Don't get into a market where your customers want to hit you

According to a Mintel report quoted today in the Economist, "Britons are far more satisfied with the service they get from their supermarkets than from their banks". The Economist draws from this the lesson that Tesco should get deeper into retail banking, competing to offer current accounts.

Of course the opposite is the case.

It's not that supermarkets are good at customer service and retail banks are bad, so that for example Tesco will be able to magically do well something at which Barclays and HSBC are failing (in fact, HSBC's First Direct won a top award for customer service only last year). It's that dealing with a retail bank, like dealing with broadband providers, public transport or most branches of the government, is unavoidably infuriating for many customers.

This is the mistake the Virgin brand made when it went into trains - thinking that good service alone would satisfy people when in reality what passengers want is the trains to run on time (preferably empty and free of charge), an outcome wholly outside the gift of the company that happens to paint its name on the side of the carriages. Banking is similarly annoying (increasingly because of futile money-laundering regulations preventing customers getting at their own money), as is apparent from the signs printed prominently in branches exhorting customers not to attack the staff.

As I've mentioned before, you only see these signs in a handful of places - mainly train stations, hospitals and of course banks, because it is apparently the reasonable expectation of these organisations that their service will be so annoying as to drive otherwise peaceable citizens into a violent rage. (You never see the signs in pubs, where the customers will often be boisterously drunk, presumably because no-one ever gets annoyed at the bartenders so long as they keep on handing over the drinks.) If Tesco gets into retail banking it won't improve banking; it'll just tarnish Tesco. A business that used to cheerfully hand over cheap food and drink will suddenly become one that inexplicably takes a week to process a cheque and won't let you get at your own wages without a passport. Unless they plan to take a uniquely firm line with regulators on how they'll conduct their business, banking is a market for Tesco to avoid.