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Supermarkets to enter banking market, says Defaqto

Tue, 05 May 2009

Financial research company Defaqto has revealed in a new report that supermarkets may be able to pose a real threat to banks due to their branding .

The report, Retail Banking : Challenging Times, shows that supermarkets, some of which already provide a banking service, have strong consumer brand recognition and this could give them an advantage over traditional banking firms .

Supermarkets may also be able to provide free full service current accounts for those who spend a certain amount in their grocery stores as the majority of the banking industry moves to a paid-for current account model during the recession .

David Black, principal consultant of banking for Defaqto, said: "This would assist the effective lock-in of such customers to buy the majority of their groceries with that supermarket, and also incentivising people to switch to their current account ."

The banking arm of supermarket the Co-operative recently announced its merger with Britannia Building Society to offer mortgages, savings and investments based on the joint knowledge of the two companies.
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