The countdown to what the Danes are calling M-day, short for migration day, has been a stressful time for new boss Andrew Healy and his team at NIB.

And they must be wondering just how much farther the local incumbents are prepared to go to rain on their parade.

AIB rolled out a spoiler last week by announcing the arrival of free banking for most of its customers, with the promise of more goodies to come. It is a cynical ploy that benefits only the 700,000 customers who have signed up for phone or internet banking. AIB is betting . . . no doubt correctly . . . that the remainder would never switch banks, no matter how sweet the deals on offer elsewhere.

This retaliation by AIB, and similar moves by Bank of Ireland, the other player with most to lose from competition, makes life increasingly difficult for new entrants. NIB is keeping its powder dry for now but its key weapon is believed to be a package of loyalty discounts for customers willing to entrust it with all their banking business.

This sounds like a winning proposition for the value-hungry consumer.

But it will cost NIB dearly if it has to drop its prices to match the loss-leaders that the competition is offering across the board.

The scale of the challenge can be seen in the aggressive pricing that Bank of Scotland is using to win business.

Its headline savings account, which pays a market-leading 4% rate of interest, will cost it an estimated 30m over the next two years. It is also using pricing to win a bigger share of the mortgage market, with two-year discounts that will place a further drain on profitability.

The incumbents can keep up the pressure with more loss-leaders. The trick will be to ensure that the special deals are ring-fenced for some customers only, so that margins are protected in other parts of the book. The banks know that customer loyalty is a thing of the past.

Today their greatest ally is inertia.