Suddenly, banks are behaving nicely. They are no longer charging for the use of teller machines, the chief executive of the National Australia Bank took a day out of his $6.6 million a year job to sell copies of The Big Issue, and from this week it’ll be really, really easy to transfer funds. It’ll take seconds rather than days, and you won’t need to look up a BSB. You’ll be able to use a phone number or email address instead.

Could it get any better? Absolutely, and the route is spelt out in one of the submissions to the Productivity Commission’s inquiry into competition in the financial system, which is running in parallel with the banking industry royal commission.

Illustration: John Shakespeare

The Productivity Commission has found that, notwithstanding the banks’ belated success in bringing service into the 21st century, they and their competitors aren’t particularly competitive. There’s half as many of them as there used to be in 1999. Instead of charging all their customers the best possible rate as competitive firms would, they charge their existing mortgage holders $66 to $87 a month more than new ones, in what amounts to a penalty for loyalty.

In the words of the commission’s draft report: “rivalry through price competition is rarely evident”. Half of all bank customers don’t switch banks, and the banks count on it.