Virgin Money To Launch Current Account Trial

By Mark Kleinman, City Editor

The banking arm of Sir Richard Branson's business empire will on Monday become the latest high street lender to begin an assault on Britain's lucrative current account market with the launch of a pilot among its 3000 employees.

Sky News understands that Virgin Money, one of the country's fastest-growing banking groups, will unveil the trial ahead of a full launch scheduled for next year.

It will mark a potentially-significant phase in efforts to bolster competition in the current account market, with well over 80% of accounts currently supplied by the five biggest lenders: the state-backed Lloyds Banking Group, owner of HBOS, and Royal Bank of Scotland, which owns NatWest; Barclays, HSBC and Santander UK.

Once the staff trial has been completed, Virgin Money will target consumers who are underserved by the major lenders, offering a basic account with no fees or charges and free access to the UK ATM network of cash machines.

Sir Richard Branson celebrates his acquistion of Northern Rock in Newcastle

Doing so is expected to be loss-making for Virgin Money, according to analysts, meaning that the availability of the product is likely to be restricted to those consumers without an existing current account.

A wider launch will get underway in Scotland and Northern Ireland in the first quarter of next year, with nationwide coverage and a digital banking service likely to be available by the end of 2014, according to people with knowledge of Virgin Money's plans.

Virgin Money executives are understood to be confident of making a serious impression on the current account market by utilising the network of Northern Rock branches and infrastructure that it acquired in 2011, and through a marketing campaign emphasizing the parent brand's credentials of service and value.

"There won't be hidden charges or gimmicks. It will be about delivering for consumers," an insider said on Sunday.

Sir Richard has said previously that he wanted to offer a choice between 'free' current accounts and those which incur a small up-front fee. It is unclear whether that will be the case as Virgin Money ultimately grows its presence in the sector in the coming years.

The issue of current account charges is becoming more intensively-debated as banks face up to the increased regulatory costs that will be triggered by the ring-fencing structure being introduced as part of the Government's banking reforms.

Under the new rules, so-called universal banks such as Barclays and RBS will have to establish separate subsidiaries for their high street and investment banking arms, which the Independent Commission on Banking said in 2011 was likely to cost the industry several billion pounds annually.

Virgin Money is likely to be an indirect beneficiary of the new rules because its sole focus on retail banking will mean that it does not have to process many of the complex structural changes required by its competitors.

Taking over Northern Rock was a crucial moment in Virgin Money's expansion

It is also likely to be aided by the new seven-day switching system for current account providers which came into effect during the autumn. Barclays and the Co-operative Bank are among those which have seen net losses of customers, the latter as a result of the adverse publicity over its £1.5bn capital hole and allegations about the behaviour of its former chairman, Paul Flowers.

During the last year, Virgin Money sold more than 1.5 million new products to customers, having established a significant market share in loans, insurance and savings.

Its takeover of Northern Rock was a crucial moment in its expansion, but the length of time between that deal and the current account launch reflects both Virgin Money's determination to develop the right products and the pitfalls of associating its brand with the poor service that has blighted British banking.

Senior executives at the major banks admit that they have only been able to avoid charging for current accounts because they have been subsidised by the sale of products such as payment protection insurance (PPI).

The mis-selling of PPI and a range of other products have cost the major banks billions of pounds in compensation and further tarnished the industry's reputation.

Last week, Tesco said it was poised to create hundreds of jobs by entering the current account market at a time when the supermarket group is wrestling with challenges in its core retailing business.

Other new current account providers include Metro Bank, which is raising nearly £400m from investors in an attempt to accelerate its growth.

Jayne-Anne Gadhia, Virgin Money chief executive, declined to comment on the details of its plans but told Sky News: "Our entry into the current account market is a significant step on our quest to make banking better."

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

Anda sedang membaca artikel tentang

Virgin Money To Launch Current Account Trial

Dengan url

http://tunggusurya.blogspot.com/2013/12/virgin-money-to-launch-current-account.html

Anda boleh menyebar luaskannya atau mengcopy paste-nya

Virgin Money To Launch Current Account Trial

namun jangan lupa untuk meletakkan link

Virgin Money To Launch Current Account Trial

sebagai sumbernya