Yahoo Finance Post Office challenges banks with current account
With branches in rural communities and in stores such as WH Smith, banking could become far more convenient.
The Post Office is set to take on the high street banks with the launch of a current account.
The account will initially be available in a small number of branches this spring, before it’s available across all 11,500 of its branches, including those in rural communities and in stores such as WH Smith.
The roll out will take more than a year, but with 99.7% of people living within three miles of one of its branches, it has the potential to make banking easier for many.
The move follows in the steps of M&S Bank current account where customers can bank in branch during store hours, which are longer than traditional banking hours.
The Post Office is now expected to beat both Tesco Bank and Virgin Money in launching a current account that will challenge the big banks’ stranglehold on the market.
Critics celebrated the increased competition for customers.
“The Post Office current account should have mass market appeal due to its large customer base and ease of access, so I expect this account will be very popular,” said Kevin Mountford, head of banking at MoneySupermarket.
Details of the new account, such as interest rates, features and charges, have yet to be announced.
However, Dr Peter Hahn, of Cass Business School, is sceptical. He commented: “It is hard to see how the Post Office is going to differentiate itself in an already crowded field.”
[Related link: Compare current accounts]
As the Post Office doesn’t have a banking licence, the account will be provided by the Bank of Ireland, which also provides the provider’s mortgages and savings range.
The current account is the latest step in the Post Office’s ambitious plans to take a larger slice of financial services customers. It already has 3 million customers, £17 billion in savings and a fleet of 2,100 ATMs.
Nick Kennett, the Post Office’s director of Financial Services, said: “The Post Office is undertaking a significant transformation, providing more and more essential services to our customers across mails, government and financial services
“We’ve carried out extensive research into the current account market and the findings tell us that customers want simplicity, transparency and good value for money.”
Customers can register their interest in the new account on the Post Office website.
The launch comes at a time when the financial crisis and subsequent mis-selling and corruption scandals have left many customers disillusioned with the banking stalwarts.
Last month customers of Royal Bank of Scotland and NatWest were left without access to their cash for the second time in nine months after a system’s glitch again locked them out of accounts.
The launch also comes at a time when plans are afoot to make it much easier for people to switch current accounts and shake up competition in the sector.
Changes to make it easier for people to switch current accounts are being introduced this September by the Payments Council.
[Related link: Compare current accounts]
They mean that incoming payments will automatically be redirected to the new account and the time it takes to fully change accounts will be cut from around 18 days to seven working days.
