Bank of Scotland is promising much in terms of bringing fresh competition to the Irish banking industry.

If it delivers what it says it will, consumers can look forward to more keenly priced banking services and a wider choice of products.

The bank's announcement that it is limbering up to take on the main banks in providing the fundamental banking services for Irish consumers will be welcomed.

It has cleverly built a brand that most Irish people will associate with having contributed to cheaper mortgage deals for everyone since it shook up the Irish mortgage market in 1999.

By undercutting the rate of interest charged by other lenders it sparked a price war that forced its rivals to match the new rate in the market.

Since then the bank has been coy about releasing figures, fuelling scepticism that its marketing coup had failed to translate into new business.

Now that it has said it has captured up to 4 per cent of the Irish market and expects this to rise to 7 per cent this year, the success of its campaign can be judged.

The bank was selective about the type of Irish customers it would advance mortgages to, targeting those who were releasing a high level of equity to trade up to a larger home. It didn't lend to first-time buyers.

There was evidence that in some cases the level of service provided to its Irish customers could have been enhanced if the operation was run from Dublin. It will be aiming to iron out these glitches and to roll out its deals to a far wider group of people.

The bank insists that it doesn't need a high-street presence to function as a full service retail bank, eventually offering the same type of services as AIB and Bank of Ireland, for example.

Customers will interface with the bank through the telephone or over the internet. And while customers are increasingly familiar with conducting their banking in this way, the bank will find it difficult to build a significant retail business without a branch network.

The speed with which it can offer personal current accounts to customers is the crucial factor that will determine whether the bank can claim to be a fully functioning retail bank.

Current accounts provide important information for financial institutions about their customers, allowing them to monitor their ability to pay additional debt and to cross-sell them other bank products.

There is a huge level of inertia among the public when it comes to moving a current account from one financial institution to another because of the costs and inconvenience involved.

The Irish Financial Services Regulatory Authority is preparing to adopt a new code of practice to make it easy for customers of financial institutions to switch their current accounts.

This new development could provide a boon for Bank of Scotland, if it were to offer a new keenly priced and attractive product.

Only time will tell whether the bank will provide real competition in retail banking. The acid test for consumers will be whether these initiatives translate into cheaper banking.