THE credit crunch could hasten the end of free banking in the UK as institutions look for ways to increase their revenues, a report predicted today.
Professor Merlin Stone, of Bristol Business School, said free banking was likely to be scaled back, with banks instead likely to copy the rest of Europe and start charging for many of the accounts that they offer for free.
He said the current High Court test case over unauthorised overdraft charges could also help tip the balance towards fee-based banking, as banks would be looking to recoup the income they could lose if the case goes against them.
Changes to the way in which controversial payment protection insurance is sold, announced by the Competition Commission last week, is also likely to reduce banks’ income.
In a report commissioned by lifestyle management firm WhiteConcierge, Professor Stone said: “The credit crunch is putting more pressure on companies – especially those in the financial services sector – to protect and grow income streams.
“One consequence of this is that they will increasingly look to migrate their customers from products such as current accounts that have no monthly charges for example, to ones that have these.”