A possible move by Coles and Woolworths into the home loan market could benefit consumers by forcing the big banks to offer cheaper products, a former Australian Competition and Consumer Commission chief says.
ABC TV reports the supermarket giants are in talks to establish their own banks and provide all types of loans to consumers, following in the footsteps of British supermarket retailer Tesco.
Tesco uses shopper data — such as where a customer buys fuel to detect how far they drive — to tailor and develop financial products.
Former ACCC chairman Graeme Samuel said if Woolworths and Coles move further into banking, their access to consumer data from loyalty programs and credit cards could shake up the big four banks and force cheaper products.
Online giants like Google, Facebook, and Amazon are already using data to profile consumers and it's the way business is now operating, he said.
Both Coles and Woolworths have already dipped their toes in the banking pool, offering credit cards and insurance policies.
Last month, Coles also announced it was moving into the personal loan market, after signing a deal with GE Capital.
A Woolworths spokeswoman was tight-lipped on whether there were any plans for the supermarket chain to push further into the financial sector.
If there were, they would be announced in the usual way, she told AAP.
Coles could not be immediately contacted for comment.
In a recording obtained by ABC, Woolworths director of group retail services Penny Winn details how the company could use consumer data to assess their financial risks.
"Customers who drink lots of milk and eat lots of red meat are very, very, very good car insurance risks versus those who eat lots of pasta and rice, fill up their petrol at night, and drink spirits," she said.
Coles general manager of financial services, Richard Wormald, said the company wasn't using shopping data to tailor insurance premiums but would reassess that policy as technology advanced.
Consumer group Choice said customers of both supermarket giants may not be aware of how much information they are giving away with loyalty and credit cards.