BFTBankingSurvey2022: Stimulating next-level competition among banks

  • how BoG’s new move would allow consumers to switch bank accounts

What is the most effective solution to poor service, mis-selling, and the seeming lack of concern by banks toward the most pressing needs of their customers; those whose hard-earned savings constitute the chunk of their funds? Simple. Bank account portability; or the ability to vote with your feet and switch to a better bank with minimal fuss. The idea of bank account portability will truly force banks to compete for their customers.

One crucial driver of effective competition in any market is consumers’ ability to exercise choice. Accordingly, if banks’ costumers can switch easily between different products and providers, firms will have stronger incentives to improve their offerings to retain and attract customers. The ability for consumers to switch easily and with confidence fosters competition in a market.

The central bank in 2021 began exploring the possibility for account number portability, which would be complete by 2024, according to the Bank of Ghana’s payment systems strategy report. The central bank identifies this strategy to engender competition and offers choices to customers. The account switching portability scheme will make the transition of current accounts simpler and quicker for customers.

Evidence globally show that account portability will allow customers to switch smoothly to another bank with the same account number and all standing instructions (deposit renewals, nomination, direct debits of credit cards, utility bills, and equated monthly installments) intact, without complicated account opening procedures or repetitive know-your-customer (KYC) hassles.

For the scheme to be considered effective it will need to run smoothly – a simple switching process is an important element of a well-functioning market. The effectiveness of the switch service includes operational aspects such as the speed and accuracy of switching as well as customers being aware of and confident in the service.

Phone number portability in the telecom sector was successfully implemented in July 2011, despite some industry resistance. It led to a huge churn initially; but things have settled down after service providers worked at treating customers better and offered lower tariffs, less opaque subscription plans, and eliminated hidden charges.

This largely increased the level of competition among the networks and hence precipitated improvements in service delivery; a strategy by the government of Ghana to check the otherwise unsatisfactory performances of the various networks. Likewise, bank account portability may also lead to an initial churn which could be avoided by giving banks a window to clean up their act with regard to customer services; but things will settle down for the better, which banks will benefit.

According to the Financial Conduct Authority report on making current account switching easier; for any account switching portability scheme to be effective, there need to be some key factors such as;

  1. Changes in provider behavior

Higher switching levels may drive changes in the profitability of providers, with those offering the best products and services retaining and winning the most customers. However, even in the absence of switching, it may be that simply the threat of increased switching drives providers to improve the products and services they offer to consumers.

  1. Improvements in consumer outcomes

If providers are driven to improve the products and services they offer to consumers, we would expect to see higher levels of satisfaction with current accounts, which may for example be reflected in complaints figures. In 2015, the Financial Conduct Authority of the UK released a report on models for implementing account number portability and it is being adopted across Europe too. In India, both, the Unique Identification Authority of India (UIDAI) and the National Payments Corporation of India (NPCI), a centralised payment system, said that inter-bank portability was feasible.

This was at a time when the information technology industry and fintech companies were lobbying for quick and easy on-boarding of customers through Aadhaar and the government was forcing customers to link their bank accounts to their Aadhaar and phones.

  1. Advantages of Account number Portability

Customers tend to enjoy the same banking services without any interruption to existing payment services with more innovative solutions and better service quality.

Banks will have increased opportunities to cater to customer needs in the area of Wealth and Asset Management, Insurance, and Advisory services to new customers who are on-boarded from different banks. Data portability across banks will provide enormous opportunities for Fintech companies to provide innovative solutions.

For customers, account number portability (ANP) will provide a reduction in cost, innovative solutions, and more product availability. In addition, there will be increased security (Two Factor Authentication, e-tokens, biometric), Omni channel Benefits, and better services. For banks, ANP will increase the customer base of the bank, and proportionality increase profitability gradually.

Overall, banks need to update their systems to enable account number portability as additional features to attract customers from competitors.  Moreover, Banks are provided with the opportunity to tap deposit accounts from ANP customers if Banks provide better service quality, and the rates offered are better than others in the market.


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