Supermarkets poised to steal 17 million current-account customers

Three out of four people (75%) believe their supermarkets offer them value for money on groceries, almost half believe supermarkets sell value for money financial products too, according to a survey by Fool.co.uk. It seems that many of us deem that supermarkets can be as good at providing ISAs as they are at selling ice cream.

The survey also shows that 50% of consumers want supermarkets to offer more financial products. However, some products could be left on the shelves. For instance, only one in 300 people (0.3%) has put a supermarket mortgage into their shopping basket. Meanwhile, only one in 200 people (0.5%) believe that supermarket current accounts are as good as their currant buns.

That said, retailers such as M&S, Sainsbury and Tesco have made significant inroads into credit cards. One in five people (20%) own a credit card affiliated with a grocer. The findings also revealed that both men and women were driven primarily by the best interest rates.

In a recent Fool.co.uk’s Money Talk podcast, Brendan Cook, chief executive of M&S Money countered suggestions that supermarkets have already cherry-picked the easy-to-manage products. He said: “Retailers are very good at knowing which products sell, and focusing their attention on those successful lines.”

David Kuo, Head of Personal Finance at Fool.co.uk, says: “Ten years ago supermarkets started with store cards and quickly expanded into credit cards, personal loans and savings accounts.

“Today, supermarkets are as clever at marketing travel-insurance policies as they are at selling travel sweets. Additionally, with their low running costs, supermarkets can easily undercut other providers. They are already pinching customers from banks and in time could steal even more.

“It is reckoned that over 40 million adults in the UK have a current account. This is a massive unpicked cherry for supermarkets to target. If three out of seven shoppers switch their loyalty from banks to supermarkets, as many as 17 million bank customers could jump ship.

“As supermarkets wheel their trolley of growth along the aisles of opportunity, they are unlikely to let anyone stand in their way. And, with millions of customers visiting the UK’s four biggest supermarkets every week, banks will need to continually look at the products on their shelves to avoid being beaten to the check out.”