The Post Office will launch a current account in the next few weeks, using its massive branch network to take on Britain's high street banks.
The new account, provided by the Bank of Ireland, will be made available through a small number of Post Office branches from the spring before a wider roll-out across an 11,500-strong network next year.
The Post Office already provides a range of financial services - including savings accounts, mortgages, insurance, and credit cards - to around three million customers.
However, by introducing a current account it will be tapping into its huge branch network and trusted brand to provide real competition to Britain's big four banks.
The move has been on the agenda since the 2008 financial crash, with politicians keen to break the stranglehold of the 'big four' - Lloyds, RBS, Barclays and HSBC - which hold 75% of the market, according to the Office of Fair Trading, leading to a lack of dynamism and customer choice.
Nick Kennett, director, financial services, Post Office, says: "We've carried out extensive research into the current account market and the findings tell us that customers want simplicity, transparency and good value for money. With over 11,500 branches, which is more than all the UK banks combined, we can provide this through the most convenient and accessible retail network in the UK."
Several other new entrants are also bidding to take on the established players, including Metro Bank and Virgin, as well as retail giants Tesco and Marks & Spencer.