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

Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments