The federal Treasury has suggested that Australia's small banking sector players could win a larger slice of the market over time.In its submission to the Senate's bank competition inquiry, Treasury says the Australian banking sector is "contestable". That is, new players can enter and take a substantial slice of the market, even if they are not currently doing so."However, this does not mean there is not scope to improve the state of competition in the banking sector," the submission adds.The Treasury submission offers bank concentration scores, based on 2008 data, which show Australia as having the eighth most concentrated banking sector among 29 OECD countries. Australia ranked as slightly more concentrated than Germany and The Netherlands, and slightly less concentrated than New Zealand and Belgium.Treasury's submission says that Australians have access to:* 12 Australian-owned banks;* 9 foreign-owned bank subsidiaries;* 35 foreign bank branches;* 11 building societies; and* more than 100 credit unions.There are also around 111 providers of over 2200 mortgage products, 66 providers of over 420 different credit cards, and 114 providers of over 992 different types of deposit accounts."Experience since the 1990s suggests that smaller players can successfully compete with the major banks should opportunities arise for them to raise funds at competitive prices and provide more innovative products and services than those already provided by the major banks," says the submission.It also notes that internet banking and ATM and Eftpos, and alternative distribution methods, such as mortgage brokers, have made it easier for new entrants, and have driven renewed interest in the retail market from some foreign banks.