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New rules will force banks to publish details of major security and operational incidents, which will expose the frailties of those with outdated IT infrastructures and compel all banks to come clean about the level of cyber security problems.
The rules will shed light on the IT competencies of different banks, which is an important consideration for the tech-savvy digital generation.
Channels such as Twitter currently seem the go-to place for information about banking IT problems, with people airing their grievances whenever they have trouble with a banking service. But Twitter does not reveal the scale of the problems and is not a trusted source.
The new rules, announced by the Financial Conduct Authority (FCA), are set to come into force next August. They are designed to give consumers more information about current accounts beyond interest rates and charges.
Consumers normally focus on interest rates and charges when choosing a bank and there is often little differentiation between them. But Christopher Woolard, executive director of strategy and competition at the FCA, said consumers should have more information when choosing a current account.
“We want to see current account providers competing hard for their customers’ business by offering better service, alongside competition on interest and charges,” he said. “These rules will help people see how their bank compares to others, so they can choose an account that suits their needs.”
Eric Leenders, managing director of personal finance at banking trade association UK Finance, said the organisation also wants to see effective competition. “Making it easier for consumers and businesses to compare the quality of service offered by different current account providers is a great way to encourage customers to shop around,” he said.
Read more about competition in banking
- The Competitions and Markets Authority opens up the banking apps market following an investigation into how to create greater competition in banking.
- The search for the Holy Grail that is Google bank, has been going on ever since digital banking took hold.
- Artificial intelligence technology could help banks retain the important link with customers when open banking arrives in Europe early next year.
The take-up of digital banking is already changing the status quo, with consumers taking an interest in cyber security, as well as mobile and online service availability, when choosing a bank.
Hackers are constantly attempting to attack banks, but very few succeed. The banks sometimes do not report incidents to customers even if money is taken, preferring to reimburse. Meanwhile, IT problems regularly make mobile and online banking services unavailable, and consumers are increasingly sharing their experiences through social media channels such as Twitter.
The FCA rules will also force banks to reveal: how and when services and helplines are available; the contact details for help, including 24-hour helplines; how long it will take to open a current account; how long it will take to have a debit card replaced; and the level of complaints made against the banks.
This is part of an ongoing drive to increase competition in the current account market. The take-up of a system that enables people to change their current account provider in just seven days, introduced in 2013, has not yet been used by high volumes of people, but as customers are made more aware of failures, digital service levels will become an increasingly important differentiator.