Coles has upped the ante in taking on Australia's big four banks, with plans to issue personal loans in a new service planned for introduction in mid-2015.
The supermarket giant has teamed up with financing major player GE Capital and will split the cost 50/50.
The partnership reflects a global trend of retailers pushing into banking.
Coles finance director Rob Scott said the offering would initially stay clear of mortgages, issuing credit cards and other personal finance products, such as small loans.
"There are a whole range of products and services that we can get involved in," Mr Scott said.
"But we also have a few screens. The first thing is can we deliver fantastic value and, secondly, can we offer great service.
The joint venture is subject to formalising a memorandum of understanding and regulatory approvals, which Mr Scott said he hoped would be completed within this financial year. It will not require a banking licence.
Although Mr Scott said it was a natural progression in Coles' foray into financial services – steadily introduced by Wesfarmers since it bought the supermarket chain in 2007 – he declined to comment on any plans to obtain a banking licence, which would enable the supermarket to accept deposits.
Such a move isn't unique among retailers. In Britain, Tesco, Sainsbury, and Marks & Spencer take deposits and sell personal loans.
"It's best that I say no comment on that."
Mr Scott acknowledged that the banks had a headstart on Coles, but said that was not a disadvantage.
"The advantage of us coming late into the game is that we don't have 40 years of IT legacy infrastructure. We can come in with best-in-class platforms that we can bring faster to market."
The major banks are trying to invest and overhaul legacy technology, although Commonwealth Bank has completed much of the upgrades.
The expansion into financial services comes as Coles launches its "mobile wallet", which it trademarked in May. The system uses credit card chip and smartphone technology and will be available to customers from Tuesday.
It will work on all smartphones and involves a credit card chip being embedded in a sticker that is applied to the back of a device, rather than a phone's internal electronics.
Customers then can swipe the sticker across a payment terminal, using existing MasterCard PayPass, or Visa payWave, technology.The sticker also contains a barcode linking purchases to the flybuys rewards system.
Transaction data and a tally of flybuys points can be accessed via a smartphone app. Mr Scott said for extra security the mobile wallet sticker can be switched on or off via the app.
He said the supermarket had been trialling the new payment system for the past two years and found that 77 per cent of Coles MasterCard customers found it more convenient than using their traditional credit cards.
Mr Scott said there would be minimal changes to stores, with most of its personal finance products being done online.
"We are mindful that we need to keep our costs down to bring better value to customers and customers today are more attracted to managing their finances with their fingertips [on their mobile phone]."
The supermarkets' 400,000 Coles MasterCard customer accounts will form part of the joint venture. Coles' insurance products will remain a separate entity.
The venture is aiming for a lending book worth $800 million in its first year of operation.
"We are not interested in just clipping the ticket, which is what some distributors have done," Mr Scott said.
"The move with GE is a logical, sustainable, incremental approach to expand financial service activities," he said. It was unlikely the supermarket would need to issue bonds to fund the venture, he said.
