27th August 2014
The recent wave of new entrants coming into the UK’s banking sector has driven a greater desire among consumers for an alternative to the usual suspects with 40% more likely to bank with a new entrant than a year ago.
An analysis from price comparison site uSwitch found that the success of financial offerings by supermarket giants Tesco and Asda seems to have rubbed off on the sector as consumers would trust other supermarkets such as Waitrose, at 45%, Morrisons with 18%, and Aldi with 12% of the vote – to do their banking if given the choice.
The findings suggest that if other much-loved high street brands moved into banking, they could be just as successful, with three quarters, at 77%, of consumers saying they would trust John Lewis to take care of their banking needs, while competitors Debenhams with 30% and House of Fraser, at 27%, also proved popular.
When it comes to choosing who they would like to bank with, consumers are most likely to be influenced by how financially secure an institution is, the strength of its reputation, how competitive its interest rates are, and whether their money will be covered by the Financial Services Compensation Scheme.
uSwitch said banks are coming under increasing pressure to improve their digital offerings as while a third of current account holders still value face-to-face contact with their bank, the vast majority, at 88%, feel having online banking is important. Half feel the same about telephone banking and 45% about mobile banking.
Commenting on the research, David Mann, head of money at uSwitch asserted that it is clear consumers want to see the established banks put under more pressure to provide better rates, rewards and services.
He said: “The reality is that if these traditional lenders don’t start upping their game, they may find themselves sitting on the sidelines when the whistle blows.
“New entrants are a catalyst to drive change in the market, so it’s great to see them continuing to challenge the dominance of the big four by bringing competitive products and services to the table and providing better value for customers.
“However, it’s important to remember that competition needs to be driven by better banks, not just more banks. New entrants need to be innovative and in touch with their customers’ needs in order to compete with more established players and online, telephone and mobile banking present an opportunity to do this.”