Companies are leaving the financial supermarket concept behind
By Jack Bobo
When the late Walter Wriston was CEO of Citibank, he was a champion of the concept of “Financial Supermarkets.”
In his famous “String Bag” speech, he analogized the transformation of the former shopping habits of the British housewife with the emerging change (as he saw it) in the behavior of people seeking financial products. He pointed out that in former times, the British housewife would leave home with her string bag and visit a butcher shop, where she purchased meat for the family. Then she would go to a local bakery to buy bread and goodies. With her string bag not yet full, she would visit a local grocer to complete her shopping for the familys meals for the next several days.
That was the way it was yesterday, according to Wriston. Today the housewife goes to a supermarket where she obtains all the necessary supplies in a single visit. He then reasoned that it was ridiculous for a person to have to visit many locations to purchase a variety of financial products. And thus, the idea of a financial supermarket was born.
The concept of a financial supermarket also was used to persuade Congress to repeal laws that acted as firewalls between banking and other financial services. The reasoning put forth at the time: Financial supermarkets (just like regular supermarkets) are in the public interest and it isnt practical to wall off the meat department from the bakery or grocery department. Everything needs to be available at a single location and with one cashier.
Congress bought the idea and promptly did the bidding of the banks by repealing laws perceived to be impeding the development of such supermarkets. And so the rush to be on the cutting edge of financial services began.
The late Bob Beck persuaded the board of Prudential to purchase Bache in order to better position the company to ride this new wave of the future.
Not to be outdone, Sears was the first organization actually to open such a supermarket by putting all its financial products and services in a single location. The prototypes opened with great fanfare and the wave continued to roll.