Veronika Thiel is a researcher and project manager on nef’s Access to Finance team.

The ClubCard creates a huge database about customer spending habits. Tesco's new current account will only add to the supermarket's knowledge about the way we shop.
Yesterday, Tesco has announced plans to provide current accounts in thirty of its stores. If this pilot scheme is successful, then the supermarket giant will roll-out banking services nationwide.
In principle, this isn’t a bad move. Britain’s banking sector isn’t really a competitive one anymore. According to an Office of Fair Trading report written before the Lloyds TSB-HBOS merger, 79 per cent of current accounts held by four high street banks. Any injection of competition into the market is, therefore, a welcome thing. And with 2,115 stores across the country, Tesco outstrips the network reach of any single bank.
But those 2,115 are also turning our high streets into Clone Towns, robbing the UK of its retail diversity. And although Tesco has successfully monopolised the nation’s grocery shopping, it shows no signs of slowing down. Tesco is quickly becoming a cradle-to-grave company. You can buy your baby food, school uniform, kitchen appliances, computers, books, internet access and telephone (both mobile and landline), fill up your car and get it insured, get a health check and prescription and, yes, even plan your funeral at Tesco. In many communities, the only pharmacy is in Tesco. It’s becoming the one-stop-shop for your entire life.
In this light, Tesco’s banking plans hardly look like a diversification of the market or the creation of some healthy competition.
Tesco also has one of the biggest databases storing customer information. If you use your Tesco ClubCard regularly, then you can be sure that the supermarket has a wonderfully clear map of your spending habits: what you buy, where you buy it, when, and how often.
Now that they’re throw banking services into the mix, they’ll have another database at their fingertips. My bank can quite easily tell what I do from my transactions: whenever I pay with a card, they know what I bought. That’s why I quite often use cash. I don’t have loyalty cards: they save you very little money, but they do make you a perfectly observable consumer.
Now, I’m not suggesting that Tesco will breach customer confidentiality or abuse the data that they collect. Due to banking rules, they will be unlikely to be able to match a bank account with the data collected on a Tesco ClubCard.
Nevertheless, the information that Tesco will hold about a person with a ClubCard and a current account would reach frightening proportions. This concentration of information is worrying. If you think that the Government holds way too much data about your person, then think again. Tesco is likely to know more about you than your local council or your GP. And if you are lured by their offer of a current account, they will soon know even more.
Whilst Tesco’s move into banking is, on the face of things, a welcome addition of diversity to the retail banking market, it also is the opposite: concentration. Concentration of the provision of goods and services in one company, and concentration of data collection.
Let’s make sure that Tesco isn’t the only new bank on the block. Support our campaign to offer banking services at the Post Office. Write to your MP and tell them to support Early Day Motion 1082. Chose to bank at a place that you trust and that will also support your local community: the Post Bank.
UPDATE: You can now sign a petition supporting the Post Bank.
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5 April, 2009 at 11:28 am
Sign the Post Office banking petition « MAKE WEALTH HISTORY
[…] the government doesn’t do it, Tesco looks poised to provide banking services instead. While this may reach a wide sector of society and be very […]
5 April, 2009 at 12:36 pm
Nickoli
It’s doubtful that Tesco would even provide any new competition into banking anyway: its current Tesco Personal Finance products are all RBS products rebranded and sold through Tesco.
14 April, 2009 at 11:41 am
Veronika Thiel
Nickoli,
you are right – up until now that was the case. Although details aren’t clear yet, however, I suspect Tesco will apply for a separate banking license now, i.e. they would be independent from RBS. Do you know more about it?
14 April, 2009 at 4:52 pm
Nickoli
No, I don’t know any more than I’ve seen here and on one or two other news sites that picked up the story: I just expected that as they’ve crept into personal finance using RBS so far, they would continue to do so. RBS seem ready to provide this type of service: “The ONE Account” and Virgin money are also RBS rebrandings, and Sainsbury’s has a similar arrangement with HBoS.