Following a two-year probe into rip-off bank accounts the Competition and Markets Authority (CMA) has announced new rules to let customers access details of their entire finances through a single mobile phone app by 2018.
Banks have been told that customers must have the capability to apply for loans, overdrafts and mortgages on their mobile phone as well as be able to transfer money between accounts.
It will increase competition by allowing customers to access all of their finances – including current accounts, savings accounts and mortgages – in one place even if they are currently manged by different providers.
It will also enable customers to immediately compare their rates with other services and quickly move their money if they are getting a poor deal.
The move will eventually alleviate the need to visit bank branches or use computers for online banking to carry out daily banking activities.
It will also lessen the risk of customers being targeted in branches by face-to-face “advisers” who often attempt to sell poor-value products and unnecessary add-ons, such as insurance.
A CMA source said the move would give people “proper control over bank account and money in general”, adding: “They will also have greater access to loans and shopping around and be able to sit down and say this is my income, this is my outgoings, and these are the products I would like based on own my life and usage”.
However the announcement is likely to raise security fears.
The CMA will insist that banks share customers’ financial details with other “approved firms” in an attempt to create banking apps which give customers access to all of their financial details from multiple accounts.
Banking customers will be able to make payments without going through full security procedures as they would when accessing online banking through a desktop computer.
Peter Roe, research director at TechMarketView, a software researcher, said: “Many people are likely to view this change as scary or risky and there will be a reluctance among some consumers to shift things on to mobiles. But mobile phones are the vehicle by which this revolution will happen.
“The CMA feels the existing group of major banks are slow and not very helpful and wants customers to have access high quality, low-cost banking services.”
Duncan Ash, director of global financial services at Qlik, an app building firm, said banking customers are already ditching banks’ websites for mobile banking apps which can be accessed more easily with just a four digit PIN.
Figures from the British Banking Association show internet banking logins fell by 100,000 to 4.3 million a day in 2015 down from 4.4 million in 2014. Meanwhile mobile device apps were used 11 million times a day in 2015, up from 7 million a day in 2014.
So-called “open banking” is one of a number of remedies being unveiled today by the CMA following a £5m investigation to improve competition among banks following years of customer complaints.
The Government launched the review over concerns customers were getting a poor deal because Britain’s biggest banks, which all offer similar accounts and services, had a market monopoly and were not competitive enough.
However the Daily Telegraph understands the regulator already has major concerns that the big banks will push back against the move by claiming rushing the technology could harm customers by leaving them open to security breaches.
Conrad Ford, chief executive at Funding Options, a financial technology firm, said: “I’d fully expect the banks to push back against the 2018 timeline. But once open banking is up-and-running, new entrants will be able to enter the financial services market far more easily, whether brand new technology startups, or major technology players like Amazon.”
But Guy Anker ofsaid: “If the data provided by banks comes back and is workable it could lead to people effectively having a bank branch in their pockets through their mobile phone apps, which would be a customer friendly move.
First appeared at The Telegraph