One in eight people over the age of 16 have a product from a supermarket bank, revealed a report from IBM Business Consulting Service.
The report, commissioned by Sainsbury's Bank, said that over the next five years the number of supermarket banking customers could increase by 149% from 5.8 million to 14.4 million in 2008.
IBM Business Consulting Services managing consultant Ewan Puckle Hobbs said: "This industry is definitely one to watch.
"There are still some issues which need to be addressed before its true potential can be realised, but in a fast changing industry coupled by the fact that peoples lives are becoming busier, the supermarket could become a major distribution channel for retail financial services products."
The report identified three main factors underpinning the strength of supermarket banks. It said the strength of their retail brands, their low operational costs resulting in competitive products, and their easy access to a large customer base, was winning them a significant share in the retail financial services market.
The report outlines three major areas where improvement was needed. It said supermarkets banks needed to differentiate their products from those of other providers, they needed to have better insight into their customers, and to maintain service excellence and convenience as they expanded.
