For too long, the current account market in the UK has been dominated by a few players.
Four banks have an almost 80 per cent market share of the personal current account and SME lending market, and the situation does not look likely to rectify itself.
Between 2000 and 2010, the number of major British banking subsidiaries almost halved, from 41 to 22.
However, this could be about to change. You may have noticed a plethora of advertisements in the papers, on the TV and over the radio recently, from banks giving incentives to switch from your existing current account to theirs.
This is because a new service was launched last week by the Payments Council to simplify the existing process for switching current accounts from one bank or building society to another.
The Current Account Switch Service aims to benefit consumers, small charities and small businesses in Hampshire and the rest of the UK, who currently have to wait an average of 18 to 30 days before their current accounts are fully switched from one bank to another and who have to manually transfer details such as direct debits.
The free service means that the time taken to switch accounts will drop to seven working days, and the new bank handles the switch from start to finish.
Forty-nine per cent of customers have said that they would now consider switching account provider – a great leap, considering that in the past two years only five per cent in the south east have chosen to switch their account and the average person stays with the same bank for 19 years.
This should hopefully force banks to work harder to attract and keep happy both new and existing customers.
Smaller market participants should also be able to attract more customers, as much of the hassle of moving to them will have been removed, thereby reducing the market share of the biggest players.
However, while the Current Account Switch Service is a great first step, I think we need to go further.
While the new service reduces some of the admin of switching current accounts, it can actually increase it for businesses. What is really needed is full bank account portability.