Federal Treasurer Wayne Swan earned a high mark of eight from consumer group Choice for his efforts in improving Australia's banking system but his recently revealed banking reform measures got only a dismal five.

Choice chief executive Nicholas Stace said on Tuesday that Swan should be lauded for his impressive work but he could have done a better job encouraging a better competition environment in the banking industry.

Stace told the Senate Committee investigating the country's banking sector that Swan needs to take cue from the criticisms thrown at his banking reform measures and prod him to go the extra mile in pushing for more competition among players, big and small, in the industry.

Choice said that the federal treasurer should consider tearing down the wall that prevents entrepreneurs to slug it out with major players in the industry.

Stace noted that major banks actually collected gains on their market value following the Sunday announcement of the federal banking reform proposals, which effectively pointed to the possibility that "the actual the reform package, as it stands at the moment, isn't going to change the world for those banks."

Critics of the reform package pilloried Swan's measures as inadequate and pointed out that as an aftermath of the federal government's reform measures, Australia's big four banks shares ballooned by an estimated $3.4 billion on Monday while smaller banks suffered retreats.

Choice said that the reform measures may have some shortfalls but the government at least took the important first step in effecting changes in the industry and all they have to do now is to sustain whatever momentum gained by the package and move on to the next level.

Also testifying at the Senate hearing, Australian Securitisation Forum chief executive Chris Dalton said that he is hopeful that Swan would not stop in providing more financial guarantee that would enable the entry of more players into the market.

Dalton said that the initial fund allocation should ensure recovery from the effects of the global financial crisis but the succeeding financial support, estimated to reach some $20 billion, could prove more crucial as it would create a much encouraging condition for banking competition.

Dalton observed that "international investors are aware of the government's support and involvement, and see that as a positive."