By Scott Thompson
There's a big appetite among consumers for alternatives to traditional banks, according to new research from uSwitch. The findings suggest that trusted online and High Street brands, such as Amazon, John Lewis and Debenhams, could find success with moves into banking.
Three quarters of survey respondents said they would trust John Lewis with their banking needs, with its competitors House of Fraser (25 per cent) and Debenhams (23 per cent) also proving popular. But while John Lewis and Debenhams have already dipped their toes into the financial services market – both brands offer a range of insurance products – some consumers said they would also consider a brand with no previous experience in banking. One in four would be willing to bank with online retailer Amazon and one in ten would trust eBay.
Many people appear to have been influenced by the personal finance successes of Tesco and Sainsbury’s, with both brands offering competitive savings products and scoring well for customer satisfaction. Other supermarket moves into banking would be backed, with Waitrose (46 per cent), Asda (36 per cent), Morrisons (26 per cent), Aldi (nine per cent), and Lidl (eight per cent) all trusted to some extent. Although High Street banks have more experience than the new players, 68 per cent of people feel the new entrants care more about their customers. When it comes to banking, 69 per cent think that supermarkets and retailers offer good customer service – just 37 per cent believe High Street banks offer the same.
High Street banks also fall behind the rest of the competition when it comes to value for money – only one in ten consumers believe they offer the best value for money when it comes to banking, compared to supermarkets and retailers (53 per cent). Eight in ten consumers would consider switching to a new entrant, while the growing number of alternatives to banks coupled with falling trust in High Street banks means that 49 per cent are more likely to move to a new entrant now compared with a year ago.
uSwitch personal finance expert, Michael Ossei, says: “It’s a telling reflection of the UK banking industry that consumers are willing to put their trust in brands that have no previous banking experience. Consumer confidence in banks has been battered these last few years and recent scandals and IT fiascos have done little to win customers back. While traditional High Street banks are still generally viewed as the most secure and experienced providers to bank with, new entrants are hot on their heels and winning customers over with their untarnished reputations and promise of superior rates and customer service. Hopefully this will act as a wake-up call to the High Street banks and will make them pull their socks up. If they do, increased competition could be great news for consumers.”