ING Direct calls for smarter switching and identification systems

The Australian financial system is not keeping pace with overseas markets on improving the ease and efficiency of consumer banking, according to ING Direct.

Two areas the bank focused on in its submission to the Financial System Inquiry were account portability and online identification and verification.

There has been debate about the success of account switching arrangements introduced in Australia in July 2012. The government's "tick and flick" scheme was designed to allow customers to authorise their new transaction bank to manage the transfer of direct credits and direct debits from their old bank.

Some banks have claimed that the system has not worked efficiently. The Australian Payments Clearing Association reported in its 2013 annual report that in the first 11 months of the scheme's operation it was used by 15,500 banking customers.

ING Direct's submission said: "The current account switching package requires too much customer effort and has not delivered a real choice to customers.

"We do not agree that full account number portability would be uneconomic. The UK Payments Council launched a new automated account switching service in September last year, called Current Account Switch Service. About 300,000 accounts were switched between September and December.

"Sweden gives each consumer a unique number that is the equivalent of a BSB and account number. The Netherlands has introduced a third party, called Equens, which is given the customer authorisation and carries out the switch."

ING Direct said the inquiry should also look at overseas developments in online customer identification and verification.

It said: "Electronic verification relies on the availability of and access to public databases. As customers move from simple savings accounts to more complex banking products, the identification requirements increase. There is customer resistance to complex on-boarding processes. Globally, other jurisdictions have met the challenge."

In Turkey financial institutions can verify customers by way of a government-owned citizen database called MERSIS for a small fee. The capture of identity data is performed once only and can be migrated with the customer's consent.

Belgium has an electronic identification card with an electronic chip.

"We recommend the introduction of a government controlled system of restricted access to the ATO database," ING Direct said.