Bank number portability 'not needed'

Monday, 14 March 2011

Banking industry executives says new rules introduced in December that make it easier for customers to switch banks appear to be working well and may make pointless a huge investment in 'bank number portability'.

A switching regime administered by bank-owned Payments NZ means banks will now do the administrative work involved in transferring direct debits and credits and automatic payments when customers change banks.

Australian consumer advocacy group Choice is pushing for banks there to follow the example of telecommunications companies and let customers take their bank accounts numbers with them when they switch banks, to boost competition.

Figures published by New Zealand's Reserve Bank suggest the margin between the rates at which banks lend and borrow has widened to 2.2 per cent – their highest profit margin since the credit crunch struck in 2008.

New Zealand telcos are understood to have spent a total of about $100 million changing their computer systems to let customers retain their mobile and fixed-line phone numbers when switching providers.

Payments NZ chief executive Steve Nichols said it was surveying banks on the December changes and anecdotally there was no evidence to suggest anything had gone 'dramatically wrong'.

He imagined bank number portability would be expensive and it was 'safe to say it is probably off the table for the moment'.

However, many consumers might not be aware it was now easier to change banks, despite an advertising campaign by Kiwibank highlighting the changes.

It was the only bank to report any significant increase in switching activity since December, he said.

Kiwibank spokesman Bruce Thompson said it was no longer pushing for portable bank numbers, which it accepted would be 'technically extremely difficult'.

The new rules were working relatively well with an 'encouraging but not huge' increase in the number of customers switching to Kiwibank, and would probably meet market needs, he said.

'Portability may be something for the future, but at the moment the switching conventions that have been introduced look pretty good.'

All of the banks had to make systems changes to make the new system work. 'Kiwibank has a major advantage in that we are in many cases the bank of choice for people who are switching.'

The systems that support phone number portability mean there is a central record of how many people have ported phone numbers – more than 500,000 in four years – but no equivalent records exist for churn in the banking sector.