The Post Office will provide a new competitor to Britain's established but unpopular high street banks, offering current accounts to customers at its 11,500 branches across the UK from this spring. The government-owned Post Office said its move to add current accounts - the top prize for British banks looking to broaden sales to customers - to its existing range of money products would turn it into one of Britain's biggest financial services providers.
It already offers savings accounts, insurance and foreign currency exchange to around 3 million customers and has savings deposits worth about 17 billion pounds ($26 billion). Britain's biggest five banks - Lloyds, Barclays, RBS, HSBC and Santander UK - control 83 percent of retail accounts and lawmakers and regulators are keen for competitors to emerge.
The 'Big 5' have been plagued by scandals, ranging from the mis-selling of insurance products and complex hedging products to the fixing of benchmark interest rates, eroding public confidence in the industry. "Customers want simplicity, transparency and good value for money. We can provide this through the most convenient and accessible retail network in the UK," Nick Kennett, Director of Financial Services at the Post Office, said in a statement on Thursday.
Consumer group Which? said it welcomed the emergence of challengers that will "increase consumer choice and tackle the unhealthy dominance of the biggest banks". But other observes doubt the Post Office will be able to make serious inroads into the market. "It is hard to see how the Post Office is going to differentiate itself," said Peter Hahn, who teaches finance at London's Cass Business School. Metro Bank became the first new high street lender to have emerged in the UK for over 100 years when it opened in 2011.