TSB launch could perform poorly unless Lloyds can convince customers of bank's reputation

Newly launched TSB branches could fail to impress unless marketing can convince customers of their trustworthiness, analysts warn.

632 branches have been launched, with 100,000 of its 4.6m customers logging on yesterday.

TSB's website is already struggling, with technical issues emerging both yesterday and today. Unlikely to do the new project's brand image any favours.

Joe Rundle, head of trading, ETX Capital:

Given the troubles in the banking sector [scandal, penalties, toxic balance sheets, state-ownership] customers at TSB Bank may have little faith in the survival of TSB in the wider UK banks space. TSB customers may be inclined to move accounts elsewhere out of fear that a smaller bank on the High Street is vulnerable compared to the banking giants in the country.

Until the IPO, Lloyds will have to pump more funds into marketing TSB as a trust worthy bank that has a place in the banking system and promote the competition in the UK with an added player in the market – there is a very real possibility that TSB customers may close accounts and move back to Lloyds or another bank to feel safer.

For Lloyds, this is part of the bank’s strategy to de-risk, scale down due to its huge size and steer into sustainable profitability in order to eventually see the UK government sell their stake in the bank. Management promise a seamless transition but already we have seen reports that the TSB systems have crashed after the split announcement leaving customers unhappy. The process also needs to be swift otherwise the risk is it undermines the split of the banks – the EU Commission has set out a timeline which Lloyds must oblige to if it wants to ready TSB for life outside again.