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Account Number Portability

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The Account Number Portability (ANP) is an expression referred to the possibility of switching to another bank without receiving a new account number (IBAN). This concept is very closed to number portability for mobile.[1][2]

General Overview[edit | edit source]

Account number portability in related to the switching barrier in banking sector. ANP could promote competition in the retail banking sector if they are able to comparison-shop actively and switch banks easily. Switching barriers (like product offerings that are difficult to compare) stand in the way of active consumer behavior. This could result in higher prices, reduced efficiency, and less innovation in the European retail banking sector.  [3][4][5][6]

History and Relation with PAD in Europe[edit | edit source]

The European Commission (EC) has recognized this competition problem, and seeks to lower the switching barriers in personal payment accounts in all EU Member States by introducing the Payment Accounts Directive (PAD). The Netherlands Authority for Consumers and Markets (ACM) has previously established that competition in the Dutch retail banking sector is suboptimal, and that switching barriers play a key role.

In 2014 PAD came into force and his main objective is to promote the internal market of retail banking in Europe. The EC wants to realize that objective by increasing competition on the market of personal payment accounts. EC aims to do so by making it easier for consumers to be able to compare the different offerings in the market. In addition, it should also become easier for consumers to switch to another bank with their payment account.

When it drew up the PAD in 2013, the EC considered four measures for lowering the switching barriers in personal payment accounts. For each measure, an individual cost-benefit analysis was carried out. One of these measures was the introduction of account number portability at a European level.[7][8][9][10]

European Commission Green paper and EBF[edit | edit source]

In 2015 the European Commission has released a Green Paper[11] on retail financial services. The Green Paper seeks the views on how to improve choice, transparency and competition in retail financials services to the benefit of European consumers and how to facilitate true cross-border supply of these services, so that financial firms can make the most of the economies of scale in a truly integrated EU market. It is also looking at and discussing the impact of digitalisation on retail financial services with a view to allow for growth of innovative solutions in this area in the EU.[12] In this report has been identified the problem of the switching barrier problems and has been identified as a solution the account number portability. In this paper has been declared that "Switching behaviour by consumers can encourage competitiveness amongst firms and provide incentives for new players to enter mature markets.Were it not for the obstacles that prevent cross-border transactions, switching behaviour could also encourage firms to provide services from other Member States. Two of the markets where switching can be most difficult – payments accounts and mortgages – have been the subject of EU-level initiatives in recent years which are still being transposed at national level, with the Mortgage Credit Directive (MCD) removing barriers to exit from products and the Payment Accounts Directive (PAD) creating dedicated national switching services for payment accounts. However, there are still further ways in which switching behaviour can be encouraged at the EU level – for instance, full portability of bank account numbers is being examined in some Member States."[13]

In March 2016 the European Banking Federation has released the response of the European Commission Green paper on retail financial services. In this response we've identified differents claims that opportunities activities in this sector. In this paper has been declared that "Some issues could appear regarding the use of personal data in the processes linked to IBAN portability. The European Commission’s impact assessment of the PAD clearly stated that in certain aspects the current IBAN portability is not compatible with the SEPA. Union-wide portability of payment account numbers could be easily comparable with the idea of keeping the address information while moving from one town to another (in opposition to mobile phone numbers). It could also create difficulties for banks to carry out AML identification requirements on new customers and branded products. In addition, it could increase the risk of fraud."

Manual Switching Service in Europe[edit | edit source]

In the decision-making process at the European level at the time, another measure was selected: a manual switching service. This means that when a consumer switches, the new bank will take certain actions associated with the switch off their hands informing businesses that collect direct debits payments from the previous account number.[14][15]

Proposal of Account Number Portabilty[edit | edit source]

In March 2015, UK’s Financial Conduct Authority showcased a report citing all the benefits of portability of Account Number Portability. In the same way in Australia the CIFR (Center for International Finance and Regulation), released a report focussing on the competition in retail banking and its advantages to customers, but it was rejected on the basis of being impractical and expensive to implement.

The nation that most has fight for the Account number Portability, is India.[16] Reserve Bank of India (RBI) The same thing deputy governor S.S. Mundra in 2017[17] has asked to banks to allow customers to move seamlessly between banks without having to change their account numbers, sustaining that the central bank would soon come out with final guidelines on customer protection to limit their liability in case of fraud in electronic banking transactions.[1][18][19]

Currently, bank account number portability doesn’t exist anywhere in the world.

Report of the Financial Conduct Authority[edit | edit source]

In September 2014, the Financial Conduct Authority (FCA)[2] commenced a study of the costs and benefits of account number portability (ANP) as a way of increasing competition in banking by making it easier for customers to switch provider. This report has been commissioned by the FCA to facilitate discussion on ANP.

