UK Post Office to Compete with Banks for Current Accounts
The UK’s Post Office is to step up its challenge to the banks by offering current accounts, following the Office of Fair Trading’s (OFT) claim that the banking market – dominated by the ‘Big Four’ of Lloyds, Royal Bank of Scotland (RBS), Barclays and HSBC – offers little choice for consumers.
It is not the first time that current accounts have been offered at UK post offices. The Girobank was set up by the General Post Office in 1968 and was the first to offer free accounts to individual customers. It was acquired by the building society Alliance and Leicester (now part of Santander) in 1990 and the name was dropped in 2003.
“We have carried out extensive research into the current account market and the findings tell us that customers want simplicity, transparency and good value for money,” said Nick Kennett, director of financial services at the Post Office, announcing the new account. Provided by Bank of Ireland (BoI), the account will be rolled out in parts of the UK over coming weeks before a wider launch next year. Other details are scarce at this stage.
The Post Office has 11,500 branches in the UK already offers a range of financial products in a link with BoI. Other recent entrants to the UK current account market include Metro Bank in 2010 and retailer Marks and Spencer’s M&S Bank in 2012. Tesco Bank, owned by the UK’s biggest supermarket chain, has also announced plans to launch an account soon. However, the OFT review of the £9bn market said that the newcomers were not yet able to provide a “significant challenge” to the established providers, with the ‘Big Four’ still accounting for 75% market share.