The Mail on Sunday

Supermarke­t giant targets customers who have lost faith in the banks

- By LISA BUCKINGHAM

TESCO has revealed for the first time that it ultimately expects to gain a ten per cent share of Britain’s financial services market, making it roughly as big as Abbey and more than half the size of Barclays.

The supermarke­t giant, which already sells insurance and some savings products, plans to launch mortgage deals by the end of this year, with a current account to follow in 2011.

Senior executives have never before put down a marker for the group’s financial services ambitions, though they are keen not to be held to targets regardless of market conditions. ‘We might be a bit bigger than ten per cent in some areas and a bit smaller in others, but that is roughly where we expect to end up,’ said a top Tesco source.

Though the company plans to build its financial services presence largely by exploiting demand from its 15 million Clubcard holders, it has about 20 million shoppers each week and expects to pick up business from those who have lost faith in traditiona­l banks.

The retail colossus has been reviled by antisuperm­arket protesters, but banks are now the public’s favourite hate figures and Tesco believes this gives it and other new finance providers such as Metro Bank and Virgin an opportunit­y to steal market share.

Tesco’s financial services business started as a joint venture with Royal Bank of Scotland, but has been brought in-house.

The company is opening bank branches in many of its 2,000 stores and already has about £5 billion in savers’ deposits. It has about eight per cent of the credit card market and is one of the country’s biggest motor insurers.

Executives are keen to stress, however, that growth of the financial services business will be cautious, with most finance for mortgages coming from savings deposits.

Tesco will be keen not to overreach with its home loans business for fear of creating bad publicity if it is forced to repossess homes.

Tesco intends to use its Clubcard as a

loyalty benefit for its financial customers as well as for its shoppers.

Tesco’s financial services, which should provide higher profit margins than the group’s intensely competitiv­e mainstream grocery business, is aiming to reward customer loyalty through Clubcard points as well as to use informatio­n gathered on customers to help target potential services.

At present, Tesco is concentrat­ing on putting all its financial business onto a single IT platform and once that is done it will launch a basic mortgage, probably before the end of the year.

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