Weaker banks 'open door for supermarkets'

14/10/2009

Supermarkets that also provide financial services could become more popular in future, reflecting customers' distrust of banks.

New analysis from personal finance website lovemoney.com suggested today (October 14th) that the existing high street banking sector was also "not ... very competitive" as a result of recent bailouts and mergers.

The comments follow the release of a report from Sainsbury's Finance - the credit card, loan and insurance provider attached to the supermarket chain.

According to the study, 34 per cent of Britons have taken out some form of financial services product with a supermarket.

Moreover, seven in ten said that they would consider taking out products in future if they thought the reward incentives were adequate.

Commenting, Ed Bowsher, head of personal finance at lovemoney.com, said: "Some of the traditional banks are in a very weak situation at the moment, so it's relatively easy for the likes of Tesco and Sainsbury's to offer stronger products and compete in that way."

He added: "It's very welcome that Tesco are coming in and will add some competition; Sainsbury's seem pretty keen too, so hopefully they will be adding competition as well."

An increase in industry competition could be good news to those seeking money problems solutions, as it would encourage firms to release better-value products.

The Office of Fair Trading announced recently that it had struck a deal with banks in order to make switching between current accounts easier and to improve the transparency of penalty charges.

Tags; Debt Management and Banking, Credit Card Lifestyle, Recent Graduate Debt,

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