Underwhelmed? Tesco unwraps its current account

Well, at last. Tesco Bank has revealed details of its first current account. First reaction: is this really what we waited three years for.To be fair, we cannot say we were not warned, writes Douglas Blakey

Underwhelmed? Tesco unwraps its current account

Well, at last. Tesco Bank has revealed details of its first current account. First reaction: is this really what we waited three years for?To be fair, we cannot say we were not warned, writes Douglas Blakey

Back in June 2011 – yes 2011, not a mis-print – Benny Higgins told me of his outline plans for Tesco Bank’s debut current account.
Higgins, CEO of Tesco Bank, said at the time:
“I have got very big expectations. When we launch current accounts, we will be transparent.”
He went on: “On pricing, the strategy of some of the high street banks to gain market share has been crazy. This is not our strategy. We will not buy market share.”

Fast forward three years and the Tesco Bank current account, launched today, deserves to be lauded as transparent.
As for pricing, there is no way that Higgins can be said to be trying to buy market share.
At first glance, the Tesco account will not top any best-buy comparison tables.

Higgins, one of the most celebrated retail bankers of his generation, was appointed CEO of Tesco Bank in 2009.
He had previously led the retail banking units of Royal Bank of Scotland (RBS) and Halifax Bank of Scotland (HBOS).
At Tesco Higgins has made prudent hires and assembled a multi-talented and enthusiastic team to expand its financial services product line-up, including the all-important first current account.

Clubcard points on non-Tesco debit card purchases will appeal to some customers, no question, but is Tesco really laying down a major challenge to the traditional high street banks by offering one Clubcard point for every £8 spent?
The emphasis there is on the word major.

Do the sums. How much might you spend via your debit card in the course of a year.
Let’s call it, say £12,000 in the course of a year. Divide that by eight and you hit 1,500 Clubcard points.
That would seem to equate to Tesco vouchers worth £15.
How many folks will switch their current account for £15 worth of Tesco vouchers?

By contrast to Santander’s 123 account – assuming you are interested in rewards – Tesco’s appeal will be limited.
By the by, there is no Tesco sweetener to boost switching: so nothing along the lines of the £100 worth of Marks and Spencer vouchers offered by Tesco’s retailer rival.
Or take Halifax……..it gives customers a £5 per month credit for running its current account. While we are it, first direct and the Coop offer £100 cashback to new customers.

So who might the Tesco offer appeal to?
Customers regularly needing to go into the red will appreciate Tesco’s treatments of overdrafts.
Pricing of overdrafts is clear and the charges are competitive.
There is no fixed monthly fee to use the overdraft: good – on the other hand, there is no ‘interest-free’ buffer’: bad.
M&S, by contrast, charges 0% on overdrafts of up to £100.

As for use of the Tesco debit card overseas: not a selling point. Tesco will charge 2.75% for debit card use out of the UK; Metro Bank by contrast offers free use of its debit card anywhere inside the European Union.

Banks, wherever they are, basically compete on either service or price.
It will be fascinating now to see if Tesco can excel in terms of customer service; it really needs to offer a blinding mobile and internet banking service for example.
How long, I wonder, before Tesco Bank offers double points promos for using its debit card or a clucbcard points giveaway to boost switching?