Retail and Financial Services - Two Sectors Getting Ever Closer

Who handles bulk of the Cash on UK High Street? Who manages bulk of the financial transactions going through the ever-growing ECommerce industry? As you would have guessed the answer is not Banks and Financial institutions, the answer is Retailers. Put all together, the retail operators handle more cash as well as card transaction on the UK High Street as well as in the ECommerce world. And there are indications that, retailers will be making most of this strength and make further inroads in offering financial services. 

The banking arm of the Co-operative Group will today offer everyday-banking services from an additional 250 high street branches as it completes the integration of Britannia.

Building Society.Britannia's branches have previously been used only for Britannia savings accounts but from this week they will be able to carry out everyday current account work for all Co-op customers. In addition, the Co-operative Financial Services will now be known as The Co-operative Banking Group and will operate under both The Co-operative Bank and The Co-operative Insurance brand names.

Unnoticed by many, Tesco recently bought out the banking partner that supplied the back-office skills for its limited range of financial services. That is as big a hint as you could get that it is planning to expand.But it does so with the huge advantage of Tesco Clubcard data, through which it knows almost everything there is to know about its customers' spending habits. This will give Tesco a huge insight into what it can afford to save and to borrow. 

Trends which are developing for the past few years and to watch out for;

• Customer Loyalty Programs collaborating closely with Retail Transactions to monitor and make sense of Consumer buying patterns
• Customer Relationship Programs leveraging Financial offers (cards, loans, etc)
• Third party promotions and alliances. A good example is Boots - Waitrose linkage
• Retailers using established banks to offer white label financial products. Number of retailers now offer store cards which are in turn products from financial services firms such as MBNA.
• Retailers with large enough scale launching their own financial services. A good example if Tesco Bank.
• Large retailers eventually buying small to medium financial services firm 

With Banks and Financial institutions coming under more pressure from regulatory authorities and adverse trading conditions we can only anticipate these trends gaining further momentum in coming months and quarters.