TESCO announced over the weekednd its ambitions to create a full service retail bank as part of plans to make up 10 per cent of the UK’s financial services market within the next ten years.
The supermarket’s credit card and motor insurance businesses already makes up 10 and 4 per cent of their respective markets but the retailer has ambitions to go further. It plans to enter the mortgage market by the end of this year and offer customers current accounts in 2011. The move would put it on a par with Santander in terms of UK market share.
“We are looking to create a full service retail bank,” a spokesman for the company said. “We plan to use the relationship we have with our loyal customers ultimately to create a substantial business in a number of areas.”
Although the Group ruled out a move into investment banking, saying it was an area it “was not interested in at all.”
Tesco senior executives have never before put down a marker for the group's financial services ambitions. The announcement echoes Metro Bank and Virgin’s plans to take advantage of the crumbling reputations of some of the industry’smore established players. The announcements by the three underdogs have been welcomed by the public who want to see increased competition in the banking sector.
“Competition is a good thing,” said Angela Knight, chief executive of the British Bankers’ Association. “They are aiming to be a market player.”
Tesco is expected to immediately grow its market share by taking the place of many of the independent financial advisers that have disappeared, industry insiders said.