What you need to know
With near-universal ownership of current accounts among Irish consumers – and, in RoI, a distinct lack of competition or differentiation – it is tempting to view the current account market in Ireland as an area of mature stagnancy. There is much happening beneath the surface, however – namely, the rapid emergence of mobile banking as the go-to, everyday preferred channel. Together, the two digital channels – online banking and mobile banking – have now overtaken and surpassed branch banking in consumers’ preferences for all activities and transactions, but mobile banking looks set to become the primary digital channel in the very near future.
Issues covered in this Report
This Report examines the current account market in Northern Ireland (NI) and Republic of Ireland (RoI). It analyses the main drivers at play within the market. It also draws on exclusive consumer data to assess levels of ownership of current accounts among Irish consumers, preferred providers of main and non-main current accounts, levels of switching activity among consumers and consumers’ preferences when it comes to channels for selected banking activities.
Definitions
Current accounts can be classified into various sub-types according to their target market and pricing model. In NI, the most common type of current account is the free-if-in-credit (or ‘free banking’) model. This is where the customer does not pay any direct fees for having the account, if in credit, or for core services such as direct debits and cheques. Interest is usually charged on any money borrowed via an overdraft, which can be either ‘authorised’ or ‘unauthorised’.
Charges are usually significant on borrowing above an arranged overdraft limit.
Student and graduate accounts are variants of the free-if-in-credit model and may offer special features, such as an interest-free overdraft. Similarly, basic bank accounts are based on the free-if-in-credit model and do not carry any charges provided there are sufficient funds in the account to meet any payments made.
The other main category is the premium or packaged account. This involves the customer being charged a monthly fee in return for a range of additional benefits, such as travel insurance and motor breakdown cover. In RoI, premium or packaged accounts are far less common. However, even standard accounts typically entail monthly or quarterly maintenance charges – which are fixed, upfront amounts levied on the customer’s account – in addition to transaction fees that depend on usage. In certain cases, it is possible to avoid these monthly or quarterly charges by maintaining a certain balance in the account.
