Marks & Spencer said it would offer customers a combined credit and loyalty card in a bid to snatch back market share in the hotly competitive financial services market.
The retailing giant has reached an agreement with a group of banks, which have lent it £1.25bn over three years to enable it to develop its new card, which will be part of its move to rebrand its financial services business M&S Money.
M&S has already piloted the combined card in Wales and is poised to roll it out over the next three years across the country. M&S argues customers will be attracted to the card because it offers the convenience of having one card in their wallet rather than two.
M&S's new card will be run entirely in-house and the group hopes it will appeal to the existing 3.5 million chargecard holders, as well as helping to bring in new business.
In the year to the end of March, operating profits for M&S financial services moved marginally ahead to £86.4m. The company projects that development of the next card will cost it £60m this year.
There are 19 banks which have backed the deal, including Barclays, Lloyds TSB and Standard Chartered. Others included in the syndicated loan are BNP Paribas, Citigroup, Deutsche Bank, HSBC, Morgan Stanley and Royal Bank of Scotland.
Laurel Powers-Freeling, who joined M&S in November 2001 from Lloyds TSB's wealth management division, is heading the financial services operation.
The new combined card is a key part of the company's attempts to revitalise its financial services performance and drive growth.
It comes as a replacement for M&S's old store card, which had been very successful, but which has declined in popularity since M&S started accepting third-party credit and debit cards.
The company said trials of the new card had led to an increase in sales, as well as improving customer loyalty.
M&S has branched out into financial services on the belief that its customers are a natural group to cross sell products such as loans and investments to. The wide variety of products on offer also include pet, wedding and travel insurance. The group intends to trial motor insurance later this year.
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