Deloitte says supermarkets will compete with mortgage lenders by using sales information to tailor products for individual borrowers.
Speaking at the BSA annual conference in Birmingham last week, Deloitte head of retail banking Neil Tomlinson said supermarkets have access to information about risk factors such as alcohol intake and whether a customer smokes.
Tomlinson said: “The supermarkets can analyse what is in our shopping basket. Picture scenes where they are able to assess and underwrite your insurance risk and price based on goods you have in your basket, whether it be for a mortgage or an unsecured loan.
“If you think about supermarket loyalty cards, the distribution, the convenience of where the stores are, they really will start to make an impact if they get their act together.”
Tesco has announced it will enter the mortgage market later this year, while many other supermarket chains, including Asda, Sainsbury’s and Marks & Spencer, offer financial products.
Tomlinson said lenders will have to focus on their customer proposition to compete with the likes of Tesco.
He said: “For building societies, customer insight is going to be a critical part of winning the battle, because it enables organisations to develop products and customer propositions that are different that are tailored and that provide a much better service and level of satisfaction than we have seen before. Just think about whether your organisation has the capability, right now, to do anything near that.”
MoneyQuest managing director Simon Jackson says: “Supermarkets have a brand that works in the grocery space but I do not think that it transfers well into financial services.”