Coles to become a bank

It is believed that retail giant Coles is in the process of obtaining an Authorised Deposit-taking Institution license (also being referred to as a ‘banking’ licence by news outlets). If this goes through, it will allow Coles to add banking to its financial services, putting the supermarket chain in direct competition with the ‘big four’ banks.

Coles already offers insurance and credit cards, but it cannot currently offer savings accounts without a banking licence. It is believed that the licence will be held by Coles’s parent company, Wesfarmers, which currently issues Coles’s car insurance product.

Head of Communication at Coles, Jon Church, was reluctant to give information on the move to banking when he spoke to the Australian Financial Review. “We have a small portfolio of financial services, insurance and credit cards, and we are looking to develop that. We haven’t said more (and) we are not going to give a running commentary on where financial services might go.”

In 2011 Coles purchased National Australia Bank’s (NAB’s) 50 per cent share in the FlyBuys loyalty scheme, and it launched its insurance earlier this year.

One of the biggest concerns relating to Coles’s move to banking is what it means for consumers’ privacy. The combination of banking, supermarket and insurance data would give Coles unmatched power to target marketing messages to specific people. Founder of Pulse Marketing, Lauren Fried, commented, “With this data, retailers would know absolutely every movement we had, and then they could target us effectively.”

According to privacy experts, there are currently no laws to prevent Coles from combining the data on its shoppers and bank users in order to target them with personalised offers and promotions. Chairman of the Australian Privacy Foundation, Roger Clarke, is deeply concerned by what this means for the privacy of the Australian public. “It’s a serious concern if they are cross-leveraging between one another, taking advantage of customer data… It could lead to individuals being identified on the basis of controversial purchase choices, such as political-leaning magazines, leisure pursuits or club memberships. Consumers need to be aware of the potential dangers.”

There is also the issue of the data falling into the hands of entities who don’t just want to give you a discount on your milk. But Coles is not concerned. A spokeswoman has assured consumers that there are no privacy concerns. “We do not share or sell the personal information of members outside of flybuys,” she explained.

Woolworths, Coles’s main competitor, recently purchased 50 per cent of a data analytics company called Quantium, which sells de-identified data to other companies, suggesting Coles is not the only supermarket giant looking to collect data on its consumers.

Read more at the Australian Financial Review.

Find out more about the privacy concerns at the Sydney Morning Herald.


Opinion: Your privacy has been sold

I am not a paranoid person by nature. But I am starting to rethink that stance. I knew that Coles and Woolworths had a lot of pull in the Australian marketplace, but the idea of these supermarket giants knowing my every move, and then using that information, is enough to have me looking over my shoulder. But this is more than just an issue of privacy.

No, I don’t want Coles to know that I’m having a bad day because my trolley contains nothing but ice-cream and Tim Tams. It’s disconcerting to think that one of the Coles data-analysis team could point to my house and say, ‘I know what brand of toilet cleaner they’re using. Oh, and they’re just about to run out.’ But this isn’t the only part of the story which bothers me.

I’m also worried about the sheer size of companies such as Coles and Woolworths. Earlier in the year Woolworths complained that Aldi, that little supermarket which sells brands you’ve never heard of, was planning to open more stores down the east coast, as if that made it some kind competition to the supermarket giant. Both Woolworths and Coles have been allowed to venture into far too many areas. They are both major players in the pokies business. They own insurance companies, credit card companies and, most obviously, most of the supermarkets in Australia. Woolworths and Coles also dominate liquor and petrol retail outlets. They only compete with each other, and they just keep growing. If Coles wants to branch out into banking, surely in the name of fair competition, the Australian Competition and Consumer Commission (ACCC) should have compelled it to sell off something else first? 

As far as I can see, there are no ethical constraints being put on these supermarket giants. There is overwhelming evidence that Coles and Woolworths are doing nothing but damage to Australian farmers. They don’t care about the little people, so why should we believe them when they say there are ‘no privacy concerns’? If Coles has access to as much data on its customers as privacy experts say it will, then there is no question in my mind that the supermarket giant will use and abuse that information to maximise its profits, with no thought to your privacy, or to mine.

What do you think? Should Coles be granted a banking licence? Or do supermarket giants already have too much power? Are you worried about your privacy?