It’s hard not to be impressed by TSB’s latest campaign to promote its new Classic Plus current account.
The bank’s new television advert highlights the strengths of the account – namely, 5% interest – by targeting what TSB terms “the usual funny stuff”: that is, the techniques regularly used by banks to attract customers.
We’ve prattled on about these ‘techniques’ before. Banks tend to offer attractive introductory rates (or, as TSB terms it, ‘teaser’ rates) that quietly vanish after a year or so, leaving customers with the same kind of drab, uncompetitive terms they had to endure previously.
With the focus now switching to current accounts following the launch of the new fast-track switching service, this is where the ‘teaser rates’ now operate.
Nationwide, for example, is offering 5% interest through its FlexDirect account, but only for a year. The interest applies to balances of up to £2,500 for twelve months, after which the account reverts to just 1%.
Let’s make no mistake – it’s still a very strong offer. Those with savings of between around £2,000 and £4,000 will struggle to find a better rate anywhere else. Deposits here are fully guaranteed by the FSCS, unlike peer-to-peer sources or investment schemes, and customers retain instant access to their cash.
But after one year, the main perk of the account is gone.
Aware that its own 5% Classic Plus account competes with Nationwide for interest-seeking customers, TSB is driving home the message that the Plus account is not supported by a teaser rate. For now, at least, it’s 5% for good.
So the ad’s cake metaphor is quite apt. It is easy to get fed up at having to constantly chase good offers that neither hang around nor last long enough.
And it’s brave for a bank to run with this kind of transparent, whistleblowing-style rhetoric. The ad demonstrates now the “usual funny stuff” works before explaining how TSB plans to distance itself from it.
On the one hand, TSB gets away with this because it’s a relatively ‘new’ bank, having re-launched as a standalone from Lloyds last year. An established high-street lender taking this approach leaves itself wide open to accusations of double standards. “Why didn’t you offer this before if you’re offering it now?” would be a perfectly fair question to ask.
On the other hand, it’s a strong product. Compare this to RBS (including NatWest), which has tried to demonstrate its new impeccable moral rectitude by axing all products with introductory rates. RBS has now left itself with nothing competitive, which doesn’t do its customers any favours at all.
The only problem with TSB’s approach is that we’ve become a nation of cynics when it comes to banks and banking practices and it’s hard not to feel a little suspicious at its whiter-than-white approach.
The ad is launched alongside a new web hub on Truth and Banking, which offers customers a more transparent explanation of how the new self-acclaimed ‘local lender’ makes money. The animation heading up this section is another injection of transparency into how banks are run.
To be fair to TSB, it doesn’t descend into overkill, constantly bleating that “there’s no catch”. Had it done so, we’d probably be thinking about nothing else but the catch, precisely because a bank told us not to. Nonetheless, we find ourselves asking: “a truthful, straightforward bank? There’s got to be a catch somewhere?”
It’s not as if the bank isn’t anticipating this. Nigel Gilbert, the bank’s Chief Marketing and Communications Offer, is right when he says that customers will want proof of intention through the bank’s products rather than words. We’re all sick of words.
At TSB we have set ourselves the challenge to tackle the issue of trust, not by words but by giving our customers what they want and ought to have – simple, straight forward products and services and transparent information from a bank that is committed to fueling local economies and helping local communities thrive.
It’s a refreshing approach. But before we get carried away, let’s remember: the new 5% Classic Plus account is variable. So, now that TSB has gone to the trouble of educating us about ‘cost awareness’, don’t be too surprised if the rate begins to drop as soon as customer numbers rise.