Australian retailers 'could become banking providers'

Australian retailers could start to offer banking services, credit cards, car insurance and other financial products to consumers.

According to The Age, Australian retailers could follow in the footsteps of British companies such as Tesco, which offers a range of banking products to consumers and competes head-on with traditional banking institutions.

One commentator told the news provider retailers in Australia have a good platform for providing banking services, as many have the ability to package such an offering.

Futurebrand managing director Tim Riches told the news provider that retailers, who are geared to attract potential banking customers through fly-buys and electronic identification systems, are well positioned to offer services such as basic home insurance or car insurance, as well as the likes of credit cards, transaction accounts and term deposits.

Mr Riches suggested Australian banking institutions are at a disadvantage in this competitive arena, as they lack an emotional connection with customers as well as innovation needed to offer viable banking alternatives - except for in the area of online banking.

If it were easy for Australian banking customers to switch providers of financial products, Mr Riches believes many "would be happy to take their business elsewhere".

However, The Age suggests that there is not an immediate threat to banking institutions in Australia. It claims that banking strategists are "probably right" when they suggest corporations are not equipped to handle the complexities of providing banking and wealth managing services.

Supermarket banking services are commonplace in the UK, with retailers such as Sainsbury's and Marks and Spencer among those with dedicated financial services departments offering personal loans, credit cards and other banking products.

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