Banks in the UK have been ordered to launch a technological “revolution”.
It is hoped that this will promote better and fairer competition by allowing users total access to all information, in one place.
The Competition and Markets Authority (CMA) conducted a two-year inquiry into the benefits of technology for banking and concluded that new mobile apps should be implemented by early 2018.
These apps will pool information from high street banks across the country and inform users on the best options for them. This will be assessed on their borrowing and spending patterns.
Dubbed the ‘Open Banking programme’, banks – many which are at the cutting edge of biometric technology for identifying customers – will be required to share customers’ data on new apps, subject to authorisation from the customer.
Once shared, the app will allow customers to see information on banking prices, policies and locations.
Alasdair Smith, chair of the CMA’s retail banking investigation, said: “Our central reform is the Open Banking programme to harness the technological changes which we have seen transform other markets.
“We want customers to be able to access new and innovative apps which will tailor services, information and advice to their individual needs.”
The apps will also require banks to set maximum monthly fees for unarranged overdraft repayments.
The CMA decided against standardising this cap across the industry, which means that banks will set their charges individually.
Additional measures will be taken to encourage users to consider their bank account choices.
According to Smith: “The reforms we have announced today will shake up retail banking for years to come, and ensure that both personal customers and small businesses get a better deal from their banks.”
He continued: “Our reforms will increase innovation and competition in a sector whose performance is crucial for the UK economy.”
Consumer group Which? has questioned the effectiveness of the new measures, despite welcoming the report.
Tech entrepreneur Paul Haydock has voiced concern that banks are pulling back from lending to small businesses.