Part of the triumvirate that privatised BA back in the mid-1980s, he was at one stage coincidentally chairman of three FTSE100 companies - BA, Invensys and Inchcape - deputy chairman of a fourth - British Telecom - and a non executive director of a fifth - HSBC.All of them, other than HSBC, have at one stage or another during Lord Marshall's reign been corporate basket cases. Now they are part of bigger groups, the partnerships don't look so benign. Still, it generally pays to hedge your bets, and it may well be that the multi-brand approach to banking being pursued by both RBS and HBOS has more to commend it than the still monobranded strategy of HSBC, LloydsTSB and Barclays.Marshall/BALord Marshall of Knightsbridge is such an institution on the British corporate scene that it's hard to know what we'll do without him when finally he retires as chairman of British Airways next year. Yet even here, they are capable of doing quite a bit of damage to the big banks' prospects of achieving decent levels of top line growth. On the "if you cannot beat them join them" principle, HBOS and Royal Bank of Scotland Group are joint venture partners with Sainsbury's and Tesco in their banking endeavours.
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Interestingly, both joint ventures date back to when these companies were still smallish, Scottish regional banks, with little to lose from taking on the big clearers in the English market. There are some other natural advantages that supermarkets enjoy over banks, most obviously convenience and exceptionally low cost of customer acquisition.For the moment, the supermarkets largely confine themselves to bread-and-butter banking - the consumer credit and deposit markets - leaving the higher margin, more complex products such as mortgages to the incumbents. For instance, car insurance from Sainsbury's and Tesco is around 11 per cent cheaper than the average. Even if this were to double, the impact on the big high-street banks would not be that great. On the other hand, the supermarkets' share of the credit-card and personal lending markets is already much more significant at 8.9 per cent and 2.6 per cent respectively.According to the report, which was commissioned by Sainsbury's, supermarkets typically operate on costs of just 25 per cent of the average financial services company, enabling them to price much more aggressively than the market as a whole.
As things stand, the supermarkets have only 1.6 per cent of the British deposit market. In the end, it was the dot s that disappeared, not the big banks. Nor was it just an inertia thing that sank the new species, or that the internet failed to develop as fast as anticipated Actually it was something much more primeval Hated though they sometimes are, the banks are also trusted. In practice, few wanted to trust their cash to cyberspace.So what to make of the latest challenge to the banking oligopoly - the supermarkets? According to an IBM Business Consulting Services report published yesterday, the number of supermarket banking customers is likely to rise by nearly 150 per cent over the next five years from 5.8 million at present to 14.4 million. At the height of the dot boom, it was widely thought the big banks were toast. Extensive, legacy branch networks and cumbersome cost bases seemed to doom them to extinction Yet they proved resilient. The biggest challenge to the banks today comes in any case not from the economy cycle, which was the old cause of difficulty, but from competition and deregulation This threat too can be exaggerated.