Julian Knight: Tesco's bank teaser will not shake the market

Tesco Bank is a bit of a tease. Ever since the financial crisis and the retailer's decision to buy the Tesco banking operation from Royal Bank of Scotland, Tesco has been seen as one of the main challengers set to break the banks' high street monopoly. If one pound in every eight we spend on the high street is with Tesco, then surely millions will want to bank with them? However, like all true teases, Tesco has not revealed everything it has to offer.

We have been told that Tesco will at some point start offering fully fledged retail banking, but no firm date has been set, or any idea of whether this will be through its huge chain of stores. But from Monday, Tesco bank will show a bit of ankle, for the first time offering mortgages to go alongside its insurance, credit card and savings products.

The mortgages on offer – mostly fixed rate – are actually nothing to write home about. The rates, although competitive, are not best buy; and as for the fees, at first glance they appear low, until you realise that the very best loan rates are available if you agree to a rather unpalatable £800 charge on top of a booking fee. The loan to values (LTVs) are unadventurous, ranging from 70 per cent to 80 per cent – as a result these are not products for first-time buyers.

I can't help but think that Tesco has missed a trick here. If it had offered a mortgage tailored to first-time buyers they could have distinguished themselves from the high-street banks, who in the main don't want to know, and keyed into the retailers' previously successful campaigns, which have had a family focus, such as equipment for schools. The great thing about Tesco marketing, in the now quite distant past, was that it could make masses of money but still be seen to be on your side; there is nothing of that feel about this range of mortgages.

Of course, the ubiquitous Tesco Clubcard makes an appearance, with borrowers able to earn points each month, which they can use to claim goods in store, but it will be difficult to distinguish whether or not this offers any real value.

The mortgage range, though, is meant to be a teaser, ahead of the full consummation of current account banking, in store, later this or early next year. But in the four years since the financial crisis, Tesco's stock has – quite literally – fallen. The retail operation, although immensely profitable, has lost a little of its lustre.

People still respect the Tesco brand, even possibly fear it – particularly if you're a supplier dealing with the razor-sharp buyers, or a small retailer within walking distance of one of its "local" stores – but do people really embrace and care about Tesco?

If I was to reveal that Tesco had been bought out and the name would disappear from the high street, would you really care? But if I was to say the same thing about Waitrose, or even, despite its travails, M&S, I reckon most reactions would be different. And this lack of care for the Tesco brand hurts its too-long drawn out banking ambitions.

Perhaps, with innovative products or approach, the banking operation could really distinguish itself, pull off the trick of being an outsider raiding the high street. But the Tesco brand isn't an outsider brand – unlike Virgin Money, for instance.

Tesco's teasing act has gone on too long, and I think the interest that was there has waned, as have some of the strengths of the Tesco brand. I'm not saying Tesco won't capture lots of business when they finally enter into fully fledged retail banking – the massive customer base and the marketers will make sure of that – but they need to try a bit harder than this very plain Jane range of mortgages.