Musgraves (SuperValu) To Set Up Bank

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, Musgraves (who own SuperValu) are to open a bank.

Services to be offered:
  • Debit Cards.
  • Credit Cards.
  • Loans.
  • Insurance.

No mention of current account, deposit account and mortgage products. Also no confirmation yet if it will be a joint venture with another bank.

Interesting move. Tesco Bank and Tusa Bank are 2 prior attempts here at supermarkets opening banks.

Tesco Bank, who launched with great ambition, but have yet to launch, once planned, deposit accounts. Tesco Bank also pulled back from offering loans. Credit Cards are Tesco Banks main offering here. Tusa Bank (join venture between PTSB and Superquinn) shut after 2 years.
 
I can't see Tesco just watch on from the sidelines and I would imagine a current account product would be a given.

The amount of extra reward points that a Supervalu customer could get will be pivotal for signing up. An Post seems an obvious possible partner for me.
 
I have a Tesco credit card and every so often, when I have to phone to get a balance etc, I ask when Tesco are going to introduce online access for us here in Ireland.
Last time, I was told never. There are just too few of us.
On that basis, I can't see Tesco opening any kind of bank system.
 
Very interesting.

Could you have a debit card without a current account?

Credit cards and loans could be very profitable. Although I think the bank needs to have the current account to minimise bad debts.

Is the Supervalu brand good enough to encourage people to take out a credit card with them?

The Tusa experience is revealing

Retailing legend Feargal Quinn also tried to enter the Irish banking sector at the end of the 1990s when setting up Tusa, a joint venture between his [broken link removed] supermarket chain and Permanent TSB.


However, after two years, the innovative banking group had attracted just 10,000 customers and had written less than 500 mortgages. As losses spiralled, the Tusa business was shuttered in 2001.
Click to expand...

Brendan
 
Gervan said:
On that basis, I can't see Tesco opening any kind of bank system.
Click to expand...

Tesco Bank publically stated that they were looking at deposit accounts here in 2007. Then the economic crisis hit. In 2010 Tesco Bank said something similar. Then the Eurozone crisis hit. The expansion of the Tesco Bank offering here has been put on ice several times but Tesco could make a strategic decision to change that at any time in the future.

Could you have a debit card without a current account?
Click to expand...

A bank can offer a prepaid debit card without offering a current account product. For example, O2 Money offering by Telefonica.

A bank offering of normal debit card product without a full service current account is very rare. Probably never happened in Ireland before.

Hence, maybe Musgraves are planning a current account product as well.

It seems Irish banks face several looming competitive threats:
  • The 100+ credit unions that are going to offer a current account product starting in 2014.
  • Potentially pan European internet based banking competitors post SEPA implementation.
  • New entrants (KBC, SuperValu, potentially Investec).
  • Longer term competition from Google Wallet and similar services.
 
theresa1 said:
... An Post seems an obvious possible partner for me.
Click to expand...
An Post are already partnered with AIB as part of AIB's branch closure rationalisation.

It strikes me that the bits the retail multiples are best at IMHO, customer-facing & contact operations and cash-handling, are the bits that the banks want shut of, so why would big retailers not make successful retail bankers?
 
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Tesco will offer banking products here eventually but their primary target is the UK market and they are still rolling out the bank in the UK. When they bought out RBS from the joint venture in 2008 they had to take on all of the technology and back office of running a bank. They have been rolling out the major products over the last few years. Investing in Irish regulations, a euro based product set and roll out does not have the same opportunity as they currently have in expanding in the UK.
 
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