Magazine article Marketing

Co-Op Branches Out

Magazine article Marketing

Co-Op Branches Out

Article excerpt

Will The Co-operative Bank's deal give it the scale to mount a real challenge, asks Alex Brownsell.

Few industries have been promised as many 'new dawns' as banking, and last week The Co-operative Bank became the latest brand to pledge to shake up the embattled sector after the acquisition of 632 branches from Lloyds Banking Group.

While establishment names such as HSBC and Barclays have been dragged through the mud following allegations of corruption, Co-operative Group chief executive Peter Marks vowed that his 'customer-led, ethically driven' bank will provide the 'biggest shake-up in high-street banking in a generation'.

He is not alone. Marks & Spencer last week opened M&S Bank, in partnership with HSBC. The latter's UK boss, Joe Garner, described it as the 'most significant retail banking innovation' since the creation of First Direct in 1989. Sir Richard Branson also boasted that Virgin Money, secured through the acquisition of Northern Rock in January, would make things 'better' for customers.

Mutual principles

The Co-operative can trace its involvement in banking and insurance services back to the 19th century. The mutual business has steadily expanded, with the launch of the UK's first internet bank, Smile, in 1999, and a merger with building society Britannia in 2009.

However, the 'Verde' package, being sold by Lloyds under instruction of the EU competition authorities, will take The Co-operative to a new level. For an initial payment of only pounds 350m, it will grow to a branch network of about 1000, and from a 1% share to 7% of the UK personal current account market.

The new branches will be branded as TSB - last seen on the high street prior to that bank's merger with Lloyds in 1995. Although The Co-operative's stated goal is to bring all its financial operations under a single brand, this is likely to be years away. A new TSB brand design is already being devised by agency Rufus Leonard.

Along with M&S, Virgin, Metro Bank and, potentially, Tesco, The Co-operative believes the UK banking market, famed for its inertia, now presents big opportunities for newcomers untarnished by the events of recent years.

It will, no doubt, hope consumers embrace its ethical stance and mutual structure.


James Boulton Founder of Truth Marketing, and former marketing director at HBOS, HSBC and Nationwide Building Society

With 1000 branches, this could propel The Co-operative into the Banking Premier League: the optimum footprint for a national high-street bank in the UK is about 800 outlets. …

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