Challenger banks are gaining traction as consumers want to see smaller players competing against the sector's established names, a new research has found.
Figures from Netherlands-based Triodos bank indicate that just over three quarters (77%) of UK adults say that greater competition from challenger banks should be encouraged.
A total of 49 per cent say that challengers could differ by providing better customer service, while 39 per cent says they would like to see more transparency.
Similarly, one in three think that the new entrants should be more committed to supporting local businesses, while 48 per cent say they think challenger banks should be more honest and show more integrity.
The findings come ahead of the publication of the Competition and Markets Authorities (CMA) report into the retail banking sector.Huw Davies, head of retail banking, Triodos Bank, said: “This research suggests that there is still a large degree of customer dissatisfaction with the mainstream banking industry, and a desire for alternative banks to challenge the status quo.”
Later this week the CMA will lay out its long-awaited recommendations calling on the big four banks to fund a new price comparison service covering fees and charges around current accounts.
The CMA launched its enquiry over fears that the four largest banks – Lloyds, RBS, HSBC andBarclays – held a 77 per cent share of active current accounts.
Among other proposals, the watchdog is expected to call on the four banks to fund a new price comparison service to cover fees, as well as floating a cap on overdraft fees.
In addition, financial technology start-ups may be asked to produce ideas to speed up and simplify switching between current accounts.
The CMA rejected calls to break up the largest banks in October last year, stating that such moves “they not likely to be effective in addressing...competition concerns".
"The problems in the market are unlikely to be resolved by creating more, smaller banks; it is the underlying issue of lack of switching which has to be addressed," it said.
A CMA spokesperson did not respond to request for comment
Mark Sands is City A.M's political reporter