Retailers' entry into the provision of financial services: the case for and against

With the deregulation of the financial services sector in many countries and the proliferation of different channels of distribution for financial services products, non-traditional providers have sought to enter what they perceive as this lucrative market. Retailers are amongst those non-traditional providers who have sought to enter the market for financial services, using their brand strength and ever-widening consumer proposition, to enable them to so do. This article discusses why and how leading European retailers, and in particular those based in the UK, have diversified into retailing financial services to their customers. It questions whether financial services really are a good fit with mass-market retailing and considers this case both for and against retailers diversifying into financial services. The article concludes by arguing that such diversification may leave retailers in a strategically ambiguous position, both co-operating with, whilst at the same time competing with, the traditional banks, and that this new source of competition is only likely to be successful for a limited range of financial services.