The U.K.’s Competition and Markets Authority (CMA) recently announced that it would launch an investigation into the UK retail banking sector to determine whether the industry lacks effective competition and is therefore inadequate to meet the needs of personal consumers or SMEs.
According to Banking Technology, findings from the studies showed several concerning areas to the CMA, such as barriers to entry and expansion for newer and smaller banks remain significant and the markets remain concentrated, particularly in Scotland and Northern Ireland. Additionally, the studies found that there is very little movement in the market share of the largest banks (other than as a result of mergers and acquisitions).
Craig Donaldson, chief executive at Metro Bank, told the news source that his organization supports CMA’s announcement, and that “an investigation into the personal current account market and SME banking sector is indeed needed to create a level playing field.”
“While work has been done to improve this, we desperately need a level playing field that allows new entrants to come into the sector and win customers,” Donaldson said. Importantly, these new entrants should offer differentiated banking models that suit different customers’ needs; giving customers a choice is the key.”
MPD CEO Karen Webster recently refuted claims that the US financial services and banking sector are falling behind that of the UK. These claims were surfaced in a column written by FT columnist John Gapper, in part due to the existence of UK’s Faster Payments initiative which enables real time transfer of funds between banks. This is made infinitely easier given the small number of banks in the UK.
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