The truth about UK packaged bank accounts


Bundled products have been popular with UK banks as a means of overcoming the UK population’s reluctance to pay for banking services. According to Dan Hyde’s recent article in the Telegraph, an estimated one in five UK adults, or 11 million people, are currently using packaged accounts, which offer additional features and benefits, such as travel insurance and roadside assistance, linked to a current account for a monthly fee.

Hyde illuminates a number of key issues currently at play with packaged bank accounts in the UK:

  • Complaints about packaged accounts up threefold to 400 per day
  • Customers were signed up for deals that they did not need
  • In some cases, the fine print in the terms and conditions prevent customers from using the deals as sold
  • Bank account mis-selling could be one of the next financial scandals in the UK

“Last March, the FCA ordered banks and building societies to ensure accounts were ‘suitable’ for every customer, ‘properly explained’, and to check whether the customer still qualified for all the benefits once a year,” said Hyde.

As Hyde notes, according to the Financial Ombudsman Service, complaints fall into three main categories:

  • UK consumers do not want or do not realize they have a packaged bank account
  • Consumers do not fully understand how much the account would cost
  • Add-on services packaged with the account may not be applicable or useful for the consumer’s needs


For packaged products, it’s all about value and transparency

value_puzzleTo be clear, packaged accounts themselves are not necessarily the issue; in fact, bundling services into consumers’ day-to-day banking products is one of the ways banks can differentiate themselves and offer a meaningful value exchange to their customers. The missing parts of the equation for many banks, at least at this point, are value and transparency.

What if it was all but impossible to mis-sell a packaged product? What if Product Managers and Relationship Managers were able to evaluate suitability and eligibility and could only offer specific products that matched the criteria? The end result would get the right products to the right customer with clear, straightforward pricing.

Better still, what if customers were able to select their own packaged features? (For more on this, check out our recent blog post on customized offerings and self-service product selection). After all, the only way to gain true insight into what customers really want is to allow them to make the choice themselves. In many ways, a mis-selling scandal is a non-starter if the customer selects the features he or she wants from the outset.

Not only is this all possible, but it’s happening right now with Product and Pricing Lifecycle Management (PPLM), a customer-centric technological framework that utilizes business rules to underpin a holistic approach to creating, simulating, offering and managing products, communicating with customers and incentivizing customer behaviour.


Zafin-Winter2014-FINAL_Page_01Interested in learning more about PPLM? Check out the latest trends and emerging best practices in our quarterly thought leadership publication, Relationship Banker: Journal of Product and Pricing Lifecycle Management.

Our latest edition focuses on delivering a meaningful value exchange in retail banking. In Zafin’s view, a value exchange is both desirable to the customer and profitable for the bank.

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