Sir Richard Branson's Virgin Money to launch current account trial
16 December 2013
Sir Richard Branson's business empire would today unveil an initiative to target the UK's lucrative current account market with the launch of a pilot among its 3,000 employees.
According to Sky News Virgin Money, one of the country's fastest-growing banking groups, plans to unveil a trial ahead of a full launch scheduled for next year.
Commentators say this would mark a potentially-significant phase in its efforts to bolster competition in the current account market, with well over 80 per cent of accounts currently supplied by the five biggest lenders - the state-backed Lloyds Banking Group, which owns HBOS, and Royal Bank of Scotland, the owner of NatWest; Barclays, HSBC and Santander UK.
On completion of the staff trial, Virgin Money would target consumers who were 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.
A move of the kind is expected to be loss-making for Virgin Money, analysts say, meaning that the availability of the products is likely be restricted to those consumers without an existing current account.
Quoting people with knowledge of Virgin Money's plans, Sky News said a wider launch would get underway in Soctland 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.
Virgin's entry into the market comes after a similar announcement by Tesco last week. According to commentators, both companies hoped to take advantage of new rules that would allow customers to change accounts in seven days.
Virgin plans to offer accounts to the public in the spring of 2014. The first to be launched would be a basic service with no charges, targeted at people who do not have an account at the moment. The account would come with a debit card but there would be no overdraft.
The Guardian newspaper quoted a source at Virgin as saying, it was planning to increase the amount of competition in the banking market.
At a later date in 2014, Virgin hoped to offer a more sophisticated account which would include charges although it had to decide on the details yet.
Though Northern Rock and other building societies had offered current accounts in the past, there was now a renewed interest in taking on the street banks with new government regulations expected to insist on the separation between retail and investment banking.