Issues and Challenges
Bank account number portability will improve competition among banks for acquiring customers and hence increase the acquisition and service cost. Bank account number portability can drive customers of the banks with insufficient service and marketing to comparatively stronger banks. Weaker and smaller banks would have to emphasis on consumer segmentation and for retaining their client base. Banks would be required to provide for higher preliminary investment and service costs for setting up bank account number portability IT infrastructure. Banks would also be required to train their staff to understand and employ the changed processes.
With the introduction of Bank account number portability consumers would receive the benefit in the similar way as with the MNP; it would reduce the customer costs related to switching over banks and foster better competition. Banks would be forced to improve their services and offerings to retain customers. Ultimately making the customer the biggest beneficiary.
Bank account number portability will require lots of added efforts from the banks. It is evident that collaborative effort from banks would be required: a system has to be developed which permits smooth transition from one bank to the other.
It is quite apparent that implementation of the system would impact banks; particularly their middle and their back offices and therefore would bring huge costs for re-structuring their internal infrastructure and processes.
The United Kingdom is among the very few economies where Bank accounting number portability has been officially rolled out. The official rollout happened in 2013, however, it would to be too early to judge its significance.
Beyond Account Number Portability
Firstly, in case it is implemented, total portability should be attained and regulations should be amended. Secondly, it will be desirable that no other noteworthy switching costs should exist for this scheme to be effective.
The Bottom Line
Banking professionals round the globe have a view that consumer mobility would improve competition across the retail banking sector. It will encourage banks to be attentive in servicing their customers and importantly, transparency over their pricing. The consumer would be free in choosing banks for its product. There is a need for an effective industry body that would compel banks in providing correct information over pricing enabling customers in making sound financial decisions before switching to other banks.