Industry response: Competition and Markets Authority’s announcement
August 2016 by Anthony Duffy, Director of Retail Banking in UK
In response to the Competition and Markets Authority’s announcement today that will
enforce banks to offer smartphone apps for all consumer banking needs, The
response from Anthony Duffy, Director of Retail Banking in UK & Ireland at Fujitsu.
The Competition and Markets Authority’s findings – which are not significantly
different from those contained in its interim report of May 2016 - are designed to
encourage competition and switching in the retail banking market. It is further
evidence of the interest that regulators continue to have in the working of the UK’s
financial services industry.
The CMA’s central reform, the implementation of “open banking” by early 2018, is to
be welcomed. It will encourage further development of, and investment in, digital
banking services and make it easier for customers to compare and contrast the
products offered by different providers.
The effectiveness of the CMAs proposal to cap overdraft fees is less clear. Most
bank already limit their charges for facilities agreed between bank and customer,
while fees for unauthorised overdrafts remain outside the scope of the CMA’s
recommendations. And it will be interesting to see how a new regulator, to oversee
the Current Account Switching Service, can help improve on the 3% of customers who
move their accounts each year.
The success of the CMA’s recommendations will be judged by the effect that they have
on customer behaviours. Fujitsu research has found that 35% of UK personal customers
had never switched bank<http://www.newpaceofchange.com/>
, while the Federation of
Small Businesses believes that only 4% of small businesses are thought to switch
accounts each year. Many commentators will be looking for a significant increase in
real competition, and particularly in the numbers of customers switching providers,
as evidence that the CMA’s proposals are working.