The retail sector will offer customers greater choice and value as more players enter market, writes Siobhán Creaton, Finance Correspondent

There are signs that Irish consumers may be offered greater choice and value from banks and building societies in 2006 if competition hots up to the extent that has been promised.

Bank of Scotland (Ireland) has been preparing to bring its brand of retail banking services to Irish consumers through 46 branches across the Republic this year.

It is set to go head-to-head with the big banks by opening for business at the ESB's network of former outlets. The first three branches, in Limerick, Ballyfermot and Dún Laoghaire in Dublin, were due to open at the end of 2005, but their debut will now be in the new year.

The bank cleverly built its brand when it muscled in on the Irish mortgage market by offering cheaper mortgages to certain customers almost six years ago and will be hoping that its latest offering will prove just as attractive to new customers.

It is hoping that 185,000 ESB customers, who frequented the offices to pay their bills and finance their electrical goods, will be attracted to the savings, personal loan, credit card and mortgage products on offer.

The bank says its branches will open at 9am at the latest and close at 5pm at the earliest on weekdays and will be open on Saturday morning. Branches located in shopping centres will open at 8am until 8pm on certain nights.

It wants to meet consumer needs and gain a significant share of one of Europe's most profitable retail banking markets. It will be interesting to see how well it delivers on its promises and whether it provides more variety in the market.

National Irish Bank's new Danish owner, Danske Bank, is also limbering up to make a greater impression on Irish consumers. It is aiming to bring its blend of mortgage and other banking products and services to a population that believes their banks have been fleecing them for years.

The bank has been working to integrate its systems with the successful model it uses in Denmark to deliver an efficient range of consumer-friendly options to its new Irish customer base.

NIB's first Dublin-based chief executive in a decade, Andrew Healy, says the bank aims to increase its market share from about 3 per cent to 10 per cent over the next five or six years.

Rabobank, which has introduced a direct banking service, is also signalling its intention to make its presence felt this year and the owners of ACCBank will be anxious to ensure it too has a place in the hearts of Ireland's expanding young population.

For all the new kids on the block, the Competition Authority isn't expecting miracles overnight. It has issued a series of recommendations it believes can deliver a better deal for customers and wants to see them taking effect by the end of 2007.

Making it easier for new banks to offer services to Irish consumers is one of its key objectives. It has also told the industry to assist personal and business customers to move their bank accounts to where they can get a better deal and it wants to make it cheaper for small businesses to access working capital.

The authority says banks in Ireland do not compete for existing customers, but fight aggressively for first-time customers such as students.

The Irish Financial Services Regulatory Authority says that customers can save more than €100 a year in fees and charges on their current accounts by shopping around.

As well as seeking a better price, it also advises customers to consider the level of service provided, whether it offers online or telephone banking, and the location of its branches.

The industry appears to be responding. The adoption of a code to help customers to easily switch their current account to a rival institution is making an impact in breaking the dominance of AIB and Bank of Ireland, which hold 70 per cent of these accounts.

The fact that Bank of Ireland has abolished current account fees for customers who meet certain requirements is a clear attempt to try to protect its customer base.

With NIB and Permanent TSB both offering free banking, Bank of Ireland's customers were obviously among those beginning to think about switching. Indeed, Permanent TSB says it has won 60,000 current account customers since the code was introduced.

Bank of Ireland has also rolled out a new, more customer-focused proposition, promising high-quality service. At the same time, it is cutting costs through the shedding of 2,500 staff, while recruiting employees to front-line positions at its branches.

AIB hasn't yet entered the free current account scramble directly, but offers a range of packages to its customers.

Permanent TSB has been among some of the smaller players accusing its bigger rivals of sharp practice in trying to dissuade those customers with itchy feet. Clearly, the switching code has the potential to shake things up.

Royal Bank of Scotland, which owns Ulster Bank and First Active, will also be displaying its colours more prominently with Ulster Bank set to take on its blue and white logo at its Irish branches.

Together, First Active and Ulster Bank have 1.3 million personal and business customers and 263 branches across the Republic of Ireland and Northern Ireland.

It is aggressive and has the resources to swell its share.

While competition is increasing, there is little sign Ireland's financial institutions are going to become less profitable soon.

The international credit rating agencies are not expecting the increased presence of more foreign banks here to hurt their bottom line.

Much will depend on just how savvy Irish consumers prove to be in demanding and getting better value and service.