Anti-trust commissioner, Ronit Kan, argued on Wednesday that the local banks had little incentive to compete for customers, spilling more fuel into the fire of criticism the banking system has faced in recent months.
"The banks are not interested in competing for customers because of the flawed structure of the banking system, which suffers from over-concentration," said Kan to the parliamentary inquiry commission on bank fees headed by the Knesset Economics Committee.
Kan explained that because of the difficulty for customers to switch banks, the local banks did not feel much need to invest in the effort of keeping their customers. According to Kan, this problem represented one of the main reason foreign banks will be hesitant to enter the Israel market.
"The bureaucratic obstacles create low motivation for the entrance of new banks, and especially foreign banks, into Israel because of the difficulty of customers to change banks. Thus their ability to attract new customers is limited," said Kan.
Therefore, Kan spoke in favor of the need to make it easier for bank customers to compare the fees charged by the different banks by narrowing the number of fees and providing price fee lists. Furthermore, Kan suggested supervision on certain bank fees, which are reducing competition.
Kan criticized the fact that when one bank raised rates, the rest of the banks just followed suit.
"We have launched an investigation on the suspicion that the banks coordinate price hikes," she said.
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