Retailer banking:the (success) story so far…..

There is hardly any area of consumer life that has not had the big brand treatment from major retailers and service companies.

Lawyers only need to glance sideways to see Tesco selling cars and computers, American Express buying up accountancy firms in the US and Virgin selling just about everything.

It is what the telecommunications industry calls “convergence” and is one of the most popular business trends of the 1990s. Companies with money to invest look “next door”, to businesses or services where similar expertise and resources are needed.

The prime target areas tend to be those which have a public perception of being old-fashioned and weak on customer focus, and areas where a large company can undercut existing prices by sheer economy of scale.

The most obvious and parallel precedent is the upheaval in financial services in the past few years.

The following big-brand retailers have moved into financial services sector:

Virgin launched Virgin Direct in March 1995 offering private equity plans (PEPs). Originally a joint venture, with Norwich Union, it is now with Australian Mutual Fund and added life insurance and pensions to the portfolio during 1996. In 1998, Virgin joined forces with the Royal Bank of Scotland to offer the Virgin One and Virgin Deposit Accounts. Virgin manages u1.5bn for 210,000 customers.

Marks & Spencer Financial Services was launched in 1985, becoming a bank in its own right in 1987. It offers cards, loans, saving and investments plan, pensions and life assurance and manages almost u1bn for 160,000 customers.

Safeway launched financial services in November 1996 in a joint venture with Abbey National. It offers in-store banking, a savings account, a card and a 24-hour phone service, along with u900,000 in deposits.

Sainsbury's Bank was launched in February 1997, jointly owned by J Sainsbury (55 per cent) and Bank of Scotland (45 per cent). It offers cards, savings, loans, mortgages, home and pet insurance and 24-hour telephone banking to 900,000 customers with deposits of over u1.7bn.

Tesco Personal Finance was launched in July 1997 in joint venture with the Royal Bank of Scotland. It offers cards, home insurance, savings, loans and a 24-hour phone service. It has 550,000 customers.