Sainsbury's winding down their banking business

friolento

In the news today: The supermarket said it planned a "phased withdrawal" from its core banking business, but said the 1.9 million customers of the service would see no immediate changes.

Exodi

Company line was so they can focus more on their core business, but I wonder what the real reason is?

To be fair to them, they're not the only one considering this decision.

DullGreyGuy

Not enough profit for the effort?
Not having the cross sell that they hoped it would have?

Have done work with one of their competitors before, their competitor was happy for Insurance (falls under their "bank") to simply wash its face and felt that they weren't far off being loss leaders (ie they got more supermarket sales because they offered car insurance with a points and a discount if you were in their loyalty club). 

Sainsbury's looked to sell their banking during pandemic, got some enquiries but no firm offers and so the writing was on the cards. 

jimjames

Article here. https://www.bbc.co.uk/news/business-68016628 

It says Tesco are doing the same. 50% of the business was worth £248m in 2014

wmb194

DullGreyGuy said:

Not enough profit for the effort?
Not having the cross sell that they hoped it would have?

Have done work with one of their competitors before, their competitor was happy for Insurance (falls under their "bank") to simply wash its face and felt that they weren't far off being loss leaders (ie they got more supermarket sales because they offered car insurance with a points and a discount if you were in their loyalty club). 

Sainsbury's looked to sell their banking during pandemic, got some enquiries but no firm offers and so the writing was on the cards. 

Yes, it sounds like it doesn't make very much money; from Investors' Chronicle today: "The grocer said that it would offer financial services products in the future through a third-party distributed model, like it does with insurance products. For the six months to 31 August, its financial services arm delivered underlying revenue of £318mn and an operating profit of £13mn."

DullGreyGuy

wmb194 said:

DullGreyGuy said:

Not enough profit for the effort?
Not having the cross sell that they hoped it would have?

Have done work with one of their competitors before, their competitor was happy for Insurance (falls under their "bank") to simply wash its face and felt that they weren't far off being loss leaders (ie they got more supermarket sales because they offered car insurance with a points and a discount if you were in their loyalty club). 

Sainsbury's looked to sell their banking during pandemic, got some enquiries but no firm offers and so the writing was on the cards. 

Yes, it sounds like it doesn't make very much money; from Investors' Chronicle today: "The grocer said that it would offer financial services products in the future through a third-party distributed model, like it does with insurance products. For the six months to 31 August, its financial services arm delivered underlying revenue of £318mn and an operating profit of £13mn."

Contrary to what people thing, consumer retail banking is thin margin stuff

Nardy

These days Sainsbury's seem to have for more ATM machines than mainstream banks have. Losing those will br a shame.

tacpot12

I'm moving my ISA from them in the next tax year as the didn't pass on a rate rise that they should of done. Only customers who called and asked why the rate rise hadn't been passed on were given it! So they are not very good at banking, so perhaps stopping is a good idea for all of us. 

mebu60

Sainsbury's Bank, like many others, generally bring out a new issue for a rate rise. This has been an established practice for a long time. It has the benefit to the customer of capitalising the interest which gets added into the new issue. Many see this practice as too much faff. In Sainsbury's case it certainly generates a lot of unnecessary paper! 

Beddie

Over many years they have tried to make this work. They had leaflets everywhere in the shops, they had banking areas in some stores, they bought out Bank of Scotland from the joint venture, but I doubt they ever made much money. They already sold the mortgage book and just need to get rid of the rest.

Stick to what you know and try to do it well, Sainsbury's.

boingy

They could probably reduce their costs by getting rid of that ridiculous thing where you have to keep opening new accounts and closing old ones to keep up with their interest rates.