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Bank Account Number Portability

22 November 2011 4 comments

Manish Jain

industry principal

Infosys Ltd

Bank Account Number Portability

The leading cause of this attrition is poor service. The same survey also says that nearly 60% of customers hold multiple banking relationships.

Clearly, total loyalty is a rare commodity today. With the market being flooded with similar products, the choice of whom to bank with boils down to service, quality of experience, and to some extent, personal circumstances (such as geographic location or a company mandated salary account). Also, when customers shop around to find the best deal each time, they could end up holding different products with different banks. Another reason why customers have more than one account is that often, it is both cumbersome and expensive to close the old one, especially if it involves terminating a mortgage or bundled product.

But that could change quickly if Bank Account Number Portability (BANP) were to become reality. The goal of BANP is to enable customers move their bank accounts seamlessly from one bank to another, and thereby save them the hassle of closing and opening accounts, reissuing standing instructions, and so on. However, for it to work, BANP requires all banks to adopt a standardized practice of account numbering, indicating the bank and code number of the branch owning the account. This is already the case in some countries of Europe and North America. But other countries, which follow a different system of account numbering, will need to spend massive effort and resources to change. It is doubtful if they will be willing to do so.

The other major challenge that BANP faces is ensuring the security of a centralized database containing the details of all bank accounts of the member banks, which serves as the repository of all porting information.

But if implemented successfully, bank account number portability could well be the next game changer.

By Manish Jain

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Comments: (6)

Nikhil Mittal Financial Crimes Consultant at Wells Fargo

22 November 2011

BANP can definitely be a game changer but before we delve into the potential hurdles as far as industry and the banking architecture is concerned, we need to evaluate the following:

- Whether a real need exists for this?

- Does customer loyalty has any proportionality to the bank account number(s)

- Will this address in any manner, even the slightest of the issues which the industry is facing today in terms of ever changing consumer loyalties, need for effective compliances and architectural longevity

- Fraud is one of the biggest concerns the industry is facing today and imagine the traceability impossibilities BANP will be putting up infront of us

- Worldwide, there are legislations and mandates for the banks to make the switching easier for a customer, which in turn makes the bank introspect and address potential problems within the system

While BANP will make the switching easier, it would be a huge effort and technical and regulatory investment across countries and companies, Is it really a possibility !

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A Finextra member

23 November 2011

Very valid points, it will change the way banking is done over the period of time. Any change has its own benefits and challanges and same is applicable here.

Many times banks take the customer service for granted, BANP will provide them with the opportunity to improve and align to new way of doing business.

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Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

23 November 2011

Most forms of ePayments (e.g. FPS) use bank sort code in addition to account number and other details. While BANP may let someone retain their account number as they switch banks, won't SIPs and STOs need to be changed to reflect the new BSC? If that be the case, I'm not sure how a switcher can avoid reissuing standing orders, BANP or no BANP.

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A Finextra member

24 November 2011

Concept is very good and really change the way things are done in banking. If regulation pushes it will happen else banks may not like to go. This is my view.

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