/ Money, Shopping

Do you want to bank where you buy your bananas?

Supermarkets strive to be one-stop-shops, and with a few big names entering the financial services sector, they’re edging closer to their goal. As Asda launches its own financial range, will you be tempted to switch?

Thanks to a potent mix of technical problems and the Libor scandal, the reputation of big banks has taken a battering. In the meantime, some supermarkets have swept in to try and take the term ‘convenience store’ to a new level by tempting customers away from more traditional financial institutions.

Most recently, Asda has launched a range of financial services and products including car, travel and home insurance, currency exchange and a flagship cashback credit card.

Asda is hot on the tail of Marks & Spencer, which recently announced it is to open 50 bank branches in its stores across the UK. Of course, Tesco and Sainsbury’s have already been operating in the financial sector for a long time.

Supermarkets sweep in

There’s definitely an appeal to being able to fiddle with my finances at the same time I do my weekly shop, for convenience if nothing else. But the reality is that it just won’t happen – I tend to do most of my banking online now, as I’m sure many of you do too.

So it seems to me that it’s the supermarket brands we’re buying into. I’m pretty sure I’m not alone in having a more favourable view of supermarkets than the big banks right now – not that that’s hard. But if you scratch the surface, you’ll find that behind supermarket financial products is another bank or provider.

For example, M&S Money’s new banking services are half-owned by HSBC. Sainsbury’s products are powered by Lloyd’s, Tesco’s by RBS, while Asda’s offerings come via a wide-range of providers. This means that switching from your current bank won’t give you the clean break away from the big banks you might’ve hoped for.

That shouldn’t necessarily put you off though, as M&S is a Which? Recommended Provider for car and home insurance, and both M&S and Tesco are recommended for credit cards.

A new wave of competition

I think that any competition in the much-derided banking sector, whether in supermarkets or otherwise, has to be a good thing. More choice should mean access to better deals and better customer service for all of us.

Our chief executive Peter Vicary-Smith this week for the banking sector to be referred to the Competition Commission to ‘break the dominance of the big banks’ and ‘turn this sector into a profession we can all trust again’, and moves like this from supermarket brands can only help towards making that happen.

Are you tempted to switch from a bank to a supermarket like Asda? Do you think supermarkets can do a better job than the banks?

Comments
Profile photo of wavechange
Member

Unexpected item in the banking area. 🙂

Profile photo of william
Member

Sadly as supermarkets seem to love using mind games to part us from our money, what’s to stop them applying the same tactics in banking. It’s not like most banks have been setting a good example in this respect.

Profile photo of wavechange
Member

I appreciate that banks have a deservedly poor reputation, but I hold them in higher regard than supermarkets. Knowing how poorly I have been treated by various supermarkets I would hesitate to let them near my money until they have demonstrated that they can do a competent job.

Profile photo of thelm
Member

With supermarkets it just seems to be a branding issue with a few bells added (clubcard points etc). In truth I don’t think it really offers anything for me at least, but I’m surprised that the Co-op doesn’t try to push and support their banking/insurance more through the Co-op grocery store network (since this is probably more a natural extension than Asda or Tesco) rather than buying part of the Lloyds branch network which they are considering currently.

Profile photo of richard
Member

I buy my bananas from a local market stall – as they are cheaper – nicer – and the Stall owner knows me and is friendly – All the characteristics not noted from my local supermarket – I far prefer on-line banking for convenience – all I need is the ability to obtain some cash which is already obtainable from banks and “cash back” from supermarkets

Profile photo of Patrick Steen
Member

Interesting news about competition on the high street, the Co-operative Group has today agreed to buy 632 branches from Lloyds Banking Group, acquiring almost five million new customers in the transfer.

Responding to the announcement, Which? executive director Richard Lloyd said: ‘This is a welcome first step to bringing more competition to the high street which is vital for improving the quality and range of banking services available to consumers.

‘But if banking is to be truly competitive, portable account numbers need to be introduced to make it as easy to switch your bank as it is to switch your mobile phone.

‘It’s important to also remember that this sale was forced on Lloyds by the European Commission. It doesn’t remove the need for a referral to the Competition Commission, which should be done now to break the dominance of the big banks that so often fail to put consumers first.’

http://www.which.co.uk/news/2012/07/co-operative-to-buy-632-branches-from-lloyds-291442/

What do you think? Good news?