A decade of supermarket banking

TEN years ago supermarket banking was born, helping transform how and when people buy their financial products.

Most people now would not hesitate to apply for travel or life insurance when buying their groceries, and many even take a mortgage from a supermarket.

Sainsbury's was the first to enter the market, closely followed by Tesco Personal Finance - a joint venture between the supermarket and Royal Bank of Scotland - which celebrated its tenth anniversary last month.

Robin Bulloch, chief executive of Tesco PF, headquartered in Edinburgh, told The Scotsman how the market had developed in the past decade.

He said: "The main supermarkets in the UK are all providing financial services to some degree. In the case of Tesco PF, we have been the most successful to date in terms of both customer numbers and profit. Most of our business is done either over the phone or through the internet. Of course the stores remain a very important element in raising awareness of our products and services through promotions and leaflets."

The idea of boosting product take-up in stores is being pushed at a "bank branch" in a flagship Tesco outlet in Silverburn in Glasgow - after RBS found this type of offering worked well in the United States.

Bulloch believes any issues over the credibility of buying financial products from a supermarket are long gone.

"We now sell more than 25 banking and insurance products and in some areas we have quite significant market shares. This year we have launched a number of new products, all of which have been well received by our customers."

Credit cards have proved one of the most popular products. Tesco PF has just under two million credit card customers, who can earn Clubcard points on the amount they spend.

Recently the supermarket chain entered the burgeoning price-comparison website sector with the launch of Tesco Compare, initially for car insurance products.

Bulloch said: "Customers have told us they want more help in choosing their car insurance and want to compare more than just price, so that's what we've given them. We will watch with keen interest how popular this service becomes. If there is demand from our customers then we will of course add more products."