Money: Plenty in store at supermarket

Banks seem to be even less popular than the Tory party, and building societies are in danger of going down the same primrose path as they raise charges and standardise services. The way has been opened for supermarkets to pitch for business and now Tesco is setting up financial service centres inside its stores, says Clifford German.

Today Tesco will announce the opening of a financial services centre inside its supermarket in Baldock, Hertfordshire. By next month nine Tescos will have such centres and they will open in all Tesco's 600 stores nationwide within a short period.

Customers will be able initially to use the centres to withdraw money from a cash dispenser, and Tesco Personal Finance savings account holders can deposit cheques or cash and obtain mini-statements. New customers can get credit cards and open savings accounts.

New services will start rolling out quickly. By the end of the month personal loans will be on offer, within the next few months travel insurance and holiday currency will be available, and over the next 12 months Tesco will start offering current accounts with cheque-books, as well as Tesco mortgages, pensions and personal equity plans.

Customers will also be able to get general information about financial services from staff, and specific details about products from brochures, or by punching buttons on Tesco's "user-friendly" consoles (see picture) which can provide personalised quotations and print-outs for customers to take away and study.

The consoles can also offer customers who prefer a live interview a video- telephone link to specialised staff in Tesco's main financial centres in Glasgow.

The same services will also be available by telephone, but this is the first time that a store has decided to commit itself to selling retail services on a nationwide scale. In the Seventies the Co-operative Bank opened kiosks in selected stores to cash cheques for customers. The clearing banks successfully spiked the Co-op initiative by extending their opening hours and offering a wider range of services.

The advent of telephone selling brought in a new era of competition, starting with Direct Line's pioneering move into selling motor insurance over the phone. Direct selling now has perhaps 30 per cent of that market and has forced the established insurers to set up their own telephone selling centres. Direct selling is also moving into household insurance, mortgages, PEPS and pensions.

Until now however the new generation of financial services providers have made a positive virtue of selling services over the phone without the costs and complications of opening offices. Marks & Spencer offers a range of financial services including personal pensions and AVCs, unit trusts and PEPS, and various insurance products with staffed information desks and freeephone facilities in 60 stores.

Midland Bank has opened some branches in Morrison supermarkets while in June Abbey National opened a fully-fledged branch in the Safeway store in Leicester and may extend the experiment. But Tesco has now decided on the basis of marketing research that while a growing minority of customers, especially women and younger adults, are probably happier using the phone, the majority of customers, especially older people, are still happier with a real person to talk to.

Long opening hours and easy parking will make it possible to buy financial services while doing the shopping without the need to make special journeys or struggle for parking space during banking hours in busy high street branches. Supermarket banking is arriving and looks to be here to stay.