Insights from the Medtech Barometer 2016

Research Paper

Power Pricing in Business Current Accounts

The UK business current accounts market has long been considered highly concentrated with a relatively loyal customer base. However, with the regulatory push for more competition stemming from the Vickers Commission recommendations, we are likely to see competition in the sector gradually increase as customers find it easier to switch. The largest players in the UK are on the brink of a price war, with some giving a range of services away for free and all promoting an extensive free offering as an incentive for customers to switch providers. Is the offering of free services the most profitable way of winning the "acquisition war"?

Is there a way to retain and grow the customer base while avoiding the commoditization of services and the excessive compression of profit margins? We completed a global research project, analyzing and benchmarking the Business Current Account (BCA) proposition of over 50 global banks, and identified eight themes which can direct the design of new BCA products to ensure a win-win situation for banks and SMEs. We call this fair value exchange.