Sainsbury’s Bank was originally launched in 1997 as part of a partnership between Sainsbury and Bank of Scotland, but Sainsbury’s took full ownership in 2014. The bank has already offloaded it’s mortgage book in the summer of last year and is now looking to exit the rest of its financial product offering, which includes loans, credit cards, and savings products. Sainsbury’s is likely to explore different options, including selling the bank to a competitor.
As a regular reader of this newsletter, this story will remind you of Tesco’s decision to sell Tesco Bank and, thus, exit financial services as well. Both retailers have had a similar approach to offering financial services and have now both decided that it does not make sense to continue this way.
A blow for embedded finance? Not really. Even though I have never used any of their products, it is probably fair to say that Sainsbury’s and Tesco Bank are much closer to a traditional banking offering than they are to an embedded finance product (perhaps except for the brand and having the stores as a customer acquisition channel). Most importantly, both companies have a banking licence of their own. When you read the official announcement from Sainsbury’s, you will understand that offering financial services is still very attractive for them; however, the model (=own licence) is not suitable anymore, most likely due to high costs and regulatory burden. Sainsbury’s even emphasises that it is looking at a distribution model of financial products, similar to its insurance product offering.
