by Mark Johnston
Consumers faith in banks has been severly tested in recent years and even more so in recnt months. Therefore with big banks under the cosh for their behaviour, customers are now looking more favourably on brands best known for their high street retailing.
Retailers and supermarkets are now moving in to the banking sector and could therefore pose a serious threat to traditional banks, according to uSwitch, a comparison website, recent research.
Supermarkets are in a particularly unique position at the moment to benefit from consumers lack of faith in high street banks as around 33% of consumers recently said that they would want to bank with a company that they regularly use for something else.
It seems that people are becoming more use to the idea of banking with supermarkets as they believe that these new providers will have learned from the mistakes made by the more traditional high street banks.
Supermarket and major retailers have really started to shake up the financial market, offering some of the best deals, particularly when it comes to personal loans and credit cards.
Michael Ossei, uSwitch personal finance expert, stated “this research suggests that the traditional banks face the biggest threat to their territory ever. While confidence in the banks is low, retailers and supermarkets reputations are looking virtually blemish free”.
A recent survey by insight agency Brandspeak showed that consumers believed that supermarkets are committed to treating customers fairly. Another survey by uSwitch showed that 69% of consumers believed a supermarket or high street brand would provide the best customer service and a further 52% believed they would also offer the best value for money.
For post credit crunch consumers, greater fairness in financial services is a now mantra that is not going to die down any time soon.
Jeremy Braune, managing director of Brandspeak, said “with perceptions that fairness with in the banking sector is in decline thee is a great opportunity for the supermarkets to further seize the initiative and grow their share of the market”.
Asda is the latest supermarket to follow the trend and raise its profile in the personal finance sector. Kirsty ward, head of Adsa money, said “times are tough and we want to do more for the millions of people who shop at Asda every day, financial products are important, but they should not cost the earth and you should not need to be an expert to buy one”.
However, Melanie Bien, mortgage broker at private Finance, warned that “supermarkets may pride themselves on their customer service but giving advice on mortgages is very different from making sure enough tills are open during busy shopping times”.
For today’s generation, speed and convenience is a priority and by offering longer opening hours and a one stop shop, supermarkets are well placed to operate in the personal finance sector.
However, what banks lack in opening hours, they more than compensate for in experience and knowledge of financial institutions, particularly when it comes to markets and regulations.
Therefore supermarkets do face some competition, especially from building societies, which are still considered to be the most secure and trusted financial providers.
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