Although Wesfarmers' (ASX: WES) Coles business recently applied for a banking license from the Australian Prudential Regulation Authority, Westpac (ASX: WBC) has shrugged off concerns that the supermarkets could pose as a threat to the banking industry.
Brian Hartzer, Westpac's chief executive of Australian financial services, believes that although the prospect of Coles being allowed to enter the market would mean more alternatives for customers, it is the customer service provided by the banks that should retain customers.
Hartzer said, "It doesn't concern what we're trying to do, which is a relationship-oriented approach recognising that money is a scary topic for most people… We're not interested in flogging products, we're interested in building relationships."
On the other hand, Graeme Samuel, the former ACCC chief, believes that the move by retailers into banking will benefit customers in that a wider array of products will be on offer, which would prompt the banks towards innovation and even greater customer service.
If Coles' move proves to be successful, it is expected that rival Woolworths (ASX: WOW) could soon follow suit.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
