LONDON Bank of England regulation of the bank payments system from April will increase competition and give customers a better service, the central bank's executive director for financial stability said.
The payments system, owned by the country's big lenders, suffers from a "pretty endemic degree of inertia", Andrew Haldane also said on Tuesday. The bulk of expenditure is on maintaining legacy systems.
"As of yesterday and the announcement from the Chancellor (George Osborne), that looks set to change," Haldane told the launch of Intellect, a forum bringing together regulators, technology firms and banks to plan financial infrastructure better.
Osborne said on Monday the payments system would be opened up to competition, signalling an end to the banks' self-regulatory set up.
"The scope here for doing things better is enormous," Haldane said, adding the time was right for a rethink of whether the existing payments infrastructure was "fit for purpose" and what more could be done to help customers switch banks.
Haldane has suggested a utility payments system for all users to plug into to ensure the technology is innovative.
The Bank becomes the main regulator for banks from April. Four banks - Barclays (BARC.L), HSBC (HSBA.L), Lloyds (LLOY.L), and Royal Bank of Scotland (RBS.L) - hold 75 percent of customer accounts, leading to talk of limited competition.
Banks will have to begin investing in IT in any case so they have a full, consolidated picture of all their risks to feed to regulators, creating a wave of data over coming years.
Some in the audience told Haldane the money spent so far on speeding up bank transactions to encourage account switching has been a "total waste of time".
(Reporting by Huw Jones; Editing by Dan Lalor)