Tesco have revolutionised their services today with the official launch of their first current account, aimed at addressing the underlying deficiencies within the banking industry by removing all ìsmoke and mirrorsî and ìrapaciousî bank fees on their new product.
The new Tesco Bank current account has been released to widespread acclaim, primarily for the honest and untypical philosophy that they have adopted when marketing the product which has seen them emerge as a leading organisation in the fight for banking sector reform.
However, the new product has also garnered praise for the vast array of incentives that come along with it for customers to enjoy, with Clubcard points, interest payments on balances and a host of other bonuses all on offer from the acquisition of the new account.
Tesco have chosen to follow suit with many of its banking counterparts and incorporated the hybrid saving account element to their new product, paying 3% interest on balances as much as £3,000. Whilst this is lower than the equivalent current account on offer from rival TSB, which pays 5% on balances up to £2,000, it nevertheless compares favourably to a number of current offerings on the market, whilst Tesco have been keen to let their customers know that what they see is what they get with the new account; the clear message from their spokesperson was that account holders can rest assured that no headline rates or introductory offers which later expire will be attached to their deal.
Account holders can also obtain Clubcard points which can be used in stores from all purchases made with their current account card, whilst the Bank have promised to provide customers with ëfairer dealsí on overdraft facilities.
Tescoís new deal marks the latest occasion in a series of events that has seen smaller and less mainstream banking arms take the fight to established high street banks in order to capitalise on the new switching regulations introduced to the country last year.
Under the new rules, banks must facilitate any of their existing customers switches to a new account provider within seven 7 days if they request them to do so, and must also transfer direct debits and standing orders in a ìseamlessî fashion.
The result of the new regulations has been monumental as competition levels have begun to pick up massively as customers begin to feel more comfortable with switching provider due to the relative ease in which they can now do so. And the new found competition has encouraged smaller providers, such as Tesco and Marks and Spencer to launch their first and first free to use products respectively, as they bid to challenge the mainstream bank supremacy that has chequered the industry for some time now.
Tesco have identified that whilst they will be aiming their product at their 6 million saving and loan clients and 16 million Clubcard holders, that nevertheless the product will be aimed universally and ìisnít just for Tesco customersî.
Any new account holders will be enabled to place money into their account at any of the store branches across the country, though Tesco have conceded that the success of this measure will be based on whether their customers are content with casting aside the typical way of conducting their banking and using Tesco stores to conduct their business instead.
Tesco have branded their new account as “fundamentally Ö a digital business” with the foundation of the product based on online and mobile banking reinforced by a customer service centre in the UK.
The account comes with no monthly charges providing that the account holder places £750 into it each month, whilst people who are unable to adhere to this- typically those with an annual salary under £9,000- will be required to pay a £5 monthly charge to use the account, which could undermine the allure of the product.
However, those who shop at Tesco frequently stand to benefit the most from utilising the new current account as the loyalty scheme attached to the product is hugely attractive.
The card comes with a contactless facility that also pays 1 Clubcard point for each £ 4 spent with the card in a Tesco stores and another point for every £8 spent in external places, though there are certain places where this does not apply.
Tesco have pledged to keep their product ìsimple and transparentî and make all fees and charges clear to their customers so that are not subjected to a relentless procession of ìusage feesî from facilities such as overdrafts; an issue which has marred the reputation of many of their banking counterparts. Instead, all account holders will be required to pay a fix overdraft rate of 18.9%, which falls into the middle category of rates in relation to its competitors.
Benny Higgins, the bank’s chief executive, said: “In designing our current account, we have listened to more than 20,000 customers to understand what they want. There are no gimmicks.”