The man leading Tesco’s charge into the home loans market claims its banking division could soon challenge HSBC’s UK operation by drilling down into Clubcard data to attract customers.
Benny Higgins, chief executive of Tesco Bank – which starts offering mortgages this week – has confirmed that Clubcard data will be driving the business forward.
The loyalty programme has more than 15 million members, and is often credited as being one of the most sophisticated in the world. More than £100m worth of rewards were handed out last year.
Now people taking out home loans will be offered Clubcard points (one point for every £4 in repayments), while it will also use the data as an additional measure to judge applicants’ credit rating.
Higgins said: “It’s about simplicity, about transparency, about rewarding loyalty. The Clubcard relationship lies at the heart of that.
“It serves us in two ways. First we can talk to people in a very timely and appropriate way. The other thing is that through Clubcard data we can make a better assessment of risk.
“We’re not saying ‘Buy a mortgage because you’ll get points’,” said Higgins, “we’re saying we’ll say thank-you.”
Set up four years ago, Tesco Bank now has 6.5 million customers; 3 million of them have a Tesco credit card.
Higgins added: “If we could get our penetration of the Clubcard base on all the products up to the level of our credit card penetration, Tesco Bank would be about the size of HSBC’s UK operation.”
But the home loans offer is not without its critics, with some experts claiming the deals are uncompetitive and lock out first-time buyers.
Ray Boulger at mortgage brokers Charcol said: “A new mortgage lender, especially one with the firepower of Tesco, is a welcome addition to the market. However, any hopes that this would produce a significant increase in competition have been dashed by the unattractive deals on offer.”
