Australians may soon be able to buy savings accounts along with their milk and bread, according to recent reports which suggest supermarket giant Coles may soon be stocking banking products.
According to reports, Coles is on track for an Authorised Deposit-taking Institution licence from the Australian Prudential Regulation Authority (APRA), which will enable it to offer banking products such as savings accounts in its own name rather than in partnership with a bank.
The move comes as supermarkets spread their reach into the financial services sector, offering products such as insurance and credit cards. Woolworths, for example, offers car, home and even pet insurance.
In September last year, Coles trademarked the brand “Coles Money” and the trademark was accepted in April. The lodgement said the classes of goods and services covered included financial monetary and banking services and insurance services.
In 2011 Coles bought NAB’s 50 percent share in Flybys loyalty scheme and relaunched the program in 2012.
Coles has neither confirmed nor denied the plan to beef up its banking offer, however Sky Business financial commentator, Lisa Montgomery, says the move is long mooted.
“Yet it remains to be seen whether people want to do their banking where they buy their meat,” says Montgomery.
To attract banking business, Montgomery says a supermarket chain will need to offer some robust incentives such as better interest rates, lower fees and discounts on groceries.
“The incentive offer must be enough to reduce living costs to entice a customer to move to banking products offered by a supermarket chain,” says Montgomery.
The move by the big grocers into banking services could also make it more difficult for consumers to compare products.
“It will be very difficult for consumers to make apples for apples comparisons if the supermarkets are offering discounts on groceries with their savings accounts,” argues Montgomery, who also raises concerns about the privacy issues associated with banking in a supermarket.
“People are there to shop and I’m not sure they’ll be there to make hard decisions about financial products.”
While the market waits for Coles, and its parent Wesfarmers, to make their next move, Alex Parsons, CEO of RateCity, urges consumers to chase the most suitable savings accounts currently available from the many financial institutions in the market.
“I’d urge consumers to shop around for a good rate. RateCity currently lists savings accounts with rates upwards of 4 percent,” he said.
He also offered these tips: “Look out for bonus rates awarded for certain behaviours, such as making a certain number of deposits every month or no withdrawals.”
“Keep an eye out for introductory rates too – but be prepared to switch banks every time the higher rates run out. It’s a good idea to set a reminder in advance and then do your homework by comparing the best available deals.”
“At the very least call your existing bank and negotiate – you have nothing to lose other than your savings income!”