The banking sector has been having an annus horribilis. The industry, once the crowning glory of the British business world, is being attacked not only by a critical Chancellor but also by brands such as Tesco and more recently O2, which are setting their own sights on a piece of the financial action.

Yet research carried out for Marketing Week by YouGov reveals that although tarnished, long-established banking brands are far from crumbling and still enjoy a remarkable level of loyalty and trust from their customers. Despite brands often cited as consumer favourites in their fields of expertise entering the financial market, these new entrants will have to work very hard to wrench consumers from traditional brands.

Sixty-five per cent of consumers polled by YouGov last week claim they would not consider taking out a financial product (eg, credit card, savings account or current account) with a supermarket or a selection of other non-traditional brands.

It seems that while marketers are always told that trust in brands equates to commercial success, the financial sector does not appear to follow this rule. In a Morgan Stanley survey published last week, consumers claim they trust Tesco more than the banks and believe it offers better value. But a third stated they "definitely wouldn't" or were "very unlikely" to open a Tesco current account and this figure rose to half when it came to taking out a Tesco mortgage.

This gulf between trusting a brand and actually using its financial services is picked up in an in-depth study by consultancy Lippincott on the emotions that consumers display surrounding banking. Lippincott found that consumers are no longer as angry with banks as has been reported.

When looking at which words consumers associate with their main bank, "loyalty" and "acceptance" rate highly, while words like "anger" and "contempt" - despite cropping up in media headlines - receive just a fraction of responses in comparison.

It appears that the UK is undergoing a similar cultural shift to the US, where anger at the banks spiked during the heat of the financial crisis and government bail-outs (MW 2 April), but has since flattened. And, with evidence that consumers are not keen to switch suppliers, the new non-banking brands moving into financial services have their work cut out.

Not that banks should rest on their laurels. While consumers may not be jumping ship as might have been expected, they are saying they want more from their banks.

Lippincott senior partner Tom Farrand explains: "The battleground is being set with a customer-driven agenda at the heart of it. It's harder for the supermarkets and other new entrants than they may be assuming but that doesn't mean they can't win, especially if banks are slow."

As a result, Lippincott has proposed "eight concepts" for banking services innovation in order for the banks to beat off the advances of the supermarkets and telecoms brands. They asked consumers which ideas and services would most appeal to them.

The eight proposals are derived from a mixture of bank account propositions that already exist and some hypothetical offers, based on the way the market might evolve.

Level of interest

When Lippincott put these concepts to a group of consumers, they discovered that while each proposition received a certain level of consumer interest, no single idea was overwhelmingly the most popular.

Farrand says: "It's not one size fits all; different customer groups want different things. This picture says it's fairly evenly spread and yet what we've actually got is a handful of institutions all offering banking in virtually the same way."

Understanding customer needs is one thing at which Tesco excels. Often cited as an expert in mining customer data and producing targeted offers, the established banks are right to consider the supermarket's aim to put "the Tesco into Tesco Personal Finance" a threat.

Although established banks also benefit from a high level of consumer inertia, if Tesco combines shopping benefits and rewards customer loyalty - something banks have historically been poor at - then it's easy to see that becoming a very attractive proposition for consumers.