Virgin Money has announced plans to step up its fight against the “Big Four” banks with an assault on the small business market and the launch of a new digital current account.
The company, created following the collapsed Northern Rock, had previously put plans for a business account on ice amid uncertainty following the Brexit referendum.
But today it said it will launch a savings account for SMEs in January, followed by a business current account later next year. It plans to attract £5bn of deposits from business customers in the next five years.
Virgin Money said there was an opportunity for a “customer-focused disruptor” to take market share from its larger rivals by offering “service and value for customers”.
The bank is also working on a new digital platform it said could give it an edge on the Big Four, which it plans to launch in 2019.
A “universal account” will allow customers to create partitions to keep money for bills separate from their day-to-day expenses and use a “smart ledger” to get a better sense of what they are spending money on each month.
It faces competition in this area from new app-based start-ups like Atom Bank and Monzo, but chief executive Jayne-Anne Gadhia said Virgin Money’s existing scale and digital experience meant it was well-positioned to hold its own in the market.
“Traditional banks are investing in digital transformation but are burdened by legacy systems; whilst digital start-ups currently lack the customer base to disrupt the sector on any significant scale,” she said.
The government has also been urging banks to lend more to smaller companies in a bid to improve Britain’s prospects of selling its goods abroad after the country exits the European Union.
In July international trade secretary Liam Fox announced a partnership with five large lenders – not including Virgin Money – designed to enable smaller suppliers to British exporters to deliver products to their clients more efficiently.