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The Antimonopoly Office of the Slovak Republic calls for measures to increase the bank clients´ mobility
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Last year the Antimonopoly Office of the Slovak Republic in detail dealt with the analysis of financial sector which is one of the most important driving forces of economy. It also aimed at providing current accounts to natural persons – non-undertakings since this market is characterized by lower competition strength.
Investigation made by the Office brought the following findings:
- market of providing current accounts to natural persons – non-undertakings is highly concentrated in long term. The five biggest providers of this product jointly cover more that 80% of market;
- position of main players is stable and during the years 2006 and 2013 no significant changes of the four biggest providers occurred. Branch network may serve both as the competitive advantage and the barrier to entry the market, or the barrier for expansion of other bank, since probably conservative clients represent the substantial proportion of clients of the most important players in the relevant market;
- according to the European Commission Slovakia belongs to those European Union countries, in which the bank clients switch their bank with current account only minimally. Low clients´ mobility may result from the slow expansion of banks with lower market share;
- retail clients usually do not have sufficient technical information for effective decision making when choosing bank services providers, they have low bargain power towards banks and do not have sufficient financial education.
Since the Antimonopoly Office of the Slovak Republic is not competent to adopt measures aimed to increase mobility of retail clients, it addressed the Ministry of Finance of the Slovak Republic and the National Bank of Slovakia to consider the adoption of following measures:
- possibility of switching the current account from the old bank to the new one, without the necessity to change the number of current account, thus the administrative barriers of switching of clients between the banks are maximally reduced,
- adoption of measures to eliminate information asymmetry and low bargaining power of consumers,
- increase of so-called financial literacy of population, for example through promotion aimed at regular monitoring of fees, that the consumers pay to the bank for administration and using of current account and also the comparison of fees in various banks and consequently change of banks that did not meet their expectations in favour of bank which better meets their requirements.
The Office sees the platform for adoption of above mentioned measures in transposition of the Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features in the form of amendment to the Act No. 492/2009 Coll. on Payment Services amending the Act No. 483/2001 Coll. on Banks which enable the member countries of the European Union to adopt even more strict measures than are stated in Directive.
Investigation made by the Office brought the following findings:
- market of providing current accounts to natural persons – non-undertakings is highly concentrated in long term. The five biggest providers of this product jointly cover more that 80% of market;
- position of main players is stable and during the years 2006 and 2013 no significant changes of the four biggest providers occurred. Branch network may serve both as the competitive advantage and the barrier to entry the market, or the barrier for expansion of other bank, since probably conservative clients represent the substantial proportion of clients of the most important players in the relevant market;
- according to the European Commission Slovakia belongs to those European Union countries, in which the bank clients switch their bank with current account only minimally. Low clients´ mobility may result from the slow expansion of banks with lower market share;
- retail clients usually do not have sufficient technical information for effective decision making when choosing bank services providers, they have low bargain power towards banks and do not have sufficient financial education.
Since the Antimonopoly Office of the Slovak Republic is not competent to adopt measures aimed to increase mobility of retail clients, it addressed the Ministry of Finance of the Slovak Republic and the National Bank of Slovakia to consider the adoption of following measures:
- possibility of switching the current account from the old bank to the new one, without the necessity to change the number of current account, thus the administrative barriers of switching of clients between the banks are maximally reduced,
- adoption of measures to eliminate information asymmetry and low bargaining power of consumers,
- increase of so-called financial literacy of population, for example through promotion aimed at regular monitoring of fees, that the consumers pay to the bank for administration and using of current account and also the comparison of fees in various banks and consequently change of banks that did not meet their expectations in favour of bank which better meets their requirements.
The Office sees the platform for adoption of above mentioned measures in transposition of the Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features in the form of amendment to the Act No. 492/2009 Coll. on Payment Services amending the Act No. 483/2001 Coll. on Banks which enable the member countries of the European Union to adopt even more strict measures than are stated in Directive.