A startling majority of consumers don’t trust retailers any more than banks to handle their personal finances, new research released today reveals.
According to independent market research consultancy Rostrum Research, only 11 per cent of UK consumers trust retailers more than high street banks to handle their bank accounts.
Earlier this year, high street stalwart Marks and Spencer (M&S) launched a banking service offering a current account facility which caused controversy upon its launch as it charged new customers a set up fee as well as a monthly premium rate.
However, earlier this year the financial world was rocked by a crisis when it emerged that top banks had attempted to rig LIBOR, the rate at which banks in London lend money to each other, and retailers rushed to offer an alternative to the discredited system.
Nonetheless, Rostrum revealed that 51 per cent of 2002 respondents said that they do not trust retailers any more than traditional banks while 38 per cent trust both to the same degree.
Mark Houlding, CEO of Rostrum Research, said: “New entrants are looking to shake up the UK financial services market.
“Supermarkets and new types of financial services providers are attempting to take market share from the established players – but our research suggests that winning the hearts and minds of consumers will not be easy or straightforward.
“That said, by combining well-known brands with an established store network - a handful of these retailers, such as Tesco (33 per cent), M&S (21 per cent) and John Lewis (20 per cent) are making progress in encouraging customers to trust their financial services offerings, particularly the all-important current account product.
“However, it remains to be seen whether these new players are able to really take a large share of the market.”
Retailers offering services at a reasonable and competitive price are likely to gain greater interest as 40 per cent of shoppers said that price was the most important factor when choosing which retailer to use while 29 per cent said an existing relationship with the retailer was their primary concern.
Houlding explains that tapping into loyalty may not be enough to make a success of retail banks.
“Supermarkets and high street giants have a wealth of experience when it comes to understanding their customers and encouraging consumer loyalty.
“However, our research shows that the perceived difference between selling consumer goods and financial products is significant and there is a long road ahead for retailers.
“Despite these challenges, the potential for this market represents a big opportunity for retailers who get it right.”