The high street will be given a new addition next month when retail giants Marks and Spencer open their own chain of commercial property banks. Following on from the success of its travel and life insurance policies, as well as its three million credit card customers, Marks and Spencer banks will now offer current accounts and home loans in participating commercial properties.
Additionally, it will provide serious competition for rival banking chains such as Bank of Scotland and Santander by opening its commercial property banks on a Sunday – allowing workers and those busy during weekdays more access to financial information.
Altogether, 21 branches are expected to open over the course of the next few months. The first will be found within Marks and Spencer’s flagship central London commercial property close to the Marble Arch.
Of course, being an established and trusted retailer in Britain is no guarantee of success, but Marks and Spencer hope that customers loyal to the brand will place their trust in the new commercial properties. With 703 stores in the United Kingdom, it has a huge consumer base to draw upon, especially given the fact that, due to the banking crisis which is largely blamed for triggering the economic downturn, customers are losing trust in the more traditional banking chains.
This could lead Marks and Spencer to reasonably expect their loyal customers to transfer their savings accounts to a commercial property chain that they trust and value.
Banking specialist at financial data company Defaqto, David Black, agrees that the venture could cause a lot of upset for more established banking commercial property chains. He says; “This could be a real shake-up on the High Street.
“Marks and Spencer is a brand very well trusted by lots of faithful customers and the retailer could attract a lot of people desperate to escape high street banks who have had a really bad reputation for customer service over the past few years.”
Yet Marks and Spencer are no strangers to the financial world – many of their existing commercial properties offer such services as foreign currency exchanges, a range of insurance policies and personal loans. In fact, the financial services aspect of the business, which is owned and managed by commercial property banking chain HSBC, made an astonishing £50 million profit in the last year alone.
The partnership with HSBC is exactly what makes the ability to offer mortgages and current accounts possible. As a parent company, HSBC’s commercial properties are covered by a banking license, which will extend to cover all of the new Marks and Spencer commercial properties offering these financial services.
However, it is this partnership that could potentially cause a sticking point with customers considering switching to the Marks and Spencer commercial property banks, according to experts. HSBC are notoriously picky when it comes to granting mortgage applications, and it is expected that the Marks and Spencer banks will be equally difficult to borrow from as the commercial properties are expected to share a business model with their high street neighbours.
Spokesman for mortgage broker London and Country, David Hollingworth, said; “I can’t imagine Marks and Spencer is going to go for anything too unusual or quirky with its mortgages.
“I would imagine they will be looking at customers who are financially in a strong position who are looking to remortgage as a key source of business.
“They will probably be going for the ‘vanilla’ customer who has a strong credit record.”
Only time will tell if Marks and Spencer’s commercial property banking venture will be a success, and it is expected that their existing customer base will eventually decide the outcome of the retailer’s risk.
Would you consider switching to a retail commercial property for financial services? Do you think Marks and Spencer are making a savvy business move, or that they will eventually lose out to more established chains?
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