With competition to offer current account perks picking up, the big four high street banks are facing increasing pressure.
The £8bn-a-year market has traditionally been dominated by Lloyds Banking Group, HSBC, Barclays and RBS, who collectively control 75 per cent of accounts.
Now smaller providers are widening the elements of competition by including current account deals such as interest payments of up to five per cent for customers that stay in credit and cashback on utility bills and shopping.
A system aiming to speed up the process of switching account providers has been in place for 15 months in the UK.
Kevin Mountford, of Moneysupermarket.com, told Radio 5 live’s consumer team: “There has always been a perception that the current account is a valuable asset because clearly then the banks have our transactional data.
“But what we have seen with the start of the [seven-day] current account switching service, is greater awareness and a political agenda to bring in more competition.
“I think the big four banks have now realised they can no longer rest on their laurels. Ultimately we as consumers are going to get more choice and that can only be a good thing.”
Data from market analysts TNS Global shows that last year, twice as many customers moved their current account to Santander than to its nearest rival, Halifax.
Santander’s 123 account has a £2 monthly fee and offers three per cent interest on balances of up to £20,000, plus cashback on household and utility bills and home insurance premiums.
Similarly, Nationwide’s Flex Direct Current Account which launched 15 months ago, offers an introductory rate of five cent on balances up to £2,500. The building society attracted 339,000 new customers in the nine months to December.
Just last week Barclays announced its current account customers can earn up to £12 a month with a new cash reward scheme.
Every customer who signs up will earn at least £4 a month from the scheme although some cash bonuses are limited to mortgage and insurance spending.
Customers must pay £3 to sign up for “Barclays Blue Rewards”, and are paid on the condition that they deposit £800 a month and set up two direct debits, as well as set up online and mobile banking.
Analysts say this change of direction by Barclays is a sign of the ferocious competition now underway.