The aim of this report was to consider and identify high-level, theoretically-feasible solutions to provide ANP or enhance the existing account switching process in order to help move the current discussions on ANP forward.

This discussion would provide evidence, alongside other available evidence, to inform a wider debate on the strategic priorities for industry and any associated infrastructure development. For the principal goal of this report, ANP is defined as the ability for a customer to switch current account provider whilst still retaining the same unique account identifier. An identifiers the part of a payment instruction that is used to locate a customer’s bank account and (currently) typically comprises a 6-digit sort-code and 8-digit bank account number. The Current Account Switch Service (CASS) was launched in September 2013 and the Payments Council describe it as a free-to-use service for consumers, small charities, small businesses and small trusts, and is designed to make switching current accounts from one bank or building society to another, simpler, reliable and hassle-free.

The service is backed by the Current Account Switch Guarantee that guarantees the redirection of payments paid into an old account to a new account for a period of 13 months (to be extended to 36 months by the end of March 2015). The service does not provide ANP as the customer is issued with a new account number and sort code by their new bank upon switching. Third parties still need to be notified of an individual’s new account details and update their records accordingly, for example to ensure that incoming payments are not lost, after the payment redirection period ends.

Account Number Portability Services[edit | edit source]

Account Number Portability is promoted by Sweedish Bankgiro [20] compatible in a local circuit) and IBAN Portability Project[21] (plugin which allows the account number portability).

References[edit | edit source]

  1. "Mobile number portability". www.bsnl.co.in. Retrieved 2018-08-03.
  2. Hersent, Olivier (2011-06-13). IP Telephony: Deploying VoIP Protocols and IMS Infrastructure. John Wiley & Sons. ISBN 9781119957331.
  3. OECD Journal of Competition Law and Policy. Organisation for Economic Co-operation and Development. 2009.
  4. Practising Law Institute's Annual Institute on Securities Regulation in Europe. Practising Law Institute. 2008.
  5. Banking, Independent Commission on (2011-09-13). Independent Commission on Banking final report: recommendations. The Stationery Office. ISBN 9780108510984.
  6. Committee, Great Britain: Parliament: House of Commons: Treasury (2012-11-12). Independent Commission on Banking Final Report: Oral and Written Evidence, [10.10. 2011 - 30.10.2012]. The Stationery Office. ISBN 9780215050649.
  7. Canoy, Marcel; Onderstal, Sander (2003). Tight Oligopolies: In Search of Proportionate Remedies. CPB Netherlands Bureau for Economic Policy Analysis. ISBN 9789058331229.
  8. Hogg, Stephen; Risenborough, Paul; Morys, Karolina (2017-09-26). Naked Banking: The Truth about Banks and You. Lid Publishing. ISBN 9781911498384.
  9. Banking 2020: A Vision for the Future. New Economics Foundation. 2013-06-12. ISBN 9781908506368.
  10. King, Brett (2012-11-19). Bank 3.0: Why Banking Is No Longer Somewhere You Go But Something You Do. John Wiley & Sons. ISBN 9781118589649.
  11. "Green Paper European Commission".
  12. "Green Paper on retail financial services: better products, more choice, and greater opportunities for consumers and businesses - European Commission". European Commission. Retrieved 2 January 2019. Content is copied from this source, which is © European Union, 1995-2018. Reuse is authorised, provided the source is acknowledged.
  13. "Green Paper on retail financial services: better products, more choice, and greater opportunities for consumers and businesses - European Commission". ec.europa.eu. Retrieved 2018-06-15.
  14. Cruickshank, Don (2000). Competition in UK Banking: A Report to the Chancellor of the Exchequer. Stationery Office. ISBN 9780115600753.
  15. Shy, Oz (2001-01-08). The Economics of Network Industries. Cambridge University Press. ISBN 9781139432276.
  16. "India mulls bank account number portability". Hindustan Times (New Delhi, India). 2012-01-04. Archived from the original on 2018-11-18. Unknown parameter |url-status= ignored (help)
  17. "Reserve Bank of India unleashes account number portability". FinTech Futures. Retrieved 2018-08-03.
  18. "Bank Account Portability scheme may be put on the back burner; government to ask UIDAI, NPCI for solution". Zee News. 2018-05-07. Retrieved 2018-08-03.
  19. "Bank union to RBI guv: Protect consumers from hidden charges, push bank account portability". Moneycontrol. Retrieved 2018-08-03.
  20. "bakigirot".
  21. "IBAN Portability Project".

Account Number Portability[edit | edit source]

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