The Co-operative is to put banking operations inside its convenience stores to encourage customers to use more services within the sprawling mutual group.

The move follows similar strategies by Tesco, Marks & Spencer and J Sainsbury. It marks a new campaign by the Co-op to compete with mainstream competition by pushing its ethical message.

The Co-op began trials six weeks ago in stores in Nottingham, Brighton and Hove. Of its 2,200 food stores, it believes it could open mini-banks in the 250 biggest.

The Co-op is investing £1m in the project, part of its strategy to double market share in financial services over five years. David Anderson, chief executive of Co-operative Financial Services since June 2005, said there was a “huge opportunity” as “there is very little cross-holding between products”.

On average customers have 1.3 financial products. “We think we can push that to over two, which would mean we can almost double our customer base without finding any new customers.”

The Co-op is also aiming to boost cross-selling between the group, which includes pharmacy, funeral arrangement, travel and legal advice services. The organisation has three million members, and a third of those have no Co-op financial services products.

The roll-out will vary from some stores where there is a machine to withdraw cash and deposit cheques to others where there will be staff to advise on products including mortgages and investments.

Having more banking branches should support the Co-op’s phone and internet bank, Smile, as customers like to have the option of a physical branch even if they carry out most banking transactions electronically, Mr Anderson said.

The Co-op also believes it has a competitive advantage because of its ethical investment credentials. “One-third of our profits are from customers who say they joined for our ethical policy,” he said.