Portable account data technology, the ability for customers to compare bank products and the healing powers of natural competition should be the aims of the Australian Banking industry.
“Portable account data technology, the ability for customers to compare bank products and the healing powers of natural competition should be the aims of the Australian Banking industry,” says Dr Rob Nicholls from UNSW Australia.
The Parliamentary committee inquiry into a range of issues regarding Australian banks is now in its second day, and the UNSW Business School’s Rob Nicholls, a lecturer in business law, has been analysing proceedings.
“At the moment we have no goalpost mechanism for regulatory outcomes - but one the committee could aim for is bank account number portability. It works well in other countries, and in the UK moving bank accounts means that all your data is immediately transferred. But Australia is lagging behind, and switching between financial institutions can be painful for the consumer. We need to stop this, implement a universal bank account database and have a decentralised linking of accounts with people. It should be as easy as keeping your mobile phone number.”
“If you provide consumers with the tools to compare banks, then they can use this portability effectively,” he says.
He argues that an ACCC review of the sector's competitiveness could be a more effective alternative to the current inquiry, where the existing market players appear to be resisting the changes needed to make the sector more competitive.
He says that’s not surprising - they are worried about their shareholders. “I understand this resistance is driven by the concern that a more competitive sector will lead to lower margins and loss of market share.”
However he says competition regulators know that competitiveness is higher when it’s easier for a consumer to switch providers. “Of course, that does not mean there will be mass switching. Consumers switch when there is a prompt. This might be the end of a contract, or poor service from a provider. Quite frankly, if bank customers get uncompetitive service from their bank, they shouldn’t be forced to stick with them.”
Rob Nicholls can discuss further developments in the Banking Inquiry.
For further comment call Rob Nicholls on 02 9385 3251, or email r.nicholls@unsw.edu.au
Media contact: Julian Lorkin: 02 9385 9887