Julian Knight: Tesco's bank teaser will not shake the market

The retail giant's long-awaited mortgage launch is a missed chance to steal a march on the high-street titans

Tesco Bank is a bit of a tease. Ever since the financial crisis and the retailer's decision to buy the Tesco banking operation from Royal Bank of Scotland, Tesco has been seen as one of the main challengers set to break the banks' high street monopoly. If one pound in every eight we spend on the high street is with Tesco, then surely millions will want to bank with them? However, like all true teases, Tesco has not revealed everything it has to offer.

We have been told that Tesco will at some point start offering fully fledged retail banking, but no firm date has been set, or any idea of whether this will be through its huge chain of stores. But from Monday, Tesco bank will show a bit of ankle, for the first time offering mortgages to go alongside its insurance, credit card and savings products.

The mortgages on offer – mostly fixed rate – are actually nothing to write home about. The rates, although competitive, are not best buy; and as for the fees, at first glance they appear low, until you realise that the very best loan rates are available if you agree to a rather unpalatable £800 charge on top of a booking fee. The loan to values (LTVs) are unadventurous, ranging from 70 per cent to 80 per cent – as a result these are not products for first-time buyers.

I can't help but think that Tesco has missed a trick here. If it had offered a mortgage tailored to first-time buyers they could have distinguished themselves from the high-street banks, who in the main don't want to know, and keyed into the retailers' previously successful campaigns, which have had a family focus, such as equipment for schools. The great thing about Tesco marketing, in the now quite distant past, was that it could make masses of money but still be seen to be on your side; there is nothing of that feel about this range of mortgages.

Of course, the ubiquitous Tesco Clubcard makes an appearance, with borrowers able to earn points each month, which they can use to claim goods in store, but it will be difficult to distinguish whether or not this offers any real value.

The mortgage range, though, is meant to be a teaser, ahead of the full consummation of current account banking, in store, later this or early next year. But in the four years since the financial crisis, Tesco's stock has – quite literally – fallen. The retail operation, although immensely profitable, has lost a little of its lustre.

People still respect the Tesco brand, even possibly fear it – particularly if you're a supplier dealing with the razor-sharp buyers, or a small retailer within walking distance of one of its "local" stores – but do people really embrace and care about Tesco?

If I was to reveal that Tesco had been bought out and the name would disappear from the high street, would you really care? But if I was to say the same thing about Waitrose, or even, despite its travails, M&S, I reckon most reactions would be different. And this lack of care for the Tesco brand hurts its too-long drawn out banking ambitions.

Perhaps, with innovative products or approach, the banking operation could really distinguish itself, pull off the trick of being an outsider raiding the high street. But the Tesco brand isn't an outsider brand – unlike Virgin Money, for instance.

Tesco's teasing act has gone on too long, and I think the interest that was there has waned, as have some of the strengths of the Tesco brand. I'm not saying Tesco won't capture lots of business when they finally enter into fully fledged retail banking – the massive customer base and the marketers will make sure of that – but they need to try a bit harder than this very plain Jane range of mortgages.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Data Analyst/Planning and Performance – Surrey – Up to £35k

    £30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker