Marks and Spencer to launch in-store bank branches

High Street retailer Marks and Spencer has said it will launch an in-store banking service this summer, backed by HSBC.

The first branch is set to open in July at the group's flagship store at Marble Arch in London.

It plans to open a total of 50 branches in M&S stores over the next two years, creating 500 jobs by the end of 2013.

M&S said it would start offering a current account from autumn 2012, with mortgages available "at a later date".

The retailer said its bank branches would follow store opening hours.

M&S began offering financial products in 1985, and its M&S Money operation - which offers credit cards, loans and savings - has three million customers with deposits of £3.2bn.

M&S Money was bought by HSBC in November 2004, with the operation being run by the bank and the retailer as a joint venture. HSBC, which also runs First Direct, and M&S share any profits in the bank equally.

M&S's financial services arm already has its own authorisation from the Financial Services Authority.

If you sign up for an account you will be a customer of HSBC, which owns the banking operation, even though business decisions and profits will be shared 50/50 with M&S.

So this is not the sort of game-changer that the Vickers Independent Commission on Banking was looking for to help whip up competition.

In that regard, Tesco's plans to launch its own current account next year could be more significant, because Tesco is an independent bank with 6.5 million customers.

Metro Bank is another one to watch. It is a start-up, which is also open every day, though only in London so far.

M&S is always keen on its packaging, so expect its accounts and mortgages to be nicely presented.

But customers are likely to judge them on two counts: convenience and value.

The stores should win on convenience, though the branches will only be in 50 of its 703 stores.

You will have to wait a few weeks to see whether the charges and interest rates are attractive enough to tickle your fancy.

That is important in relation to the safety of savings. Although it is owned by HSBC, customers can have up to £85,000 in both HSBC and M&S Money accounts which are covered by the Financial Services Compensation Scheme (FSCS).

The FSCS, funded by a levy on the industry and backed by the government, protects customers savings if a bank, building society or credit card operator goes bust.

M&S Money has bureaux de change in a number of stores already.

Leaflets about financial services are currently placed in stores, with applications for loans or dealings with savings accounts conducted on the telephone or online.

The new branches will have private meeting rooms and seats rather than counters. Online and telephone banking will continue.

"This is an evolution into current accounts and banking," said Colin Kersley, chief executive of the new M&S Bank.

Customers will be able to register for M&S Bank current accounts from July, and they will become operational in the autumn.

A spokeswoman for the provider said that there were no details as yet about whether the current account would be free, or carry a monthly charge.

Mr Kersley said that the current account and banking would need to run smoothly before mortgage products were launched.

A number of retailers and supermarkets offer credit cards, loans and savings products.

Tesco Bank is one of the largest, with double the number of financial services customers to M&S. It is a separate business, having broken its ties with RBS.

It announced in April that it had delayed a launching products such as mortgages following computer problems, and is yet to offer current accounts.

In comparison, Sainsbury's Bank has 1.4 million customers and is run as a joint venture with Lloyds Banking Group.