Another competitor has jumped into the race to provide financial services as Asda launch a new credit card to try and lure customers away not just from supermarket rivals but from traditional high street banks as well.
Recent weeks have seen ethical banks and building societies, such as The Co-Operative and Nationwide, gather up plenty of new customers as they leave the high street banks, either due to the website problems that plagued NatWest and RBS or the Libor scandal that’s hit Barclays. However, they aren’t the only ones to be benefitting. Supermarket finance has been becoming more and more popular in recent years, with Tesco and Marks and Spencer being the best-known examples, and these products have also been receiving more attention.
Whilst alternative banks having been grabbing current accounts, the supermarkets are going for different financial products, including loans, savings accounts and credit cards. Asda’s latest addition to its financial services roster comes just as they rebrand the arm into ‘Asda Money’.
Supermarkets don’t seem to be able to launch a product without tying in a way to reward customer loyalty, and this new credit card is no different. It offers unlimited cashback from purchases, giving users 1% back on anything bought from Asda and 0.5% on all other purchases.
Richard Hyman, a strategic retail advisor at the corporate finance advisory service Deloitte, believes that supermarkets need to push and capitalise on the loss of confidence in the traditional banks: “It’s not so much a question of whether the retail brands are strong enough as whether trust in the banks has sunk low enough. It seems that with every passing few months, the banks are plummeting further and further.”
If this trend continues, it will seriously alter the face of banking in Britain, and whether the banks can react and change their image in time to stop hemorrhaging customers is yet to be seen.