The competition watchdog has confirmed it is consulting on a provisional decision to launch an in-depth investigation into the retail banking sector.
The Competition and Markets Authority (CMA) said essential parts of the UK market lack effective competitiveness.
The CMA said the existing structure did not meet the needs of consumers or that required by small and medium-sized enterprises (SME).
It said there will now be a consultation for an in-depth market investigation for personal current accounts and SME banking.
The watchdog said despite claims of competitiveness, customers have not benefitted sufficiently from attempts to open up the market.
Recent changes have included a simplification of switching current accounts between providers.
The CMA said it would possibly launch a full-scale market investigation but has told the "big four" banks - Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland - to offer an industry solution.
It said a formal decision on the investigation would be made in the autumn.
The current account sector is around £8bn is size while the SME sector is worth £2bn.
The watchdog commissioned two reports, one into current accounts and the other into SME functionality.
The SME banking market study was a joint project with the City watchdog, the Financial Conduct Authority (FCA).
It was the first formal collaboration between the organisations, since the CMA was formed following a merging of the Office of Fair Trading and the Competition Commission.
The CMA said it was interested in hearing from consumers and companies on their experiences.
It said there appeared to be limited scope for newer and smaller banks and the markets remain concentrated, particularly in Scotland and Northern Ireland.
It added that there was very little movement in the market share of the largest banks - other than as a result of mergers and acquisitions.
The CMA said many customers see little difference between the largest banks in terms of the services they offer.
In addition, it said limited transparency and difficulties for customers in making comparisons between banks, particularly for overdraft charges, are "very complex".
"This makes it hard for customers to choose the cheapest or most appropriate accounts for them, so limiting banks' incentives to compete," the CMA said.
"This may result in higher overdraft charges than would otherwise be the case."
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