Greater competition needed in banking sector to improve services and reduce costs for SMEs

This week Chartered Accountants Ireland represented members in attending the Cost of Business Advisory Forum run by the Department of Enterprise, Tourism and Employment. The meeting follows the Institute’s submission recently where the focus was on banking, payments and financial services. 

We outlined how banking services in Ireland, particularly on the payments side, is behind what is available as standard in other countries.  Competition is essential in moving the dial in terms of banking services and reducing costs for SMEs. We urged both the Central Bank and the Government to recognise that the lack of competition in the banking sector is a drag on the economy and needs to be acted on.   

The Institute highlighted the need for the banking sector to move quicker to Account to Account (A2A) payment services.  

A2A is an instant payment mechanism which does not need an intermediary card. A2A payments benefit businesses by reducing transaction costs, speeding up settlement and improving reconciliation through real-time data and automation.  

At the moment payers end up using credit or debit cards to pay SMEs online and it is the SME that incurs the significant costs of availing of those services. In addition, it is very challenging for SMEs to track who is paying money into their account. This adds to administration cost for SMEs. 

In terms of access to finance for SMEs, the Institute highlighted the need for Ireland to deepen the capital markets and improve retail investment in Ireland. We urged the Government to introduce a Savings and Investment Account in Ireland which will encourage workers and households to invest in SMEs. 

Following this meeting, the Institute will continue to contribute to the Cost of Business Advisory Forum with the aim of completing a comprehensive report on business costs with important and achievable recommendations for Government.