With new entrants into the UK banking sector from both new retail banks and supermarket brands, a MoneySuperMarket study shows consumer attitudes to the diverse banking landscape and how that has changed in the last five years.
The research showed people’s views are mixed on the expansion of supermarket brands into the personal finance space. 25% feel that supermarket brands should stick to more traditional products, and a further 17% feel these brands should stop expanding. However, 32% are quite happy with the growth and expansion of supermarket brands, with 20% saying they can get a cheaper deal for a range of products with a supermarket and 12% are happy to be able to get everything from one place.
By comparison, these figures have changed significantly over the last five years. In a similar MoneySuperMarket study from 2009, only 11% of people felt supermarket brands should stick to more traditional products, with a further 30% feeling these brands should stop expanding.
The new study also found that consumer trust in supermarket banks has increased over the last five years. Currently 13% of UK adults trust a retail/supermarket brand either much more or a little more than a high street bank, to look after their finances. This is compared to just 4% from the 2009 study who said they would trust a supermarket brand more. Trust in retail/supermarket banks is, however, still low when comparing it against high street banks, with 34% stating they would trust a traditional banking brand more than a retail / supermarket branded bank. Yet for those who said back in 2009 that they trusted both equally (22%) the current proportion of people who give equal trust to supermarket banks and tradition players is now 40%.
Kevin Mountford, head of banking at MoneySuperMarket, said: “We have seen more and more retail brands expanding into the financial services world and growing product offerings, with Tesco’s current account launch being the most recent example. Many people are naturally cautious about the diversification of these brands and the feeling could be that the expertise and capability might not be delivered by a less traditional provider, especially as they take on so many different industries simultaneously.
“However, our research has shown people’s confidence in supermarket banks is growing, and people should not be swayed by sticking with what they know, as the less traditional banks might come without the legacy of issues some banking stalwarts carry.
“The introduction of more competition within financial services should be embraced, especially as this generally heralds a better deal for consumers. The more choice there is, the easier people should find the right fit for their modern day banking needs.
“Although the time honoured banking brands still hold far more trust than supermarket brands when it comes to managing the UK’s finances, the shopping giants such as Tesco, Sainsbury’s and M&S have come someway to tackle this obstacle but are yet to take a reasonable share of the market.”
The research has uncovered the area in which ‘supermarket banks’ are perceived as being better than traditional banking brands – providing good value financial products. One in four of those surveyed (27%) felt a ‘retail/supermarket bank’ would offer better deals on a current account than traditional high street banks. This compares to just 12% who felt a bank would be more likely to offer the better value products.
Of common financial products, people would be more willing to take out or have already taken out a credit card from a supermarket brand (27%). This was followed by a savings account (19%), a current account (16%) and mortgage application at 8%. By comparison, in the study from 2009, 24% of people said they would be willing to take out a credit card from a supermarket bank, followed by 15% who would take out a savings account, and 11% who would take on a current account and 5% would apply for a mortgage with a supermarket bank – all of these proportions have grown in the five years to further highlight people’s openness to shopping for their financial products along with their groceries.
Mountford said: “Our research shows that one area people do seem to feel supermarket banks can trump traditional banks is on providing good value innovative products, and this hasn’t changed over the last five years since we last conducted a similar study. However, customers are still less willing to use non-traditional brands when it comes to larger financial products, such as mortgages, with low volumes of people considering applying for this kind of product through a retailer/supermarket bank. Alongside this, it will be interesting to see the take-up levels of Tesco’s newly launched current account too.”
Supermarket banks are on an even keel with their high street rivals when it comes to customer service. 43% feel they would get the same level of service with a retail/supermarket bank as they would with a more traditional high street bank. But this figure seems to have increased since 2009 where only 28% thought both would provide good service. A further 17% think retail/supermarket banks would provide better customer service, in comparison to the 20% who feel the high street banks would.
Mountford added: “Clearly supermarket banks have upped their game and are now giving the high street banks a run for their money in the customer service stakes, which is great news. Customer service is of paramount importance to customers, and so it is good to see both types of banks making headway in this area.
“We can see how attitudes have changed in recent years, and it will be interesting to see how this continues to develop in the future. With more choice available people should take the opportunity to re-evaluate what they want and need from their personal finance products and compare the offers out there. It doesn’t hurt to check out all the options from the banks and the supermarkets as the best deals are often offered to new customers, in this competitive marketplace it really does pay to shop around.”
