Do you like your bank? Perhaps not very much. The financial services industry suffers from a poor image, cemented by its role in the ongoing economic crisis.
Although it was the banks’ corporate divisions that were frequently blamed for the reckless attitudes that led to recession across the developed world, the retail arms were caught up in the disaster too. It was of course queues of anxious savers lining up outside Northern Rock branches that brought the first hints of looming catastrophe back in 2007.
It is in that context that Marks & Spencer’s decision to launch a chain of banks should be seen.
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.
Although it doesn’t generate the headlines that typically accompany the latest fashion styles and foodie trends, M&S’s money business already has substantial scale. Last year it generated profits of £50m – far more than many retailers make full stop.
M&S Money was set up in 1985 and is a top-10 credit card provider and the second-biggest travel money retailer in the UK. It has more than 3 million credit card customers. The business is a joint venture between HSBC and M&S.
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.