Consumer groups welcome launch of Marks & Spencer bank venture

MARKS & SPENCER (M&S) is to ramp up pressure on the banking sector by launching its own bank.

The retail giant revealed it will open bank branches in 50 or so of its 730 stores over the next two years in conjunction with HSBC, which underpins M&S Money.

An M&S spokesman confirmed that an unspecified number of the group’s near-70 outlets in Scotland would be included in the launch of M&S Bank.

The move won broad support from consumer groups calling for more alternatives to the high street banks. Marieke Dwarshuis, senior director at consumer watchdog, Consumer Focus Scotland, said: “It is good to see another banking option for consumers on the high street from a trusted name.

“New players on the scene also mean more competition, consumer choice and healthy pressure on all banks to deliver better services.”

The first branch, scheduled to open next month, will be at M&S’s flagship Marble Arch store in London’s West End.

The retailer said that new current accounts will be available from next autumn, mortgages “at a later date”, and that the project will create 500 jobs. As with M&S Money, the group’s partner in the new venture will be the HSBC banking giant.

Matthew McEachran, retailing analyst at broker Singer Capital Markets: “This will not make a huge [financial] difference for Marks & Spencer in the short term but it is a positive step.

“It is leveraging the brand on a financial services business in M&S Money that is already well-run and profitable.

“Retail customers’ expectations are getting higher and higher. Everyone expects convenience 24/7, and M&S Bank should therefore attract extra footfall to the company’s stores given the extended opening hours. It will also utilise unused space.”

M&S said the new branches’ hours will mirror shop opening hours. It means the branches will effectively be open twice as long as traditional high street banks and introduce seven-days-a-week banking to Britain.

M&S Money already provides credit cards, loans and savings, and currency exchange to more than three million customers.

Colin Kersley, chief executive of M&S Bank, said the move would “provide customers with a credible, alternative choice in the banking sector”.

Joe Garner, head of HSBC in the UK, said he believed the new venture was the group’s “most significant innovation” in its UK offering since it launched the First Direct telephone banking business 22 years ago.

“It is concrete evidence of HSBC increasing innovation, competition and investment in the UK,” Garner said. The jobs created will include 400 customer-facing roles and about 500 at the company’s Chester base.

Danny Jatania, chairman of the Pockit financial services group, commented: “Retailers are recognising the need to provide a more holistic service to their customers. Despite the strong growth in online shopping, high streets are still instrumental in providing services on their doorstep.”

One City banking analyst said: “This is not significant for HSBC in the wider shape of things. It has a very big international and investment banking presence and a big UK branch network of its own. But it is building on an existing j/v with one of Britain’s best-known retail groups. That is very useful in public relations and brand recognition terms.”

M&S customers will be able to pre-register their interest in M&S Bank current accounts in July. M&S said research amongst its Premium Club customers showed that more than 70 per cent found the idea of an M&S current account attractive.