Since the 1980s, Australia’s major banks have, with a few marginal exceptions, seen off most of their foreign rivals plays for the domestic consumer market, survived the Asian crisis and the GFC and consolidated their market power across banking, insurance and wealth management.
But confirmation this morning that Coles is a long way down the road to an expanded financial services offering is perhaps the biggest threat to the majors’ dominant market position they have faced.
The AFR says that the aim of the banking service offering is to bind customers to its stores and that already Coles has trademarked the brand “Coles Mobile Wallet”.
Coles’ move mirrors similar expansion by household brand name retailers in the UK (Tesco, Sainsbury and Marks & Spencer) and in Canada (Loblaw).
Indeed, with so many potential “branches” around the country in its stores, and with the AFR reporting that “research has shown shoppers tend to spend more on traditional food and groceries if they are also financial services customers of the supermarket”, Coles’ incentive to pursue its financial services strategy in an aggressive manner is strong.
Clearly there are regulatory issues that APRA and the RBA will be interested in (such as an actual banking licence), and while it may not be breaking new ground globally, the innovative approach and low cost structure that it will be able to bring to financial services is likely to be a disruptive force for the industry over the medium term.
You can read more here
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.