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IBS Journal September 2016


07


banks, we do not pose a systemic risk so should not have to adhere to the same capital and regulatory requirements as them. The Corporation Tax Surcharge should be removed for smaller banks as this will genuinely move competition in the right direction and create the ‘revolution’ in banking the CMA claims we’ve already had.”


Not everyone gave the reforms a thumbs down, however, with the proposal for an open Application Programme Interface (API) standard, which would give consumers access to more information from banks, winning some over. This could benefit FinTech firms, although the ambitious timescale for the project (2018) means implementing it could prove challenging and costly for banks.


Anne Boden, CEO, Starling, acknowledged that many believe the proposals have not gone far enough to disrupt the market and introduce more competition, but also claimed the key pillars will deliver real benefit for customers in the longer term. “New generation banks, like Starling, with the agility and focus on customers will be able to respond quickly to meet, and go beyond the


recommendations of the report. The CMA has defined the basic hygiene factors needed to improve people’s day-to-day banking experience. To be notified when you go overdrawn, benefit from transparent pricing and have the opportunity to compare services, should not be seen as anything but a basic right for a banking customer in today’s world.”


Boden said that her discussions with bank customers showed many saw the benefits of some of the foundation measures being put in place. Some expressed frustration with their bank but the perceived hassle of switching deterred them from waving goodbye. Others did not see the compelling proposition from alternative providers. “Competition enquiries and rhetoric won’t improve the situation, it requires genuine action, compelling proposals and value for money for customers,” Boden remarked. “A number of new banks will be coming to market over the next year. It is only then that will we be able to determine whether the combination of competition measures, new innovative propositions and the overcoming of customer inertia will lead to a transformation of the market.”


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