On Your Marks as Banking Pops into the Shops; PERSONAL FINANCE Jeremy Gates Looks at the Nation's Money Issues and Reports on How Marks & Spencer's Move into Banking Could Tempt Customers Away from Britain's 'Big Five'

Western Mail (Cardiff, Wales), June 16, 2012 | Go to article overview

On Your Marks as Banking Pops into the Shops; PERSONAL FINANCE Jeremy Gates Looks at the Nation's Money Issues and Reports on How Marks & Spencer's Move into Banking Could Tempt Customers Away from Britain's 'Big Five'


* HERE has hardly been a shortage of challengers to the high street banks in recent years, especially since the financial crash of 2008, with Sir Richard Branson's Virgin Bank among those determined to do a better job.

Simon Rose, ebullient spokesman of Save Our Savers lobby group, said: "The established banks try to make everything as bland as possible and to pigeonhole customers on what they can sell to them.

"When it comes to providing service, they are far more concerned with their own convenience than the customer's. My hope is that any new bank entering the marketplace will make the existing banks feel the need to compete."

One new contender, Metro Bank - famous for opening seven days a week and offering free dog biscuits for customers' pets - has just raised pounds 126m from new investors and existing shareholders to enable it to add seven new branches in southeast England to the dozen in London opened in its first two years. In 2014, if all goes to plan, you might be able to buy Metro shares in a public flotation as early investors, which include fund manager Fidelity, cash in part of their holding.

Tesco, too, will offer current accounts in 2013.

Slowly but surely, greater customer choice is emerging in personal banking - though the Big Five of RBS, HSBC, Lloyds TSB, Barclays and Santander maintain a total market share approaching 65%.

Now they face a new challenger - from St Michael. Marks and Spencer achieved a major surprise when it announced the imminent arrival of its own clearing bank last week.

In recent years, M&S has been derided by Jeremy Paxman for its underpants, and criticised on a wider front for failing to keep up with latest styles in women's clothing. But Mr Rose said: "What M&S does have is a large degree of trust - and people have lost trust in so many financial institutions in recent years."

The retail giant also has a useful platform for the new venture: M&S Money, owned and operated by HSBC since 2004, makes profits of pounds 50m a year from three million customers with credit cards, travel money, loans, insurance and savings products, including ISAs.

HSBC will also run the M&S Bank when the first branch opens in the M&S flagship Marble Arch store, presumably ahead of the Olympics.

Branches will be open twice as long as traditional high street banks, mirroring M&S store opening hours, and enabling customers to bank while they shop, seven days a week. Customers will benefit from 24-hour access to online banking, as well as UK-based call centres.

A current account will be made available from autumn 2012 and customers can pre-register their interest next month, with mortgages available at a later date.

Research among M&S Premium Club customers found that more than 70% found the idea of an M&S current account appealing.

Over the next two years, M&S Bank plans to open banks in 50 of its branches, creating around 500 new jobs.

Market commentators give the move a guarded welcome.

Andy Gadd, head of research at financial adviser Lighthouse Group, said: "It's an interesting development by M&S and HSBC.

If customers are happy to go into M&S branches to do their banking and find it easier, it is a positive move.

"Choosing a bank account is very important for anybody likely to go into the red. Look at the cost of any services you are likely to use, and compare costs of various accounts on the website moneysaving expert.com "If you always stay in credit, you shouldn't pay charges anyway - so the decision is less important."

Will Mayne, lead analyst in retail banking at Datamonitor, said: "M&S has a loyal captive audience who see real value in the brand. Its rivals, like Metro, have no existing customer base and even Virgin doesn't start with the footfall and a regular interaction with customers. …

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