The Competition and Markets Authority (CMA) have spent the last 2 years inquiring into the technological state of high street banks and the ease of switching between accounts. The CMA have announced that “The reforms we have announced today will shake up retail banking for years to come, and ensure that both personal customers and small businesses get a better deal from their banks”.
The banks have been ordered to launch a revolution in their technology, offering new mobile apps and new software for its customers. The programme named “Open Banking” means that banks will have to make sure customers can share data using mobile apps, once giving consent. Essentially, banks will have to look into installing and creating relevant API’s. This means customers will now be able to see prices, information and deals from its bank, and from others. The idea is to make sure banks are giving customers enough information to allow them to make informed choices on the financial products they choose, as opposed to being stuck with their current provider and not realising the benefits elsewhere. This could be good news for upcoming Fintech companies who are looking to collaborate with banks and offer more advanced and emerging services.
The CMA wants to also encourage people to switch between current accounts. They will be launching a long term campaign to spread the awareness as well as putting in place a regulator to keep track on the switching service of current accounts. They are looking to make it an easier process, as well as making sure people are aware that by switching, they could be saving. Currently only 3% of account holders switch their accounts each year. Overdraft charges have also been a focus for the CMA and they will be looking to cap charges. Banks currently cap the charges but add interest on to the total, meaning some customers end of paying a lot more than expected. The CMA is focusing on changing this, allowing customers to easily compare accounts and their charges.
It seems the banks have been under a lot of pressure recently to make changes, with the BoE cutting rates and now pressure from the CMA, it will be interesting to see how and when they respond. The CMA believes these changes are crucial in order to keep up with the change in technology and the way consumers view information. With plenty of growing Fintech companies now on the market and alternative finance disturbing the traditional financial scene, will we see collaborations with high street banks, or a switch in the way consumer’s bank and shop around? Time will tell but it is likely we are going to see some big changes from our banks as these announcements are sure to cause a stir.
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