Customer account information will be transferred within three days under the new technology, which uses a messaging standard called Automated Direct Debit Amendment and Cancellation Service (Adacs).
Previously it could take weeks for customers to switch between banks because the organisations exchanged their details by post. Data had to be manually re-keyed which ran the risk of errors being made.
The project, which cost tens of millions of pounds, will also help banks meet one of the recommendations of the Cruickshank Report into the UK banking industry. The report criticised banks for the time it took to switch customers' accounts.
The project involved the development of a new system to handle the Adacs messages, built by payment clearing house Voca, formerly known as Bacs, to transfer account information between banks.
It also required banks to build applications to transfer customer information electronically - using Adacs or XML technology - and to pipe information from their front offices to their back offices.
Voca's Adacs message handling system uses an Oracle 9i database to store customer account details. The application is built on a BEA Weblogic application server and runs on Sun's Solaris Unix operating system. A public key infrastructure is used to encrypt information. The system has been developed using the Java 2.0 Enterprise Edition programming language.
Steve Grigg, chief operating officer at Voca, said, "The banks and Bacs have worked extremely well [and are on schedule] to deliver a complex IT programme that will benefit millions of customers and the industry."