The big UK supermarkets have been selling financial products since 1997, and keen rates and discounted deals continue to make them a popular choice.
With all the financial products being sold online or by phone, the overheads are low and that translates into good- value savings accounts and loans that frequently appear in the best-buy tables.
With no bank branches to maintain this lean and mean set-up gives the supermarket players a distinct advantage.
The advertising is also slick and well positioned, ensuring that millions of weekly shoppers can't help but notice the promotions staring them in the face as they put their weekly groceries on the conveyor belt. Whether it's credit cards, personal loans, savings, insurance or travel money, the shelves are stacked with top-value deals.
Credit cards offering reward points form a very strong product area built on the huge success of the Clubcard and Nectar loyalty schemes at Tesco and Sainsbury's respectively. It's easy to earn extra rewards for using these store- branded credit cards when purchasing the weekly shop or filling the car. To give you an idea of the popularity of these promotions, Sainsbury's Bank has awarded a staggering 2.3 billion Nectar points to its banking customers in the past 12 months alone.
Unsecured borrowing is another strong suit for the supermarkets, with Tesco Clubcard heading the best buys with the longest interest- free term for card purchases :18 months. Sainsbury's is a top 5 player, too, at 15 months.
Tesco Bank is also in the top 10 for 0 per cent balance-transfer deals at 29 months with a one-off arrangement fee of 2.9 per cent – just two months fewer than Barclaycard, which currently offers the longest deal.
Aside from introductory interest-free cards, Tesco and Sainsbury's both offer credit cards with the lowest standard interest rate: 7.8 per cent APR representative – equal top of the best buys
Supermarket banks are just as competitive in personal loans and have dominated the best-buy lending tables over the last three years.
For loans of £7,500 and £10,000, Sainsbury's Bank charges just 4.6 per cent APR representative and is in second place behind Zopa in the best buys, with its main rival Tesco right behind at 4.9 per cent APR.
The supermarket banks have always excelled at offering simple, no-nonsense products, and savings accounts is another area in which they fare well.
While the top slots in the best-buy league for savings tend to be occupied by the challenger banks and niche financial players, both Tesco and Sainsbury's are never too far off the pace with their pricing and often offer a better return than the main UK banks.
It will be interesting to see what happens when these brands move into more complex financial products.
Tesco Bank was the first to move into a new market when it launched its own range of mortgages in August 2012. It has been aggressive with its pricing and, as we speak, is offering the cheapest three-year fixed mortgage at 3.29 per cent (£195 fee) up to 85 per cent loan to value.
The much-anticipated launch of the Tesco current account may well take place later this year and is a move that will come under close scrutiny from the media and wider banking industry. Hopefully, it will deliver innovation and a badly needed injection of fresh competition.
Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.ukReuse content