Tesco Bank Challenges High Street Rivals
Tesco Bank has launched its first current account, claiming it will bring competition back to a market offering "ridiculously poor value" to consumers.
The bank's chief executive Benny Higgins said its first foray into the current account market would challenge the dominance of the major players on the high street despite having only a minimal branch presence.
Tesco said it was launching an account without the "smoke and mirrors" offerings, such as charges and introductory deals, used by others.
It would give 3% interest on balances but would charge a £5 fee unless holders paid in £750 a month.
The account, which Tesco said could only be opened and managed online but with telephone support, would also allow deposits to be paid at 300 Tesco stores.
It aims to capture business from the six million existing customers who already use its savings, insurance and loans but also has its parent supermarket's 16 million Clubcard holders also in its sights.
Debit card spending on the current accounts will offer Clubcard points, both at Tesco and elsewhere.
Mr Higgins said it would bring a "fiercely competitive" customer focus from the retail sector which did not exist in banking.
He saw Tesco's offering as a rival to the so-called 'big four' of RBS, Lloyds, HSBC and Barclays - brands which have endured a public backlash for mis-selling in the wake of the financial crisis.
Another challenger bank will be TSB, which is being spun off from Lloyds in a flotation.
Mr Higgins said: "It is a market dominated by smoke and mirrors and we have tried to be as transparent as possible.
"The vast majority of current accounts are languishing with ridiculously poor value.
"There is still very little switching taking place in the UK and it's because people think that all the banks are the same."
Tesco chief executive Philip Clarke added: "Customers have told us that in banking they want us to deliver in the same way we do for millions of customers across the UK every day."