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Attitudes towards expansion
The research found that more than one in ten (11 per cent) feels that ‘supermarket brands are taking over our lives and should stick to more traditional products’, and a further 30 per cent feel these brands ‘have already gone too far and should stop expanding’. However more than a third (37 per cent) are quite happy with the growth and expansion of major supermarket brands, with one in five saying they can get a cheaper deal for a range of products with a supermarket and 17 per cent happy to be able to get everything from one place.
Kevin Mountford, head of banking at moneysupermarket.com, said; "Many people are naturally cynical about the expansion of large brands into new product areas, feeling that certain companies are getting a bit too big for their boots in taking on so many different industries all at once.
"However, in general the introduction of more competition within financial services should be seen as a positive move, especially after a period of consolidation. More competition generally heralds a better deal for consumers, and with that in mind we welcome any new entrants to the market."
Who to trust with your money
The study found that, despite a tough period for the reputation of the banking industry, just four per cent of UK adults would trust a supermarket brand more than a bank to look after their finances, compared to 27 per cent who say they would trust a traditional banking brand more than a supermarket. A further one in five say they would not trust a supermarket brand at all to look after their finances. 14 per cent simply don’t trust any big company with their finances.
Kevin Mountford continued; "The last couple of years have been extremely damaging to the public’s confidence in banks, and this clearly opens a door for the likes of Tesco and Sainsbury’s. However, our research shows banking brands still hold far more trust than supermarket brands when it comes to managing the UK’s finances.
"The trust factor is a crucial obstacle for the supermarket’s to overcome if they want to take a reasonable share of the banking market. The relationship many people have with their bank runs back many years, even through family generations and for supermarkets to establish faith with these people to look after their hard earned money will take time. A good proportion of the well known banking brands have over a hundred years of experience; it appears it will take more than a credit crunch to wipe that slate clean.
"It would be fair to imagine that, over time, people will become more comfortable with larger retail brands running their money, but for now, experience is key, and that is one thing the banks have plenty of."
Good value products
The research has uncovered the area in which ‘supermarket banks’ are perceived as being better than traditional banking brands – providing good value products (e.g. cheaper insurance premiums, higher savings rates and lower mortgage rates). One in five of those surveyed felt a ‘supermarket bank’ would offer better deals on their products than traditional high street banks. This compares to just nine per cent who felt a bank would be more likely to offer the better value products. But good value rates are obviously not key as the vast majority said they are unlikely to go to a supermarket brand for any financial product.
Of all financial products, people would be more willing to take out a credit card from a supermarket brand (24 per cent) closely followed by general insurance (23 per cent). Only 15 per cent would be willing to take on a savings account with a supermarket brand, 11 per cent would take on a current account, 10 per cent would buy life insurance and just five per cent would take out a mortgage with a supermarket bank.
Kevin Mountford said; "Our research shows that one area people do seem to feel supermarket banks can trump traditional banks on providing good value innovative products. However the real issue is that so few are willing to consider a supermarket brand when looking at their finances. With only 11 per cent willing to take on a supermarket current account, it is clear the likes of Tesco and Sainsbury’s have some real work to do in convincing consumers of their ability to effectively manage their finances, especially when it comes to the larger financial products, such as mortgages."
Customer service
An area where ‘supermarket banks’ are trailing their more traditional rivals is in customer service, just 10 per cent think a supermarket would provide better service than a bank when looking after their money, with 20 per cent saying the bank would do better (18 per cent think neither would give good service and 28 per cent think both would give good service).
Kevin Mountford concludes; "Supermarkets are able to capture lots and lots of data about their customers, and if they can transfer this to the financial services arena by offering intelligently targeted products, they may well find that attitudes toward their customer service gradually move in their favour, though this type of targeted marketing always carries with it the ‘big brother’ suspicion.
"The trend of supermarket brands entering into the banking sector is not likely to slow down soon, however it is quite clear they haven’t yet won over the British public, and until they do, they will be consigned to a relatively small market share."
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