Tesco boss taking on the big banks
Its boss Benny Higgins takes inspiration from the emperor Claudius – but don’t call him a ‘challenger’
MURDER, sexual debauchery, insanity and a vicious struggle for power. That is what is keeping Tesco Bank boss Benny Higgins entertained at the moment.
The head of one of Britain’s newest current account providers is a voracious reader and has just started Robert Graves’ fictional account of imperial Rome – I, Claudius.
No meeting with Higgins, 53, goes without copious references to his reading and it is a habit he tries to encourage in his management team.
‘Curiosity is something that is essential in leadership,’ he says.
Bank managers with imagination, curiosity and broad horizons will doubtless be a benefit to the business. But one hopes the lessons of I, Claudius are not too directly relevant to Tesco Bank, as the group faces a spot of political bother.
Tesco Bank is based in Scotland and along with thousands of other companies is preparing for September’s referendum on independence. Higgins, born in Glasgow and now an Edinburgh resident, is diplomatic but gives a very broad hint that in the event of a yes vote, his company will not cut and run.
‘Scotland is important to Tesco – 30,000 colleagues work for Tesco in Scotland. We’re the biggest customer of Scottish agriculture. Read into that what you will,’ he says.
But September’s vote is not the only thing on his mind. Last month Tesco Bank finally launched its long-awaited current account, having previously been primarily a loans and savings business.
‘Customer reaction has been very positive. We’ve had more applications than we anticipated. We don’t set ourselves targets, but we have to plan operationally for volumes,’ he says.
Higgins says he wants to build market share rather than short-term profits.
‘The whole purpose is to deepen and broaden the relationship with Tesco customers,’ he says.
The bank – once a joint venture with Royal Bank of Scotland but now a fully Tesco-owned operation – thinks it has delivered what customers want from a current account: an interest-paying product, with simpler terms and conditions and lower overdraft charges.
Time will tell if that is what customers are looking for, but the fact that the next product Higgins wants to launch is a basic current account for those who find it hard to get accepted by other banks, suggests he has big ambitions for a largescale banking enterprise. The term ‘challenger bank’ has been used about Tesco and the handful of other relative newcomers, but it is not a word Higgins is keen on.
‘When people say challenger, what do they mean? Who is challenging whom and about what? There may be more competition, but it is people just doing the same things,’ he says, naming no names, but clearly referring to the offshoots of the big banks, such as the newly listed TSB.
‘Tesco is looking to build a bank that will serve customers for generations. We are up against organisations with a shorter horizons, like private equity-backed players.’
Certainly, Tesco Bank no longer feels like a plucky upstart. Last year its total turnover was just over £1billion, generating £194million in trading profits for its parent company.
But it also had to set aside £63million to compensate customers for its misdeeds including the notorious mis-selling of payment protection insurance. It is a small figure compared with bigger banks, but surely it shows that Tesco Bank is no better than the rest?
Tesco is looking to build a bank that will serve customers for generations
The bespectacled Higgins looks sheepish, and points out that PPI mis-selling was ‘an industry-wide issue’. He adds: ‘The PPI charges date back to the joint venture with RBS. All you can say is we are making sure we are focused now.’
Higgins himself can claim some small distinction for his role in the banking crisis of 2007-08.
Just before disaster struck Higgins was head of retail banking at HBOS. He left at the end of 2007 after the bank was seen to be lagging behind its rivals in selling new mortgages. With hindsight his decision not to chase the ever-expanding mortgage market has been seen as wise, although it was too little too late for HBOS.
Today Higgins does not believe that we need any more banks to improve service for customers.
He says: ‘You need enough choice, you need there to be no obstacles to switching accounts and you need transparency on value. I don’t think we need more banks in themselves. There are enough. Switching is easier too.’
But transparency, he says, is still lacking, adding: ‘There’s still a lot of smoke and mirrors, and a lack of transparency on value.’
A maths graduate and former Standard Life actuary, Higgins lives with his wife and six children and enjoys the arts, with of course that focus on literature.
He picked up I, Claudius after reading Graves’ account of his life in Goodbye To All That.
He says: ‘I have pretty broad tastes. I like American writers, like F Scott Fitzgerald and that generation. And I like a really good Raymond Carver short story. I think it can be the equivalent of a beautiful still life.’