Would you bank with Tesco?
Tesco is a shopping favourite for many of here in the UK…
But would you use them for banking?
There has been a trial in Glasgow since 2006. New branches will open next month in Blackpool, Coventry and Bristol and Tesco hopes that it can capitalise on our newfound distrust of traditional banks.
Tesco already offers credit cards, savings accounts, loans and insurance and plans to start offering current accounts within two years and also offering mortgages in due course. As a Tesco bank customer, you will also be able to accrue loyalty points under its Clubcard programme.
Tesco set up its financial services division as a joint venture with Royal Bank of Scotland 11 years ago and it bought RBS’ stake for £950m in July 2008.
Andy Higginson, the chief executive of Tesco Personal Finance, has said that the move into the mainstream banking business will be based on a conservative, “old-fashioned” approach. The retailer has hired several high-profile executives from the financial services industry to lead its foray into the new business.
Tesco announced earlier in March that the amount of money deposited in its savings accounts had nearly doubled in the last 6 months, with more accounts opened in December 2008 than in the whole of 2007.
It also announced plans to recruit more than 200 staff to work in the Edinburgh headquarters of its personal finance arm.
The move by the Tesco comes as our anger grows over the billions of pounds paid out in bonuses to bankers this year despite some of the biggest banks, including Lloyds and Royal Bank of Scotland, being saved from collapse by taxpayer-funded bailouts.
Banking analysts believe a current account from Tesco could really shake up the banking sector with David Black of financial information provider Defaqto saying:
‘Current accounts are a key product for a bank because they enable them to cross-sell other products very successfully. It usually takes an age to get market share in current accounts but the supermarkets are in an ideal position to do this.’
The reality of across-the-board paid-for current accounts is becoming more likely as the major high street banks face the possibility of no longer being able to charge unauthorised overdraft fees as a result of an ongoing court battle with the Office of Fair Trading.
Black believes Tesco will be in a prime position to avoid this, saying:
“Tesco have the superb situation where they can say they won’t charge if you spend x amount of money in their stores. The high-street banks should be very afraid.’
So, do you think Tesco will make an impact in the banking sector in the year ahead?
And if they do, would you be willing to use them?