THE BLOG

Delivering More Competition in Financial Services

20/03/2013 10:50 GMT | Updated 19/05/2013 10:12 BST

The Chancellor recently appeared before the Parliamentary Commission on Banking Standards, where he reiterated the need to increase competition in the financial sector through reform.

He has for a long time championed competition as being key to a banking industry that offers customers better products and services. An industry that puts the customer first.

And that is absolutely right. Change is inevitable and reform is right.

George Osborne spoke of his desire for a payments system that sits at the heart of the banking system. Yet, it would be a mistake to assume this isn't already happening.

A revolution in payments that seeks to meet the Chancellor's calls for reform is already well underway.

The Payments Council has been listening to politicians, consumers, businesses and charities, as well as to the incumbents, challengers and new entrants to the banking market so central to this debate. What is clear is that everyone wants a long-term view of how our payments infrastructure and services might be developed. They want to know what options might be available so that they can best consider and prepare for them.

This year we are introducing a new account switching service for customers and next spring we will be launching a new way to move money between accounts using just your mobile phone. This will be the first time that such a service will be made available to any customer, regardless of who they bank with.

We have high hopes for our new, radically different account switching service, which the Chancellor also spoke of at his Commission appearance. After its launch this September, we hope it will act as a catalyst in the retail banking sector to boost competition.

Banking customers will be able to switch their banks within seven days, something which currently takes between 18 and 30 days. It will also be very easy to use. The disincentive to shop around simply because the process is so drawn-out will be eliminated overnight.

The changes that this new service brings will have the power to transform the retail banking landscape in this country. It will deliver greater competition and choice for consumers and businesses alike, by making it easier for 'challenger banks' or new entrants to join the market and compete for customers.

The Independent Commission on Banking has recommended that the success of our switching services be assessed in 2015, at which point it can be considered what further action may be required. I strongly agree that this is the best time to test these reforms: judging success after the new service has been launched.

Even today, PayPal, Google, the telecoms providers and many others are adding new and innovative ways of both making and receiving payments. With the likes of Facebook and Twitter also exploring payments, there is a clear direction of travel and it is only going one way - more, not less, competition.

Delivering secure, innovative and competitive payment systems and evolving them to meet the changing needs of customers and economy are our key goals. Whilst we believe that UK payment systems compare very well internationally, we must be ambitious for change. We want to remain world leading. We are here to ensure that customers are well served, that current and future regulators see changes that they want, and that the UK benefits further from competitive, innovative payment services. The Payments Council has changed over the past two years and our actions and plans prove we can play a key role in helping support the Chancellor meet his aims.