Banks want account switching added to real-time payments platform

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Banks want account switching added to real-time payments platform

Current process a hassle.

Four Australian regional banks have banded together to lobby the Federal Government to add account switching capability to its planned central real-time payments platform, to remove the hassle involved in changing banks.

Seventeen institutions from the banking sector - including the 'big four' - are currently working on the ‘New Payments Platform’, a central payments clearing utility born from the Reserve Bank of Australia’s bid to have all financial institutions facilitating real-time payments by 2016.

The design of the system, developed in late 2012 by the Australian Payments Clearing Association and industry, is currently nearing finalisation.

The system will involve same-day settlement of bulk and direct payments, real-time retail payments, and the ability to finalise low-value payments outside banking hours, when it goes live prior to 2016.

The RBA hopes the system will allow banks to ditch the BSB/account number system in favour of a single identifying number for those receiving payments by the end of 2017.

The focus for 2014 is on selecting a solution provider for the basic infrastructure of the NPP and beginning its implementation. 

But in a recent submission to the Federal Government’s financial system inquiry, a handful of regional banks called on the inquiry panel to recommend that the design of the NPP incorporate the ability to easily switch accounts.

The Bank of Queensland, Suncorp, ME Bank and the Bendigo and Adelaide Bank said account switching capability in the NPP would have a “considerable consumer benefit”. 

“One area of frustration for the regional banks is the inertia of customers switching banks. For decades the regional banks have recorded considerably higher customer satisfaction ratings but this has not resulted in the expected market share gains implied by this satisfaction gap,” the joint submission read.

“The hassle involved in switching accounts, particularly linked accounts that have existing debit instructions ... has been a factor in this inertia.”

The banks said adding account switching to the NPP - and thereby removing the need for customers to identify direct debits and credits linked to all of their accounts and enabling the customer’s new bank to complete necessary actions with a simple authorisation process - would make the process more convenient for all involved.

“The [NPP] is likely to enable customers to use convenient forms of addresses to route transactions, such as email and mobile phone numbers. If this comes to fruition it should enable customers to link regular payments to mobile phone numbers and email addresses and, therefore, make switching bank accounts easier."

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