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Tesco to open 30 'bank branches' this year

UK supermarket chain Tesco plans to open 30 bank branches in its stores by the end of 2009 as it looks to cash in on consumer mistrust of traditional banks and extend its presence in financial service...


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What Banks Could Learn From Tesco

The fact that Tesco is seeing a doubling of customer deposits in recent months as distrusting consumers move away from the troubled banking sector highlights how banks need to go back to basics to retain their customers. A closer examination of why consumers are putting their financial trust in Tesco would probably reveal that, animosity  toward the banks aside,  Tesco is a brand they feel they have a more personal relationship with. In addition to rebuilding trust, fostering a one-to-one  relationship with each customer is something banks should now be focusing on.

 

Of course, building one-to-one relationships can’t come at the expense of profitability, especially in the current climate. Ideally, every decision a bank makes with regard to a customer should cater to that individual’s specific needs but do so in a manner that ensures the profitability of the account. Gaining full understanding of each customer as an individual, including their likely behaviour, and applying that to every interaction  is not only critical for differentiation and loyalty in these challenging times, but it may be the key to survival amid increasing competition. 

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Comments: (1)

A Finextra member
A Finextra member 07 April, 2009, 09:17Be the first to give this comment the thumbs up 0 likes

I think that you might find that one of the main reasons (but of course not the only one) for Tesco's increase in deposits is the generous interest rate that they were offering; in particular the fact that the first year bonus became very competitive as interest rates fell so dramatically. Indeed, there was a point a few months ago when they apologised for the delay in account-opening processes because of the volume of applications, especially as the deal came to an end.  It will be interesting to see what happens to those deposits 1 year hence, when the bonus ends.

I'm sure there are other factors, such as convenience and the trust factor, and I wish Tesco well in their venture.  If we can get back to what banking was about until the late 90's then they will certainly be doing us all a favour.