By opening a fully fledged, 50-branch bank, Marks & Spencer is relying on the power of its brand – and venturing where Sir Stuart Rose feared to tread.
Why are we talking about this now?
Marks & Spencer surprised observers last week when it revealed it was to move into banking. The bellwether retailer intends to open 50 branches in its stores, beginning with Marble Arch next month.
What’s the big deal? Isn’t Marks & Spencer already in financial services?
Yes it is. The M&S Money business, which will be rebranded M&S Bank later this year, generated profits for the retailer last year of £50m through services such as bureaux de change, savings accounts and credit cards.
But a full banking offer takes matters to a new level. M&S Bank, which will be run in partnership with HSBC, will offer services such as a current account and, eventually, mortgages.
Other retailers also have banks don’t they?
The Co-op has a well-established banking arm. Sainsbury’s has a bank but it does not offer a current account. Tesco Bank is in the process of launching a current account but has been hit by delays.
How will the M&S banks be different from others?
One of the biggest differences will be opening hours. M&S Bank will trade the same hours as the stores in which branches are located. That includes Sundays, and M&S says its branches will be open “twice as long as traditional high street banks”. Online banking will also be available 24 hours a day.
M&S also thinks that the power of, and trust in, its brand will give the banking service unique appeal to consumers. The retailer’s chief executive Marc Bolland said: “M&S is one of the most trusted brands on the UK high street. This bank will be built on M&S values, putting the customers at the heart of the proposition and delivering the exceptional service that sets us apart from the competition.”
Kurt Salmon UK and Ireland managing partner Helen Mountney agrees. She says: “A bank which is actually open when customers want to go in, and provides the services they want, backed by a brand which is loved and trusted, should have consumers rushing to its doors.“
Are there any risks?
Yes, there could be. Former M&S boss Sir Stuart Rose reportedly shied away from extending financial services too far because he feared it could damage relationships with some customers. If you offer mortgages, Rose reasoned, at some point you also have to deal with repossessions.
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