Recently, a statement has been announced by Tesco Bank regarding the closure of all its current accounts due to being least utilized by their customers.

According to the Bank’s assessment, only 12% of its current account is getting their client’s response as their primary records.

The bank explained that most of the accounts are experiencing “limited activity” while others are being utilized for “different purposes, for example, a funds pot.”

This above-mentioned declaration came into light after the bank detailed a £175m loss in April, compared with a £193m profit in the previous 12 months.

Client’s Alternatives

The bank expects to cease all of its 213,000 personal current accounts on 30th November while its current accounts had already been closed to new businesses in December 2019.

Clients can get the letters in the upcoming two weeks as a notification about the closure of their current account, as per the bank.

As per Gerry Mallon, chief executive of Tesco Bank, “Not only this, the bank will aid clients to find an appropriate alternative depending on their requirements.”

When it comes to the alternatives, it includes shifting clients to a new current account provider by using the Current Account Switching Service (CASS) or shifting their available balance to a Tesco Bank savings account.

According to the bank, it has discussed with its customers regarding their choices of not changing to a new current account to move any structured incoming or outgoing payments to an alternate account and to ensure a zero balance in their account by 30th November.

As per Mallon, “Customers are effectively transforming their ways of purchasing & handling the money continuously and we strive to develop products & services which cater to the requirements of Tesco Customers. ”

He further added, “Since only a few customers are utilizing our current accounts as their primary accounts, we are looking forward to encouraging them to figure out an appropriate alternative focused on their needs. We are going to pay our keen attention to facilitate any weak clients and those who are looking for financial aid. ”

Supermarkets - with their convenient branch networks - were once considered the principal threat to the supremacy of High Street banks.

They considered themselves as the stopping place for much more than groceries, and that covered financial services.

That vision was disrupted by rigid regulations, the diminishing significance of branches to digitally-served clients, and the rise of the agile, new-application-based banks.

Banks expect customers to stick with their primary accounts. Not least, as they can bring cash flow opportunities when clients go overdrawn. The incentives they are providing for changing to a primary account make that self-evident.

That was uncommon for Tesco Bank clients, so it is getting rid of these accounts. Advanced challenger banks are trying to cope with the same complexities, with a purpose to finally break the tight grip of the huge High Street banking brands.

In recent years, Tesco Bank has been decreasing its financial services activities, having once considered it to be a chance for fast development.

It sold its mortgage book two years ago and now it is on its way to close current accounts.

It follows its retail store M&S, which is shutting its current accounts in August and has already closed its in-store branches.

M&S Bank, which is a joint endeavor between the retailer and HSBC, has developed over three million clients.

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