already own it.

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Many people's status quo bias turns hesitation into inertia, because departing from a default requires attention and effort. And our usual bias towards the present adds a timing problem: the admin is immediate while the benefits arrive later and accrue gradually .

All these mechanisms interact with how people organise their money. Many maintain informal "mental accounts" for bills, savings and day-to-day spending. A bank move forces a rewiring of standing orders, direct debits, salary instructions and payees. It feels like opening a filing cabinet and relabelling everything.

Fear of missing a mortgage or utility payment is especially salient. As such, guarantees like those around direct debits and standing orders provided by the Cass system only help if people trust they are actually covered .

While financial education improves what people know, studies have found it typically only encourages modest changes in behaviour. A meta-analysis of 201 studies reported that education efforts explained only about 0.1% of changes in money-related behaviour (things like saving, dealing with debt and avoiding fees), with these effects often disappearing over time.

A later meta-analysis with a sample size of more than 160,000 people found that financial education improved knowledge more than it prompted changes in behaviour. This was measured across areas such as budgeting and saving.

These reviews do not test current account switching directly. But they support the narrower point that information alone usually only shifts real-world financial actions a little.

However, small changes to the way choices are presented can move outcomes when used at scale. A comprehensive analysis of 23 million participants found that "nudges" - such as making a process simpler or sending a reminder - increased behaviour changes in areas as varied as signing up to a savings plan or making safety improvements in the home by about 1.4 percentage points, on average. While this may seem small, scale is key.

We can view this finding through a banking lens. Without intervention, perhaps 5% of customers would switch to a better account. A simple nudge might boost this to 6.4%. Across 100,000 customers, that's 1,400 additional people making a beneficial switch.

How to overcome your inertia

So-called "implementation-intention techniques", where a person invents conditions to help them achieve a goal, are a practical option. Across 94 tests, it was found that forming an explicit "if-then" plan - for example: "If I get the job then I'll increase the amount I save" - produced a medium-to-large improvement in people attaining their goals.

In terms of banking, this technique could be used along the following lines: "If it is Sunday at 8pm, I will compare three accounts for 30 minutes. If one is clearly better on fees or green credentials, I will apply for it the same evening. Once approved, I will move two direct debits per night until I'm finished."

In my experience, there are three steps that can help you overcome inertia when it comes to your finances.

First, convert a general goal into time-boxed tasks on your calendar, using an if-then plan rather than a vague intention.

Second, use frustrations with your existing bank account to motivate you - such as being charged a fee you did not expect, or discovering your bank's environmental failings. Your motivation to act is elevated at these moments.

Third, to make the task less overwhelming, use a short checklist of payees and subscriptions. Ticking items off in small batches should reduce the cognitive load you feel.

Broader lessons

Clear communication about how much switching services such as Cass will do for an account holder can make them worry less about the risks. This should also help them realise if certain authorisations need to be switched manually .

But the lessons here apply beyond current accounts. Loss aversion, attachment to the familiar, present bias and default effects also shape decisions about savings products, energy tariffs and mobile contracts - choices that all come with environmental consequences.

Systems that assume consumers will tirelessly compare their options will disappoint. Those that make better options prominent, easy and well timed are far more likely to encourage meaningful change, at scale.

Marcel Lukas is the Vice-Dean Executive Education at the University of St Andrews Business School and has previously received funding from the British Academy, UKRI and Interface UK.