BSA 2011: Retailers will blow mutuals out of water

Robyn Hall

May 5, 2011

This was the prediction made today by Neil Tomlinson, consulting partner and head of banking at Deloitte, at the Building Societies Association annual conference in Birmingham.

Tomlinson said the insight that brands such as Tesco, John Lewis and Sainsbury’s have into their customers would change the way products in retail financial services are designed and priced and that mutuals relying on customer loyalty would be given a rude awakening if they didn’t start trying to learn more about their customers.

He told delegates: “If you think that trust and service and convenience and your brand is a differentiator, I think you need to think again.

“Customer insight is going to be a critical part of winning because it will enable successful organisations to develop products and customer propositions that are tailored and provide a much better service and level of satisfaction than we’ve seen before.”

He said big retail brands will pose a big risk to mutuals and could even change the way protection policies are underwritten.

He added: “They know what their customers have in their shopping baskets, whether they like butter or margarine. Imagine they have these customers for retail financial services as well.

“Picture a scene where they are able to assess and underwrite your insurance and price based on the things you have in your basket. Not only the form you fill in when you apply for life insurance, but whether you eat red meat and drink a lot. They will also price for risk on mortgages and secured loans.

“Think about the loyalty cross sell an organisation like that might be able to your customers who are buying their weekly shop.

“Think about the brand values of the likes of Tesco with ‘every little helps’, the promise to customers, the distribution, the convenience of where their stores are – they will really start to make a big impact on the market…and will challenge the models we hold dear.”

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