Chancellor Philip Hammond has pledged to build up the UK's challenger banks and credit unions with a package of measures to widen potential membership and increase competition.
Tucked away on pages 50 and 51 of the Autumn Budget 2017 document, HM Treasury outlined ways to bring more people into the banking system in the UK, as well as provide better, more competitive and transparent banking services.
To improve access to "reputable sources of credit" the document stated "the government will increase the number of potential members that a credit union service a local area is to have, from 2 million to 3 million".
Moreover, the chancellor affirmed a decision agreed with the European Commission in September, by which Royal Bank of Scotland will fund and deliver a £775m package of measures designed to improve competition in the UK business banking market.
The Budget document also stated: "The Prudential Regulation Authority will also make capital requirements more proportionate for eligible smaller banks, helping them compete more effectively in the market."
According to the document, the government is also aiming to boost the low-cost services on offer through the Post Office.
The document stated the government was set to ask Post Office Limited and UK Finance to raise public awareness of the banking services available at the Post Office, both for personal customers and small and medium enterprises.
This can only be a good thing if it means the market is not being monopolised by a handful of big players.Liz SymsIn the document, HM Treasury wrote: "The government is committed to supporting competition in banking, and the Budget sets out further actions which will enable innovation in banking services, strengthen challenger banks and improve access to affordable credit for consumers."
It confirmed the support for the Open Banking project, which will be in force in the UK early in 2018.
The government claims this will make it easier for consumers to access innovative products and services that better suit their needs.
Liz Syms, founder and chief executive of Connect for Intermediaries, said: "I am always interested in anything that does help competition in the banking sector, without question.
"If the government is going to help invest more money in the technology side of things, for example with open banking, this can be a potential game-changer in the mortgage market."
Ms Syms said a few years ago, MoGobankconnect launched an app that would allow customers, if they agreed, to pull all their accounts into one place to make it easier for advisers to check bank statements and do affordability checks.
"This meant the adviser could be sure they were getting the information straight from the bank without it being tampered with. But while we tried to engage clients, they were against authorising an app to allow this.
"However, with open banking, the whole of the banking industry will be forced to make this sort of service available and it will become more mainstream", Ms Syms added.
Ms Syms said she was also pleased to hear about the boost for challenger banks and credit unions.
She said: "This will help create more competition.
"Again the government is trying to raise awareness of the Post Office and credit unions, and so enable more people to take advantage of these. This can only be a good thing if it means the market is not being monopolised by a handful of big players."
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