Challengers such as Metro Bank, Aldermore and Handelsbanken have been yapping at the heels of the big banks of late but the BBA said they needed more support to compete.
The group said that rules governing how much capital banks need to hold should be relaxed for challengers and that there should be no barriers preventing the public sector from investing in challengers.
It added that regulators should bear in mind the impact of rules on challenger banks as well at the big players in order to make sure it was proportionate.
James Barty, the BBA’s Director of Strategy, said: “Customers are the biggest winners from competition. You just have to look at how easyJet, Ocado and Lidl have shaken up their industries by providing new goods, services and price structures.
“The banking industry is made up of a number of different markets, each with its own range of providers striving to win customers every day. Many of these markets are already extremely competitive but we want ministers and regulators to make it easier for emerging banks to set up and grow.
“The best way to promote competition is by creating a more level playing field for players of all shapes and size. It’s vital that we don’t treat all banking markets as the same and introduce rules, regulations and costs that smother changes that are already driving competition.”
The recent launch of Business Banking Insight, a survey of business experiences with their bank, highlights the range of options available.
Related: Five ways to compare funding for your business.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.