Banks wasting your money on costly marketing
December 11, 2007
An official from the Indian ICICI bank, which is aiming to break into the UK market with a range of services over the coming months, has stated that many UK consumers may be having to put up with lower interest rates paid on savings simply because the banks spend so much money on advertising and marketing, particularly over the Christmas period.
The banks claims that some savers could be losing between 1.5 and 1.8% on their saving because of the tens of millions that banks are spending on advertising and marketing costs.
According to officials from ICICI the major UK banks are spending around £70-£80 million a year on glossy advertisements and marketing campaigns. The bank states that although this may raise awareness about the products that the banks are offering it also means that customers lose out in terms of the interest that is paid on their accounts. The majority of the annual advertising spend used by banks is spent over the Christmas period.
An official from the Indian bank stated: ‘The combination of providing branch services together with nationwide advertising, particularly during peak season, can really pull down savings interest rates. The cost savings on this, and the savings from using the infrastructure of our parent Indian bank, which serves 23m people, is one of the main reasons why we will be able to make a name for ourselves here. It’s all about simple products at market-beating rates.’
At present many people in the UK are not familiar with ICICI products, which may cause difficulties for the bank when trying to raise its profile in the UK market. However, the ICICI HiSave account is already Money Mail’s best savings account, offering an impressive rate of interest, which is something that ICICI wants to offer on other savings and investment products.
Alan Wright
11th December 2007
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