Matt Scuffham London
Tesco Bank, the financial services arm of Britain’s biggest retailer, has launched its first personal current or cheque account, looking to challenge established lenders and bring shoppers back into its parent’s stores.
The bank is aiming for a slice of a market dominated by Lloyds Banking Group, Royal Bank of Scotland, Barclays, HSBC and Santander UK (part of Spain’s Santander), which provide over three-quarters of Briatain’s customer accounts.
Parent Tesco also hopes the service will help entice customers back into its supermarkets after suffering its worst three-monthly sales decline in 40 years. Account holders will be offered credits via Tesco’s loyalty scheme, Clubcard, which they can spend inside Tesco’s 3 000 UK outlets.
“The bank is a cornerstone of Tesco’s relationship with its customers and [the new account] will make that relationship stronger,” Tesco Bank chief executive Benny Higgins said yesterday.
Legislators are keen for challengers to emerge to break the dominance of Britain’s “Big Five” lenders and last year introduced rules to guarantee customers can switch bank accounts within seven working days. Britain’s financial regulator has also been asked to promote competition within the industry.
“We want Britain’s consumers and businesses to have far greater choice in banking services,” said Economic Secretary Andrea Leadsom. “New banking providers will give people more choice and encourage all banks to offer better and competitive services.”
Higgins said the potential for growth was illustrated by the progress of Tesco Bank’s credit card, which had built up a 12 percent share of the market in the UK. If that was replicated in current accounts, it would give Tesco the same share as HSBC.
He wants to target the 6 million customers already using Tesco Bank for credit cards, loans and savings products and the 16 million Tesco customers who use Clubcard.
Britain’s personal current account market has become increasingly competitive, with companies such as Nationwide and TSB setting ambitious targets for growth, and Santander UK also picking up market share through the company’s heavily advertised 123 current account. – Reuters