We'd rather bank with John Lewis
New research shows we'd prefer to bank with John Lewis, Waitrose or Amazon instead of our own bank.
The high street banks are not in favour at the moment. The recent string of scandals hasn’t helped and is now pushing customers to look for other ways to bank.
Marks and Spencer and Asda recently launched financial products and now three quarters of consumers have said they would trust John Lewis with their money over the traditional banks in a survey by USwitch.
Waitrose is also highly rated with 46% saying they would happily bank there, while a quarter picked Amazon and 23% went for Debenhams.
Now as a fan of the shop, I can see why people would see John Lewis as a trusty brand. However, there are a lot of other financial institutions I’d look at first before heading to the shops.
Alternatives to the traditional banks
Savers and borrowers in the UK are getting a raw deal from high street banks. Low interest rates mean there's little chance of making a decent return on your savings and it’s now harder than ever to borrow. Combine this with the Libor scandal and all the recent online banking problems and it’s not hard to see why we’re looking elsewhere.
When asked in the poll, 69% of us said supermarkets and retailers offer good customer service, but only 37% could say the same about the banks.
Switching banks to get a better deal is something we are big fans of, but in reality very few people actually shop around. However, 80% of those asked said they would consider swapping to a new financial entrant, such as a supermarket, a rise from 49% a year ago.
New entrants to the market
Every time a new financial institution arrives it’s good news for consumers as it means the banks have to fight a littler bit harder for our custom. Sainsbury’s, Tesco and Asda all now offer things like credit cards and savings accounts which are at least the equal, if not even better than those on offer from banks.
However I’m more interested in some of the less well known names in this sector.
Once known as the ‘poor man’s bank’ credit unions are now a serious contender to the high street banks. They are not-for-profit institutions which are are owned and controlled by their members. As well as getting a say in how it’s run, there are also competitive products on offer such as savings accounts, loans, current accounts and mortgages.
Across the country thousands exist and to join one you must meet the requirements of what is known as a ‘common bond’ – such as living in a certain postcode or working for an employer.
Ratesetter, Zopa and Funding Circle are the big players in the peer-to-peer market which has seen great success in the past year. These websites allow individuals to lend and borrow from each other, at a pre-determined interest rate.
Each one is slightly different. For example Funding Circle only lends to small businesses, while Zopa and RateSetter deal with individuals. Either way, the returns on offer are far better than what you'd get from a bank.
Unfortunately they’re not currently covered by the Financial Services Compensation Scheme (FSCS). This means that if they went bust you would not be able to claim your money back. That said, a number of the sites have a plan for this and keep a certain amount of cash in reserve.
Check out Why I've started saving with RateSetter for more.
So what do you think about alternative methods of banking? Would you prefer to trust John Lewis with your cash rather than a traditional bank? What other big-name brands would you trust with your money?
Let me know in the box below.