Britain counting on fintech for banking revolution
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LONDON - British banks will from 2018 have to share customers' data with third parties who can then show how much could be saved by using other lenders, the competition watchdog said on Tuesday.
Customers currently are paying more than they should for banking and are not benefiting from new services, the Competition and Markets Authority (CMA) said in its final report after a three-year review of consumer and small business banking.
Third-party companies have already begun to build "apps" for managing finances on a phone or other devices, and the CMA believes that setting a 2018 deadline will also boost the "fintech" sector.
The government wants to see fintech grow, a sector European Union countries like Germany want to lure from London after Britain voted to leave the bloc.
"This is a real opportunity for the UK to take the lead. We are going to make it happen and give it a push to get it across the line," Adam Land, a senior director at the CMA, said. "There is no question that fintech companies are champing at the bit."
High street banking in Britain is dominated by the "big four" lenders - Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC - who control more than three-quarters of current accounts and provide nine out of 10 business loans.
The CMA hopes its proposed measures, which differ little from draft measures outlined in May, will make it easier for personal and small business customers to switch lenders. At the moment only 3 percent of consumers and 4 percent of business customers change banks in any year.
Under the new rules, banks will have to share a customer's data with third parties, providing the customer agrees.
The CMA will also require lenders to publish a maximum fee for unarranged overdrafts which earn banks 1.2 billion pounds a year.
Consumer group Which?, however, said that measure did not go far enough as banks would still set the maximum rate and so would be able to continue to charge "exorbitant fees".
Land said the Financial Conduct Authority, which capped payday loans' interest rates, will review the overdraft measures to see if they work.
Allowing banks to set their own cap gives them flexibility to compete with each other on offering the lowest overdraft fee, he said.
- Reuters
