The Post Office is pinning its hopes on new branding to remind customers that it’s a fully-fledged provider of financial products and services. It’s aiming to be the next main challenger to major banks by 2020 – but can it be successful?
The iconic institution has launched the new ‘Post Office Money’ brand this week in Islington, which will become the new platform for its financial products.
The rollout will be made to 300 branches. It follows the expansion of the Post Office’s new current accounts across the country, following an initial trial in the East of England.
The Monopoly is Waning
The new branding will associate the Post Office with financial products in the same way as other multifaceted brands such as Virgin.
And the Post Office’s vast branch network, which outnumbers all British banks collectively, should put the 350 year-old institution in a strong position. Major banks continue to close branches in local communities as increasing numbers head online to apply for and manage their financial products.
But the demand for local branches has not evaporated entirely. A recent white paper drafted by the statisticians at TNS Global notes that customers who choose to switch banks are identifying convenience as one of the major factors in their choice of new destination.
It’s clear that the Post Office wishes to exploit its network and its outreach. Those are by far its biggest assets.
The odd thing is that it needs new branding at all. It’s arguably an admission of failure if it truly believes that people are not aware of everything it provides. Still, it’s not too late to get in on the act, and it’s only been a real banking player for a few months.
Another point of interest arising from TNS’s report is that although consumers are still not trampling head-over-heels to switch their products, the so-called ‘monopoly’ of the big banks is starting to unravel. Those who are looking to switch are doing so with a degree of interest in what their next destination has to offer.
In other words, people are starting to realise that financial products are not ‘vanilla’.
There are differences between savings accounts that have temporary bonus rates and those that don’t. A mortgage with a standout rate and a colossal setup fee is not necessarily better value than one with a higher rate and a lower fee. And current accounts are the trump card at the moment. Interest, cashback, complimentary insurance, monthly rewards – they’re all on offer.
All Show Without Punch?
This is the Post Office’s achilles heel – two of them, in fact – its offers, and its service provider. The service will still be underpinned by the Bank of Ireland, which is not shy of controversy. In 2013, it hiked its tracker mortgage rates overnight. Buy-to-let customers in particular were stunned by a rise from 1.75% over base to 4.49%. Despite a small concession afterwards, it still has some trust to claw back.
And then there’s the offers themselves. Certainly, where the current accounts are concerned, there’s little to trouble the most attractive offers out there – Santander and Nationwide among the most popular.
The free account offers a reasonable rate on overdrafts, at 14.9%, but little else besides. Those after greater rewards for switching banks will find much more attractive offers elsewhere. As if to hammer home the point that branch access is central to the Post Office’s operations, its current accounts are not available to open online.
It has a better track record on mortgages, despite the Bank of Ireland’s past indiscretions. Here, the rates on offer tend to be more competitive relative to the market leaders. Occasionally, the Post Office will attempt to punch above its weight and muscle into select loan-to-value sectors.
Where it does tend to shine is insurance. Though rarely the cheapest for travel insurance, year after year customers continue to vote for the Post Office as the best travel insurance provider year after year. In an age when it’s easier to name and shame than ever before, you would dare to believe that so many people could not be wrong.
The Post Office has been dubbed a ‘sleeping giant’ in the battle for customers. This latest move shows the giant to be waking and with menace. But while it’s sluggish, it’s still easily avoided, and it will have to do better if it wants to entice the digitally literate age to side with it as well as those who just simply need access to branches.