The parliamentary inquiry into the major banks has called for a small team to be formed to explore competition within the banking system and barriers to new entrants, the Australian Financial Review reports.
The House of Representatives Standing Committee on Economics highlighted that no recent wholesale review of competition into the banking sector and little competition has "significant adverse consequences for the Australian economy and consumers".
It also recommended that all all deposit providers provide open access to customer and small business data by July 2018, which could increase competition.
"For example, data sharing could increase price transparency with comparison services able to accurately assess how much a product would actually cost a consumer based on their usage and recommend the most appropriate products to them.
"The committee believes that there is a strong case for increasing access to, what the banks themselves regard as, customers' data."
Customer Owned Banking Association CEO Mark Degotardi said on the report’s recommendations, “It is important to distinguish between measures that are unambiguously pro-competitive and measures that need further evaluation because they could have the perverse impact of harming competition.
“For example, recommendation 4 would force all banking institutions to embrace ‘open banking’ in barely 18 months despite concerns that this could be ‘prohibitively expensive’.
“COBA’s view is that ‘open banking’ has tremendous potential to empower consumers but forcing all banking institutions into an unrealistic implementation timetable would just harm competition.
“In the UK, it is estimated that moving to ‘open banking’ will cost each institution around $1.7 million. Extrapolated across our sector that would amount to $144 million or nearly a third of our sector’s net profit after tax in 2015- 16.”
The Australian Bankers’ Association responded to the parliamentary report with chief executive Steven Münchenberg saying the banking industry had consistently supported reasonable measures to enhance competition.
“Australia’s financial services industry is competitive. Consumers can choose from 150 APRA-regulated providers, 3,600 home loan products and 190 credit cards.”
He said Australia’s banks were committed to protecting consumer interests, increasing transparency and accountability, and building trust and confidence in banks.
“Consumers are demanding action now, and we are responding,” he said. “The industry is making major changes that address concerns about how bank staff are rewarded, the protection of whistleblowers, the handling of customer complaints and dealing with poor conduct. We are doing this with independent oversight.”