Blackfriar: Halifax aims to be the prize guy in the savings market

Personally, Blackfriar could think of some more fun and exciting things to do than open a new bank account.

But Halifax has certainly put the cat among the pigeons with its new savings scheme which promises to give away £6m a year in prizes.

The Halifax Savers Prize Draw will pitch the UK’s biggest savings bank head to head with National Savings’ Premium Bonds – the nation’s most popular savings scheme.

This will be the first time a UK bank has offered a monthly cash prize, although similar schemes have proved popular in the US, Australia and New Zealand.

Under the new Halifax scheme, savers with £5,000 or more will get a chance to win three £100,000 prizes, one hundred £1,000 prizes and a thousand £100 prizes every month.

Now Blackfriar has a fun quiz for you to liven up your Thursday morning in the office.

Demand absolute quiet and then ask everyone in the office to stand up if they have Premium Bonds.

Assure them it’s not a trick question and then ask those who are standing the last time they won anything.

According to anecdotal evidence, you will have few takers. While £100 gives you a 240 to one chance of winning a prize, actual winners are very hard to find.

Now assess your Premium Bond holders. How many are over 60?

Ask only those under 60 to stay standing (be diplomatic here).

The final task is to ask those who are still standing to sit down if an elderly relative bought them their bonds. How many are left? Not many, Blackfriar will wager.

The purpose of this exercise is to show what a huge gap in the market there is for a modern savings scheme that offers substantial monthly prizes.

Premium Bonds remind most people of the 1960s and 1970s. It is certainly not an obvious choice for a younger internet-savvy generation.

According to financial analyst Moneyfacts.co.uk, Halifax’s new scheme offers decent returns, but in all cases but one (four-year fixed Isas) Halifax can be beaten by a number of other accounts.

According to Moneyfacts, an easy access Halifax online saver account pays 2.8 per cent interest, but the equivalent from market leader Derbyshire Building Society pays 3.18 per cent.

A fixed-rate one year Halifax Isa pays 2.25 per cent, but market leader Yorkshire Bank pays 3.3 per cent.

But while Halifax may not be offering the best deals on the high street, its new concept is likely to be a winner.

It cleverly taps into consumers’ new-found urge to gamble as they struggle with the toughest economic climate in a generation.

According to Leeds-based Asda, the UK’s second biggest supermarket chain, this urge to gamble has led to a massive increase in scratchcard sales.

Asda describes the phenomenon as “hope over adversity”.

Rob McWilliam, Asda’s commercial finance director, said that scratchcard sales show a direct correlation to people’s anxiety about their future.

“Customers are looking for an escape,” said Mr McWilliam.

“During the 2008 banking crisis scratchcard sales peaked, but then fell back. We are now seeing scratchcard sales head back in the direction where they were two years ago.”

Most financial advisers would agree that if you feel the urge for a flutter to get away from the pain of everyday living, it is far more sensible to pile your money into a savings account that pays prizes and interest rather than blow the whole lot gambling.

But Halifax’s new scheme does raise one thorny issue – as a partly nationalised bank, what is Halifax doing asking the taxpayer to fund its prizes?

A typical message on an internet discussion board last night read: “In this time of austerity measures, where in the world is this cash coming from? Taxpayers again I presume.”

Halifax said the scheme will cost £6m a year to run and the bank will pay for the scheme itself out of its customer budget.

It added that the £6m is a small proportion of the total interest it pays savers.

Yet the scheme has angered some rivals.

Kim Rebecchi, sales and marketing director at Leeds Building Society, said: “Clearly, the savings market is already distorted as Halifax benefits from a Government guarantee.

“UK savers look for good value-for-money products backed up by excellent service.

“Unless this is on offer, using taxpayer money as a gimmick in this way to ‘reignite a savings culture’ seems optimistic.”

Halifax itself is taking a gamble with this scheme, hoping that the taxpayer lobby won’t punish it for its new move.

That said, Blackfriar bets that this new initiative – the first by Lloyds’ chief executive Antonio Horta-Osorio to revitalise the Halifax brand – will prove a winner with customers.