Abbey National has an immediate audience for it’s the new fund supermarket service through its retail customer base. However, its success is dependent on the bank’s ability to cross-sell to existing account holders: something that retail banks have struggled to do in the past. Abbey will have to market its product carefully.
Abbey National has launched its new fund supermarket, FundsCentre.
Abbey National, the UK high street bank, has set up an online fund supermarket named FundsCentre. It will offer consumers a choice of 280 funds from 24 leading fund managers, including Schroders, Jupiter and Fidelity. Abbey National is the first UK high street bank to launch a fund supermarket.
The FundsCentre service will be available on the web, as well as by telephone or post. It forms part of Abbey National’s wider strategy to increase earnings from wealth management and long-term savings and investments. The bank is aiming to attract GBP250 million in assets under management by the end of 2003, which will see the fund supermarket become one of the leading three players in the market. Abbey intends to promote the service to its 15.3 million customers.
The importance of distributing through fund supermarkets cannot be underestimated. Initial figures from leading investment companies indicate that in Q1 2002, 25% of ISA sales were made through fund supermarkets. This reflects the increasing willingness of consumers to buy products direct and benefit from the discounts offered by many fund supermarkets as a result of decreased distribution costs.
However, Abbey National is launching its service into an already saturated market space: there are currently 18 fund supermarkets competing for consumers in the UK. Many retail banks have been poor at cross-selling products and services to current and deposit account holders, who generally prefer to use distribution outlets such as intermediaries to purchase investment products. Abbey National will have to take care in marketing its product effectively to its large customer base.
Related research: Datamonitor, 2002: UK Fund Supermarkets 2001