CMA proposes shake-up of small business banking
Government department wants to reduce small business owners' "reliance on their personal bank when choosing a bank for their business"
On the back of its ongoing Retail Banking Investigation, the Competition and Markets Authority (CMA) has today proposed to build a package of measures that will “deliver better banking services” to the UK’s small and medium-sized businesses.
Following an initial investigation last year, the CMA has said it wants to make it easier for small businesses to shop around for a current account with the goal to reduce business owners’ “reliance on their personal bank when choosing a bank for their business”.
It also intends to make the prices of business banking more transparent, as well as the availability of lending products, so that small firms will consider other forms of finance before going directly to their existing bank for finance.
In addition, the CMA has proposed the introduction of an Open API banking standard which will enable small business and personal customers to share their unique transaction history with other banks and third parties.
This standard could see bank customers click on an app and get comparisons tailored to them; directing them to the bank account which offers them the best deal.
Once this ‘package of changes’ has been introduced, the CMA believes it could bring £1bn in benefits to bank customers over five years.
The banking investigation is still underway with the CMA’s full report set to be announced on August 12.
Chair of the Retail Banking Investigation, Alasdair Smith, said of its findings so far:
“For too long, banks have been able to sit back and not work hard enough for their personal and small business customers. We believe the strong and innovative package of measures we are proposing will give customers the information and tools they really need to get a better deal out of the banks.
“Our package of banking reforms will help new competitors get a stronger foothold in a market which is of vital importance to the whole economy.”
Anil Stocker, co-founder of MarketInvoice, has welcomed the proposals: “[These] finally lay the groundwork for a level playing field in small and medium enterprise finance.
“Whilst the proposals do not go as far as new lending platforms might have liked, they do provide a solid starting point on which to build a culture of open data in finance.”
You can read the CMA’s announcement in full here.