A full market inquiry into banks has been ordered over fears the dominance of the largest lenders is stifling competition.
The Competition and Markets Authority (CMA) said its investigation would scrutinise the personal current account and small business retail banking sectors.
Sky News reported on Tuesday night how major banks had called off their efforts to stall the inquiry.
The UK's four largest banks, Lloyds, RBS, Barclays, and HSBC collectively supply 77% of personal current accounts in the UK - a market worth £8bn.
The 'Big Four' also control about 85% of all small and medium-sized business accounts, an industry worth another £2bn.
The CMA said there has been "very little movement" in their collective market share as the level of customers shopping around and switching current accounts is "low".
It blamed limited transparency in the sector and had previously suggested a banking comparison website as a first step to improving transparency and aid competition.
Challenger banks, such as Metro Bank and supermarket lenders, have grown their customer bases but failed to make the impact that had been hoped for to aid lending to small firms in particular.
The seven-day switch initiative - to ease the amount of time customers would have to wait to change bank - has helped grow numbers changing their lender.
The spin-off of TSB from Lloyds and the looming flotation of Virgin Money may also help boost competition.
But the CMA said it was concerned about continuing barriers of entry and expansion in the banking sector, which limit the ability of smaller and newer providers to develop their businesses.
The investigation is tipped to take up to two years to complete.
The chief executive of the bank industry group the BBA, Anthony Browne, said of the probe: "All the banks will co-operate fully with any investigation.
"There are already substantial changes currently under way across the banking industry to strengthen competition."
But his view was not shared by some of the smaller players.
Paul Pester, chief executive of TSB Bank, said: "The big four banks have had a stranglehold on the market for far too long.
"TSB believes the CMA investigation should focus on achieving greater transparency in banking, along with more choice and competition, so consumers get a better deal."
Craig Donaldson, the boss of Metro Bank, said: "Competition in the UK banking sector is heavily distorted.
"No market where such a small number of players hold such a large percentage of the market share should be described as efficient or competitive."
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