Will TSB take banking back to the future?

Branch of TSB
TSB hasn't been on the high street since 1995
"TSB is drawing on its worthy approach to banking as a way of persuading people of its benefits. Will that be enough to tempt the great British public?"
  • | by Tom Cropper

Grab someone from the 1980s and transport them to the present day and they’ll struggle to notice the difference. The Transformers are in toy shops, Bowie’s released an album and there’s even talk of a Bros reunion.

Plus, TSB is back on the high street.

That’s right, in the latest ‘80s comeback, ‘the bank that liked to say yes’ is back and it’s on a mission – it’s come to save banking.

Sporting the catchy slogan ‘welcome back to local banking’, TSB announced its return with a snazzy new advertisement. The minute-long slot tells the story of the bank’s founder, Reverend Duncan, a kindly man who decided to found a bank with the sole purpose of helping ordinary, hard-working people – a bit like Father Christmas, but with a degree in economics.

The new-look TSB has pledged to get back to basics. Gone is the old-style casino banking model of some of the big high street names that used deposits to play the stock market. In its place is good, old-fashioned retail banking – deposits will be used simply to provide loans for local businesses and individuals.

Most significantly of all, this is not a scrappy, small upstart. In total, Lloyds transferred 631 of its branches to the TSB name, along with their customers. Overnight, millions of Lloyd’s current account holders found themselves aligned with what is now the UK’s seventh-largest bank.

As ever there will be those who consider this new-look TSB and its bold vision with cynicism – the kind of people who normally trust bankers about as far as they can spit out a rat.

And, as ever, the sceptics may well be on to something.

The emergence of TSB comes not through an idealistic sense of mission, but an edict from the EU who insisted on the sale after the Lloyd’s bail out.

The branches had been set to go to the Co-operative until it noticed a titanic hole in its own accounts and swiftly exited the deal.

Instead, Lloyd’s dusted down the old TSB name and sent it out into the big, bad world. The branches were quickly re-labelled with plans in store to float on the stock market in 2014.

However, what concerns customers most – both current and potential – is what the bank actually offers.

Existing Lloyds customers will want to know how products will be affected and how easily they can change back. 

In the short term the only difference should be the name on the bank. Mortgages, current and savings accounts will continue as normal.

However, once the bank is floated in 2014 it will have new owners who will be free to shape their own products.

Any customer can switch back to Lloyd’s and around 4,000 have already done so, with 1,000 making the journey in the opposite direction.

As for new customers, what tempting new deals are there to bring them into the TSB fold?

The answer to that is not many. TSB has not introduced any flash new offer such as the Halifax’s £100 for a new account holder.

The banking products are very much in line with what you’ll find elsewhere. The basic current account offers interest rising to 3% depending on how much you pay in, while the savings rates are nothing to write home about  - assuming you’re the kind of person who habitually writes home about savings accounts, in which case you have our sympathy.

Instead, TSB is drawing on its worthy approach to banking as a way of persuading people of its benefits. Will that be enough to tempt the great British public? Only time will tell.