I have written on the topic of high street stores entering banking before but it's now looking certain that Tesco will be the first to go the whole hog. The Chief Executive Sir Terry Leahy appears to be on a mission to utilise the many assets of Tesco and
notably their Clubcard with all its client data, to take advantage of the gaps opening up, as bank after bank goes to the wall or in most cases is encumbered by legacy.
Legacy systems and legacy people can be a huge burden for a business in the fast changing world of financial services. Tesco's will have a huge advantage over most banks by coming in squeaky clean, with a brand and an image recognised by ‘Joe Public' as
trustworthy, and that is massive plus in the current climate.
Although Tesco will be limited in its financial services capabilities initially, I can see no reason why with astute management and a desire to build a new type of bank, which makes use of new technology, concentrates on clients and their protection, it
will not shake the remaining banks to the core. This could be a significant element of the restructuring of financial markets, the replacement of banks that have failed and how the future might not look so bad after all.
If Tesco are the first, who will be second?