The brands are coming

While banks and building societies battle it out on price, the supermarkets are moving in. Jill Treanor reports

It turns out that there might be some sense after all in the mad rush by supermarkets such as Sainsbury's to sell financial products to their food-shopping customers. Until now banks had been able to shrug off the plans of many of the retailers to take them on at their own game because of the inertia of bank customers. A report by Abbey National showed that 20 per cent of customers were dissatisfied with their banks and 66 per cent had thought of moving their account. Banks rely on the fact that in reality very few people do.

However, research by Interbrand, experts in branding, with Dresdner Kleinwort Benson, a City investment bank, concludes that supermarket chains could pose a very real challenge to the traditional financial services provider.

Why? It's all about brand names, according to Karen Hack, branding consultant at Interbrand.

She said that while banks and building societies are busy competing over savings products and the price at which they sell mortgages, they are eroding the brand-recognition of their institutions.

"If the banks don't wake up and realise that the messages on price are not enough, they could lose out to brands," she said.

"It makes sense that supermarkets are moving into financial services. If they play the brands very carefully it could be 'watch out, banks'."

This is because financial services firms generally have a reputation for letting their customers down. So customers stay with their bank or building society, believing it to be the best of a bad bunch.

However, the new entrants have strong brand names and have succeeded in areas where financial firms are traditionally seen to be lacking - value for money, quality and trust of expertise.

"Two of the most obvious examples (and in the case of the former probably the most successful) are Marks & Spencer and Virgin," Dresdner Kleinwort Benson says.

The would-be entrants - led by Sainsbury's - also have branding and distribution clout. Take two examples: within two years of selling petrol, retailers had a 25 per cent market share, and within six months of launching its loyalty card, Tesco had almost as many card holders as Barclaycard had established over 30 years.

The research pointed out that there is a risk for the supermarkets that their brands could be contaminated simply by being involved in banking. So far, M&S does not seem to have suffered from its drive into financial services although the research said it may be too early to reach any conclusions on this risk. Simon Samuels, banking analyst at Dresdner Kleinwort Benson, also believes that all is not lost for the banks and building societies. They can develop their brands by moving away from price battles to concentrate on other areas such as customer service.

"If you present yourself as the cheapest then one thing's for sure - you're not going to develop brand value," he said.

Barclaycard, which has kept away from pricing issues and developed a strong brand over the past 30 years, has the highest brand value of any financial services group, of pounds 1.334bn. This is well ahead of its nearest rival, Halifax Building Society, whose brand is valued at pounds 956m by the research, but well behind some of the world's top brands, such as McDonald's.

Whereas the world's top brands are valued at more than 10 times annual profits, the best mortgage and deposit-taking brands are valued at one times profits. Barclaycard's brand is valued at more than five times annual profits.

Towards the bottom end of the brand-value scale is Direct Line, the low- cost insurance firm, which, while radically altering the insurance market, has developed a brand worth only pounds 24m.

"Clearly Direct Line needs to encourage its customers to think of it as a value-for-money organisation with high-quality services - rather than simply cheap," said the research.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
Life and Style
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
Finacial products from our partners
Property search
  • Get to the point
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

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

    Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

    £50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

    Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

    £13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Ashdown Group: Training Programme Manager - City, London

    £40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

    Day In a Page

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own