M&S Bank

8th June 2012

The store will probably opt for the plain vanilla customer with a strong credit record who's become increasingly wary of high street banks with their tainted reputation.

After all, in an effort to save costs, banks have neglected face-to-face consumer relationships and pushed day-to-day banking business online or over the phone. Does the average consumer really understand what goes on behind the scenes? Unlikely. But we do get the basics behind the M&S brand, with its ability to provide us with everything from underwear to cutlery and food.

George MacDonald says in Retail Week: "Marks & Spencer may not be having the best of times at the moment in its core retail business. Like others, the bellwether business has suffered as consumers keep a tight eye on spending.

"But even its harshest critics acknowledge that the Marks & Spencer brand is one of the most trusted in the UK. And at a time when trust in business, especially banks, is low it makes sense for the retailer to grasp the opportunity."

When people are nervous about banks, there is potential for brand diversification

The new M&S Banks will undoubtedly pose a challenge to Britain's troubled financial services sector, particularly given they plan to open during normal shop hours including Sundays.

The first branch is expected to open next month in the flagship central London store near Marble Arch, with 50 more planned. Yet M&S already offers limited financial services through M&S Money, under the HSBC Group, having first ventured into personal finance in 1985 – but the plan to offer current accounts, with mortgages to follow at a later date, marks its boldest step.

M&S Money is already the biggest provider of travel money after the Post Office and is one of the top ten players in the credit card market, with three million customers.

But isn't the move just a case of multi-labelling? Another name for HSBC? 

The Twittersphere is full of speculation over what the new banks will look like.

Paul Lewis ‏@paullewismoney comments on Twitter: "M&S Money is run by HSBC – So will new bank be like First Direct? Or like HSBC? I expect first to be ones with Foreign Exchange already."

And plenty are commenting on whether this is a welcome move.

For example, ses6jwg comments on a MoneySavingExpert.com forum: "…personally I think any extra competition in the banking sector is always welcome.

Jon142 adds: "This is good news, I've got an M&S Credit Card. I hope they make their own bank and move everything away from and don't rely on HSBC – I really like M&S money, would go for a current account with them!"

With Tesco also planning to launch a current account, the next year is likely to see a major shift in the UK banking market.

Tesco, which spent £950 million buying out its joint-venture partner Royal Bank of Scotland in 2008, has promised to shake up the banking market by introducing mortgages and current accounts. However, this has been subject to delay until it can move from RBS's technology platform to its own, so it won't offer a current account until next year.

Perhaps the question is – will John Lewis be next?

It's clear that businesses are battling a rapidly changing economic landscape, with big names falling by the wayside as they fail to adapt. High street banks might not be on that list, but some have needed massive bailouts and the level of distrust surrounding their services is at an all-time high.

M&S chief executive Marc Bolland says the chain will look to build on its reputation as one of the high street's most trusted brands.

He says: "This bank will be built on M&S values, putting the customer at the heart of the proposition and delivering the exceptional service that sets us apart from the competition."

MacDonald says in Retail Week: "Because M&S's bank branches will be in stores, they will offer greater convenience than many traditional players – including Sunday opening. Such differentiation, along with M&S's unique status among consumers, should ensure take-up of the banking offer.

"While financial services may only be one leg of M&S's strategy, which will remain reliant on retail prowess, it is a forward-thinking and innovative move likely to make waves among the traditional high street banks."

Do you like your bank? Would a level of distrust be enough for you to shift to an M&S Bank?

There's no doubt traditional banks will have to adapt to survive in a challenging environment with many set to step on their toes – Will M&S Bank be a success? It is too bold a move? And does this mean the M&S brand risks consumer distrust?


More on Mindful Money:

How safe are your savings in a European bank?

What could high street banks learn from start-ups?

Can the financial system be fixed? The Philosopher vs the Trader

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