Sainsbury's Latest Retailer to Commit to Banking
Sainsbury's is planning to open bank branches in some of its stores as it approaches the completion of its banking system.
According to sources the addition of branches could be part of the retailer's expansion into financial services.
Back in 2013 Sainsbury's began a three and a half year project to move its banking customers off the systems of Lloyds Banking Group and onto an off-the-shelf banking system from FIS.
This followed the supermarket's £248m acquisition of Lloyd's 50% shareholding.
Once fully rolled out Sainsbury's Bank's core banking platform will enable it to widen digital services and support the bank's expansion.
Competitor Tesco is also looking to expand in this sector. It launched a current account back in June last year, four years after implementing its core banking platform.
Sainsbury's and Tesco are part of a new industry of firms launching banking outside of the banking sector. One of the perceived advantages of these new banks is IT. Traditional banks have legacy systems that date back to the 1970s in some instances, which were not designed to work in today's banking environment where technology has significantly changed.
As Sainsbury's currently has a large network of stores, adding bank branches within them will require less capital investment.
Future banks will have far fewer branches and will rely on technology more and more. The UK's major high street banks are currently reducing their branch networks by hundreds.
For instance, The Cooperative Bank is closing about a quarter of its remaining branches and replacing them with digital technology. It is said to close 57 branches as part of its cost-cutting plans, leaving it with 165 (one branch per 8,500 customers) but aims to retain service level through IT.
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