M&S aims to launch banking and loyalty ‘superapp’ in long-term commitment to financial services

Marks & Spencer (M&S) is reportedly close to a seven-year agreement with HSBC to transform its banking division into a financial services and loyalty “superapp”.

The retailer and banking giant have been engaged in long-running talks and are focused on finalising a deal over the next few weeks before their current contract expires, Sky News‘ Mark Kleinman reported, citing unnamed sources.

It is said that M&S’ long-term goal is to build a “superapp” incorporating the retailer’s payments and financial services, as well as its Sparks loyalty programme.

M&S Bank has more than 3m customers and offers products ranging from personal loans and travel insurance to store payment cards and a buy-now pay-later scheme.

The supermarket operates the bank, originally founded in 1985, as a joint venture with HSBC. M&S Bank became a wholly-owned subsidiary of HSBC after being sold in November 2004.

One source said a public announcement with more details of the revised partnership was expected in April. It is unclear whether M&S is set to take an ownership position in due course.

M&S declined to comment when approached by City A.M. HSBC was approached for comment.

News of M&S doubling down on its financial services offering comes shortly after two of its biggest rivals, Tesco and Sainsbury’s, announced they would exit the banking business.

Sainsbury’s revealed in January that it would undertake a “phased withdrawal” from its banking business following a strategic review, in line with its “food first” strategy.

The next month, Barclays struck a deal with Tesco to acquire the supermarket’s retail banking business for around £600m and transfer around 2,800 staff to the Big Four bank.

Consolidation among mid-sized banks this year has not been limited to just supermarkets, with higher interest rates pushing up both profits and costs within the sector.

Nationwide earlier this month agreed terms for a £2.9bn takeover of Virgin Money to create the UK’s second-largest mortgages and savings provider. Meanwhile, Coventry Building Society is in exclusive talks to potentially merge with The Co-operative Bank.

Investment banking boutique Fenchurch Advisory Partners has been advising M&S on the talks with HSBC.

M&S announced earlier this month that chief executive Katie Bickerstaffe would leave the firm after two years in the role, to be succeeded by Stuart Machin.

The company’s shares have soared 74 per cent over the last year as its food business posted strong earnings despite inflationary pressures and the cost-of-living crisis.