Current account customers could save up to £260 a year by switching to a better deal, an investigation by competition watchdog into the dominance of the big banks has found.
The Competition and Markets Authority (CMA) said that banks had been able to "sit back and take their existing customers for granted".
It said that despite seeing some evidence that some banks with larger market shares had personal current accounts which were more expensive and/or of a lower quality, just 3% of people switched their account in 2014.
Customers were not flocking to cheaper and better alternatives at the rate that would be expected in a well-functioning market, the CMA found.
Analysis by the CMA found that Lloyds was gaining personal current account customers, despite having above average prices and below average satisfaction ratings.
Its analysis, which used satisfaction ratings from consumer group Which? also found that the Royal Bank of Scotland, Bank of Scotland, NatWest, and the Co-op had above average prices but below average satisfaction ratings.
Meanwhile, Santander, Nationwide Building Society, Metro Bank and First Direct were found by the CMA to have costs below the market average, while offering quality which was above average.
Across the market generally, while current account customers could save themselves £70 a year by switching on average, people who heavily use their overdraft can save around £260 a year.
Yet overdraft users are often the least likely people to switch.
The watchdog, which is due to publish a final report into its investigation into the £16 billion current account and business banking sectors next April, has put forward a list of proposed remedies.
These include requiring banks to prompt customers to review the service they are getting at certain "trigger points" - such as when their overdraft charges change or their local bank branch closes.
But consumer campaigners and challenger banks have said the proposals do not go far enough.
The CMA provisionally rejected the idea of forcing a break-up of the banks, saying a lack of switching was the underlying problem.
The watchdog has also provisionally decided not to bring an end to "free" if in credit current accounts.
Around three-quarters of current accounts are of this type.
In reality, consumers do pay for these accounts, through overdraft charges and foregone interest that they could have received elsewhere.
But the CMA said these accounts gave a "reasonable deal" to many customers.
According to figures in the CMA's report, Britain's biggest four banks - Lloyds Banking Group, HSBC, RBS and Barclays - accounted for around 70% of active personal current accounts and 80% of active business current accounts in 2014.
Personal current accounts generated revenues of around £8.7 billion in 2014 across the industry, while business current accounts generated around £2.7 billion in revenues.
Which? executive director, Richard Lloyd, said: "These proposals don't go far enough.
"The CMA's own evidence is that consumers are disengaged from the banking market, so better information and nudges to switch will not be enough."
Nick Kennett, director of financial services for Post Office Money, said the report was "disappointing and misses the opportunity of making significant change to the current account market".
John Longworth, director general of the British Chambers of Commerce, said the proposals "are unlikely to be game-changing".
Looking at barriers to switching, the CMA's investigation found that overdraft charges were "complex" and information on product service and quality was limited, making it hard for customers to compare deals.
More than half (57%) of consumers had been with their account provider for more than 10 years and 37% for more than 20 years.
Meanwhile, 55% of customers considered switching to be a "hassle".
The CMA's report said: "We saw some evidence that banks with larger (personal current account) market shares have higher average prices and/or lower quality."
A current account switching service was introduced in 2013 to make it easier for current account holders to change providers.
The CMA said awareness of this service was low.
It has proposed that banks should be required to help raise awareness of the scheme, through increasing their funding of a widespread advertising campaign.
The CMA also said there was a particular problem with SME (small and medium enterprise) customers opening their business current accounts (BCA) at the same bank where they had their personal current account, then sticking with the same bank for their business loans.
It said the lack of competitive pressure in SME banking was highlighted by the fact that more than 50% of start-ups looking for an SME account chose the bank with which they had a personal current account, over 90% stayed with their BCA when the initial free banking period came to an end, and around 90% then went to their BCA provider when they were looking for business loans.
Alasdair Smith, chairman of the retail banking investigation, said: "For too long banks have been able to sit back and take their existing customers for granted.
"We don't think that customers will truly benefit from a more competitive marketplace until they can compare accounts more easily and feel confident that they can switch without risk, and that is why our provisional remedies are aimed at giving customers control."
Chancellor George Osborne described the report as "an excellent report which points to what more we can do to give people real choices about who they bank with and the deal they get when they do their banking".