Bank customers could have the option in the future of moving their deposit accounts and mortgages to different banks while retaining their account number under broad financial reforms, announced Treasurer Wayne Swan yesterday.
"Deposit account number portability could ultimately provide consumers with a personalised, transferable account number to which all their direct credits and debits attach, and which moves with them when they switch," policy documents said.
Treasurer Wayne Swan announced that Reserve Bank Governor Bernie Fraser would conduct a feasibility study into the appropriateness of the account number portability system and into a timeline for delivery.
Fraser is set to consult the Reserve Bank itself, as well as big commercial banks, smaller credit unions and financial services customers to determine the issues the system faces in a view to implementation.
According to policy documents, Fraser will analyse the technological limits surrounding portability, how the system can best preserve existing banking regulations and the benefits, costs and risks of such a system.
The policy documents also highlighted the potential need for a Central Account Registry to track registered banking details and supervise movements.
Fraser is expected to report back to the government with his findings on 30 June 2011.
The account portability reforms are designed to increase competition in the Australian banking sector, with policy documents accusing the big banks of exploiting customers by making it a long and expensive process to move institutions.
The Competitive and Sustainable Banking System Reform contains a swathe of regulatory overhauls to help smaller banks compete with the bigger institutions, and strives to make banking fairer for consumers.
Analyst firm Datamonitor today said that the new account number portability system was great for customers, but required previously absent industry-wide standardisation. The firm also said that it may involve prohibitively high transformation cost during the implementation process.
However, the benefits are there for the taking, according to Datamonitor.
"Account number portability may address many issues that have been discussed in the past which becomes the barriers for consumers to switch. This means that consumers can take their bank account number to other banks without changing their direct debit arrangement," said Harry Senlitonga, senior analyst with Datamonitor.
iTNews.com.au reported today that National Australia Bank head Cameron Clyne urged a rethink on the proposed account portability plan, saying that the government should consider other options.
Before a Senate Committee on banking reforms today, Clyne reportedly said that there may be other technological options that deliver similar outcomes rather than create a costly, complicated whole-of-industry system.
"For example, a user interface that allows customers to re-point a direct debit from one banking institution to another," Clyne suggested.
Clyne warned the government not to underestimate the complexity of core banking systems.
"I wouldn't underestimate the complexity of the infrastructure environment that a lot of banks are dealing with. They were built up over a long period of time," he told the committee.