LONDON–The United Kingdom’s Competition and Market Authority (CMA) has issued its final report on its investigation into the U.K’s retail banking market and found that in the three years since changes were made to allow for easier account switching there has been relatively little consumer movement.
But one company, the financial services research and insight firm Verdict Financial, said that buried in the report is a recommendation that could have lasting effects.
Most of the measures the CMA recommended to promote customer mobility in the current account market involved making improvements to the existing Current Account Switch Service (CASS), which was introduced in 2013 and allows U.K. consumers to switch their bank accounts to a new provider within seven working days. The CMA report found that in the wake of CASS, there has actually been no significant increase in customer mobility. According to statistics from Bacs, the number of consumers using CASS has actually fallen: in the 12 months to June 2016 there were 1,056,378 switches, compared to 1,109,381 switches in the previous 12-month period, Verdict Financial noted.
“Given the widespread consumer indifference to CASS since the service launched nearly three years ago, the incremental improvements that have been proposed by the CMA are highly unlikely to have any noticeable impact on switching rates,” said Daoud Fakhri, principal analyst for retail banking at Verdict Financial.
The company said that in its view a “far more noteworthy proposal by the CMA is the recommendation to facilitate 'open banking' through the introduction of an open application programming interface (API) standard that will allow the easy and secure exchange of customer data between banks and third parties.”
“The use of open APIs in banking has potentially far-reaching consequences,” said Fakhri in a statement. “The free flow of customer data between banks and third parties will help to promote competition, spur innovation, and improve customer outcomes. Consumers will benefit by, for example, being able to accurately compare current accounts and other products without having to manually enter personal data, using account aggregation services without having to divulge their online banking login credentials, and gaining wider access to credit. Work on creating an open banking API framework in the U.K. is already well underway, having been mandated by the Treasury in 2015, and is expected to come to fruition by Q1 2019.”