The Post Office is to challenge Britain’s scandal-hit high street banks with the launch of a current account.
It will target the millions who use its branches every week as well as customers at high street rivals who are unhappy with service and payment protection insurance mis-selling.
The new account - to be available over the counter - could also help boost the ailing fortunes of branches in its 11,500-strong network, some of which are under threat of closure.
Kevin Mountford, banking specialist at price comparison website Moneysupermarket said:
‘It is great news there will be a new competitor to shake up the High Street giants, and good timing to ride on a wave of anti-bank sentiment where people are looking for a trusted alternative.’
The Post Office is the latest contender to pitch into the battle raging on the high street for current account customers.
Banks are offering freebies such as £100 cash payments to win lucrative new current account holders ahead of new rules to be introduced this September, which will make it easier to move to another bank.
At the moment only three in every 100 customers switch accounts each year because they are scared the move will go wrong, and lose their money.
An Office of Fair Trading report recently found three-quarters of people had never switched bank – and three-quarters of these had never even considered it.
The new switching rules will ensure it only takes seven days to do so - instead of 18 today - and automatically sweep any money wrongly sent to somebody else into the right account.
Virgin and Tesco have already said they plan to unveil their own current account deals once these changes have been ushered in.
Gary Greenwood, a banking analyst at Shore Capital said: ‘Current account customers are difficult to win. People tend to stick with their bank even if they have been treated badly. The question is whether the Post Office can make them a good enough deal to tempt them to move.’
The new account will be on sale in just a few weeks time in select branches.
It will then be rolled out widely across the Post Office’s branch network next year.
Full details have yet to be
revealed and it is not clear whether the Post Office will demand a
monthly fee, like M&S, which charges up to £20 a month.
It could most benefit those living in rural areas ignored by banks and the elderly who find it hard to get to a bank branch.
Even if the account is free it could prove lucrative for the Post Office, allowing it to sell more loans, credit cards and insurance to customers who sign up.
The Post Office already offers a card account to customers, but this is only for the payment of benefits.
A Post Office spokesman said there were no plans to merge it with the new current account.
The Post Office first mooted launching a current account in 2009 but put its plans on ice following the banking crisis.
The new account will be offered in conjunction with Bank of Ireland which already operates the Post Office’s mortgages and savings accounts.
The Bank of Ireland current account, aimed at customers in Northern Ireland slashes offers perks such as cut-price overdrafts for those who pay in more than £1,500 a month.
It will target the millions who use its branches every week as well as customers at high street rivals who are unhappy with service and payment protection insurance mis-selling.
The new account - to be available over the counter - could also help boost the ailing fortunes of branches in its 11,500-strong network, some of which are under threat of closure.
Kevin Mountford, banking specialist at price comparison website Moneysupermarket said:
‘It is great news there will be a new competitor to shake up the High Street giants, and good timing to ride on a wave of anti-bank sentiment where people are looking for a trusted alternative.’
The Post Office is the latest contender to pitch into the battle raging on the high street for current account customers.
Banks are offering freebies such as £100 cash payments to win lucrative new current account holders ahead of new rules to be introduced this September, which will make it easier to move to another bank.
At the moment only three in every 100 customers switch accounts each year because they are scared the move will go wrong, and lose their money.
An Office of Fair Trading report recently found three-quarters of people had never switched bank – and three-quarters of these had never even considered it.
The new switching rules will ensure it only takes seven days to do so - instead of 18 today - and automatically sweep any money wrongly sent to somebody else into the right account.
5 FAVOURITE CURRENT ACCOUNTS
| Bank | Incentive | |
|---|---|---|
| 1 | First Direct | £100 to switch |
| 2 | Nationwide | Free travel cover |
| 3 | Santander | 3% cashback |
| 4 | Barclays | Choose add-ons |
| 5 | Halifax | Earn £5 a month |
Gary Greenwood, a banking analyst at Shore Capital said: ‘Current account customers are difficult to win. People tend to stick with their bank even if they have been treated badly. The question is whether the Post Office can make them a good enough deal to tempt them to move.’
The new account will be on sale in just a few weeks time in select branches.
It will then be rolled out widely across the Post Office’s branch network next year.
Virgin
(left) and Tesco (right) have already said they plan to unveil their own
current account deals once these changes have been ushered in
It could most benefit those living in rural areas ignored by banks and the elderly who find it hard to get to a bank branch.
Even if the account is free it could prove lucrative for the Post Office, allowing it to sell more loans, credit cards and insurance to customers who sign up.
The Post Office already offers a card account to customers, but this is only for the payment of benefits.
A Post Office spokesman said there were no plans to merge it with the new current account.
The Post Office first mooted launching a current account in 2009 but put its plans on ice following the banking crisis.
The new account will be offered in conjunction with Bank of Ireland which already operates the Post Office’s mortgages and savings accounts.
The Bank of Ireland current account, aimed at customers in Northern Ireland slashes offers perks such as cut-price overdrafts for those who pay in more than £1,500 a month.