PO to challenge banks for top spot in financial services

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Post Office to challenge major banks for top spot in financial services

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The Post Office is in for major changes this week as the aged company sets its sights on one of the top spots in Britain's financial services industry.

According to Sky News, the Post Office is hoping to become one of the country's leading financial services providers and will announce on Monday its plan to amalgamate financial products under Post Office Money.

The Post Office provides insurance, mortgages and savings accounts. It is hoped the Post Office will become a leading challenger on the high street competing with the five biggest banks.

The Post Office is still a major presence on the high street with 11,550 branches and roughly 3m customers. Speaking to Sky News, Nick Kennett, director of financial services at Post Office Money, said:

Consumers want a choice about how they manage their money; at Post Office Money our customers have access to an unrivalled network as well as online and phone, combined with multi-award winning products.

We have been listening to our customers and know that people are facing some big financial decisions, and through the new Post Office Money we want to become their first choice when thinking about a mortgage, credit card or a safe haven for their savings."

Kennet wants to double the size of Post Office money by 2020. Earlier this month, insurgent Metro Bank cut its losses to £8.9m in the final quarter of 2014 as it edged towards profitability.

The bank, set up by Vernon Hill in 2010, has been championed as an alternative to Britain’s big four lenders – Lloyds, RBS, Barclays and HSBC – which account for more than 75 per cent of Britain’s 65m personal accounts and provide nine out of every 10 business loans.

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The Post Office will this week publicly target becoming one of Britain's leading financial services providers by the end of the decade, amid ministerial support for its vast network to play a greater role in banking provision.

Sky News has learnt that the state-owned entity will announce on Monday that it is to amalgamate its range of financial products under a new umbrella brand, Post Office Money.

The move is designed to promote the Post Office as a leading 'challenger' brand in financial services at a time when the big five high street banks are reducing the number of branches they operate.

On Tuesday, Vince Cable, the Business Secretary, will meet major lenders to thrash out details of additional efforts to allow bank customers to make more use of the Post Office’s 11,500 outlets.

The Post Office currently offers products including insurance, mortgages, savings accounts and foreign exchange, some of which are provided through a partnership with Bank of Ireland.

Further products, including a new range of current accounts, are expected to follow.

Speaking to Sky News, Nick Kennett, director of financial services at Post Office Money, said:

"Consumers want a choice about how they manage their money; at Post Office Money our customers have access to an unrivalled network as well as online and phone, combined with multi-award winning products.

"We have been listening to our customers and know that people are facing some big financial decisions, and through the new Post Office Money we want to become their first choice when thinking about a mortgage, credit card or a safe haven for their savings."

The Post Office network has around three million customers within its banking and insurance business and nine million people use its foreign currency exchange services, while 2,500 of its branches open on Sundays.

Mr Kennett acknowledged that the target of doubling the size of the Post Office Money business by 2020 was ambitious but said its principles of fairness and accessibility were major advantages at a time of widespread consumer mistrust of major banks.

The details of Government-led efforts to strengthen the Post Office’s role in the provision of banking services are expected to become clear after Tuesday’s meeting.

Mr Cable has been angered by the decision of lenders including Barclays, Lloyds Banking Group and Royal Bank of Scotland (RBS) not to renew a commitment not to close branches when they are the last one remaining in a local community.

The banks argue that rapid technological changes, with customers now performing billions of transactions remotely each year, have rendered such a pledge obsolete.

Mr Cable told Sky News earlier this month: "There are a lot of people who are not connected who also need to do basic banking functions, and we mustn't be in a position where large numbers of villages and other small communities are effectively being cut off from banking.

"If the banks cannot perform that service we need an adequate substitute, and they've got a responsibility to help provide it."

He added that the banks should "think about… how to address any additional financial and operational burdens on the Post Office", implying that they could face a substantial bill for any new programme.