Suncorp wants Treasurer Joe Hockey to make it easier for the smaller banks to compete.
Chief executive Patrick Snowball's mortgage market plea comes as former Commonwealth Bank boss David Murray finalises an inquiry into the post-GFC finance sector.
"My message to the treasurer is clear and unambiguous," he told a business lunch on Wednesday.
"For the inquiry to complete its work without addressing this issue, in a fair and equitable manner, will amount to a huge lost opportunity and it will entrench the disadvantage the regionals have been dealing with since the post GFC consolidation."
During a question and answer session, Mr Snowball said it was increasingly hard for challenger or "battler brands" such as Suncorp, Bank of Queensland, Bendigo and Adelaide Bank, and credit unions to offer competitively-priced products as the big banks entrenched their dominance.
But he saw a "bone being thrown" to the regional banks by the Murray inquiry, which is expected to deliver a final report with recommendations in November.
"My sense is that there is the appetite to see regional banks thrive," he said.
Mr Snowball wants regional banks to be able to lend with lower capital requirements, arguing this would increase competition in the low-risk housing market and enable more lending to small and medium enterprises and innovation projects.
He pointed out that the major banks hold up to a third less capital than regional banks on mortgage portfolios with the same risk profile.
He also took aim at mortgage brokers, arguing they sometimes lacked impartiality because the big banks had interests in this area.
"Brokers are viewed as independent but increasingly the major banks are influencing these channels which they predominantly own," he said.
Mr Snowball said the insurance sector, which Suncorp also competed it, was much fairer than banking.
"In insurance, there is a level playing field. There are low barriers to entry and a much more liquid market with consistent capital treatments," he said.
He is also backing a Productivity Commission call for the commonwealth to increase annual natural disaster mitigation funding, to the states, to more than $200 million a year.
"This government plan to spend about $250 million a year on mitigation is absolutely the right thing to do," he said.
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