Consumers in the U.K. are apparently loyal to their banks, and that is apparently a bad thing according to the U.K. Competition and Markets Authority, the competition watchdog for the country.
In a report released earlier this week the U.K. Competition and Markets Authority, the government agency said it found only 3 percent of retail customers switch banks while only 4 percent of business customers do. In an effort to change that it is proposing banks in the U.K. roll out an open API standard by the beginning part of 2018. That would enable customers to share their transaction history with other banks and third parties, which in turn would make it easier for bank customers to shop for other banks that may offer products that better suit them.
“The older and larger banks, which still account for the large majority of the retail banking market do not have to work hard enough to win and retain customers and it is difficult for new and small providers to attract customers,” the report said. “These failing are having a pronounced effect on certain groups of customers, particularly overdraft users and smaller businesses. They also mean that the sector is still not as innovative or competitive as it needs to be. Banks will only invest in new products or services or reduce their prices and improve service quality if they expect to win business as a result, or fear losing business if they do not.”
The U.K. Competition and Markets Authority also wants banks in the U.K. to provide technical support and financial backing to Nesta, an initiative to create a set of tools to provide detailed information about the fees the banks charge as well as the quality of the services the banks provide and the availability of credit. Nesta was formed in 1998 and is designed to increase financial services innovation in the U.K.