Do we really need a third banking force?

One of the arguments in favour of allowing/encouraging ptsb to acquire Ulster Bank's mortgage book is so that we get a third banking force.

What does that mean in today's market?

New specialist mortgage lenders can come into the market and offer cheaper mortgages than AIB and BoI.

There are also specialist credit card providers.

There are also online banks such as N 26 and payments services such as Revolut.

We need branches in the cities and a few of the larger towns. But they would be more sustainable with fewer banks than more banks. In other words, three banking forces won't be able to sustain three separate branches in a mid-sized town, whereas one bank could sustain one branch.

So I really don't understand why we need a third banking force.

Brendan

Banking is changing everywhere. Lending, deposits and payments are all being separated as products. This process will continue.

So for competition you need to look at the markets for lending, deposits and payments separately.

The number of banks with bricks-and-mortar presence doesn't tell you much anymore.

Banking is a business.
As seen in car insurance industry for years the "new entrants" will cherry pick the good customers.
Anyone who is on the margins is not going to be a desirable customer for any of the online only operations.

The concept of a third force is an attempt to try to improve "access" to banking for all.

The credit unions and post offices will have a role but even they are not the panacea.

BlackandBlue said:

The concept of a third force is an attempt to try to improve "access" to banking for all.

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Anyone with a smartphone and a passport can open a Revolut account now.

You can have wages or welfare payments paid into it. This is the "easiest" that banking has been in my lifetime

A lot of arguments for "access" banking are from retailers who want a stream of people collecting payments in cash once a week nearby and spending it in their shop.

Third force may have more relevance in business banking especially access to credit for smaller businesses. Yet the main purpose seems to be securing a future for PTSB, a bank that's too small to compete in its current form.

How can they possibly be considered three different forces, when two of the three are owned by the same party, so that true competitors ?

Why three, why not five? Both An Post and the Credit Union moment could be the other two.

Why not close all bank branches of all banks, and outsource all services to better equipped post offices, nationwide? That allows all Banks cut costs, while continuing to offer a branch in every village and town, give or take? It the allows the Banks to utilise the capital for their trade, while helping maintain the post office network.

PTSB still won't be anywhere near on par with AIB and BoI, post acquisition of the UB book, so calling it a third force is just nonsense (and that's before we talk about their limited ability).

This country needs more competition, and that means creating a more attractive marketplace for service providers to come in and compete. We need to focus our attention on improving legislation to permit lenders enforce their security more easily, when borrowers default, and we need to address the issue with the Irish Central Bank insisting on unreasonable levels of capital being held back to provide for potential losses, if we want a more competitive market.

But Northern Ireland has 5 main banks for only a million people, 2 of those banks Danske bank and Ulster bank have now left this country but maintained their presence in Northern Ireland. So clearly they don't see the small size of the northern ireland market as an issue but they saw fit to exit this much bigger market here. Something is very much wrong here that big banks like Ulster and Danske have now skidaddled

Posters on Askaboutmoney tend to be more literate and financially savy than the average punter in ireland.

Making access simpler should be a priority.

I think a “third force” is important.

Otherwise, there’s a duopoly. Not for mortgages or FX, but for lots of other products and services, such as current accounts or business lending.