Virgin Money has revealed its attempt at pulling customers away from Britain’s biggest high street names, unveiling its new digital current account.
The bank says it is looking ‘to break the big banks’ stranglehold on the UK’s stagnant current account market’.
The challenger bank’s first foray into digital banking can be opened in-app, online, over the phone or in one of the bank’s 231 branches, which includes re-designed branches in Birmingham, London and Manchester.
The announcement follows Virgin’s takeover by Clydesdale and Yorkshire Banking Group in October 2018, which created the UK’s sixth-largest bank.
Virgin Money is in the middle of a big rebrand following its takeover by CYBG, including 3 refurbished flagship branches in Birmingham, London and Manchester
The Clydesdale and Yorkshire brands are due to be phased out, with the new digital account carrying the Virgin name marking a sign of things to come.
Existing customers of those two banks, as well as holders of Virgin Money’s old basic bank account, will not see any change to their accounts for now, but newcomers will only be able to sign up to the account.
The launch follows a £60million rebrand of Virgin Money, which CYBG executives hope pans out following a £194million loss in the 12 months to September, an axing of its dividend and an extra £385million bill for mis-selling PPI.
What do you get with the account on day one?
Given Virgin is setting out its stall to try and take on Britain’s biggest banks, it is perhaps no surprise it has launched a fairly impressive looking offer.
For customers sick of poor savings rates and increasingly sky high overdraft fees, there will be lots to admire in the new account.
Virgin’s arranged overdraft rate is currently set at 19.9 per cent, while the account itself pays 0.5 per cent interest on balances of up to £2,000.
On top of that, it comes with a linked easy-access savings account which pays 1 per cent with no restrictions on bonus rates or withdrawals.
The new digital bank account has a big focus on mobile usage, with Virgin trying to edge out Monzo and Starling as the leading digital challenger to the big high street banks
While this is not that close to the top of the best buy tables, with Marcus Bank paying 1.45 per cent, it is likely a better offer than most big banks’ easy access rates and is only 0.21 percentage points below Virgin Money’s own Double Take E-Saver.
Virgin also says its new bank account has a feature which will work out when your account is running low and automatically sweep money from the easy-access account into your bank account to stop you incurring any charges.
In an indication that Virgin is attempting to take on not only the likes of Barclays and NatWest but also Monzo and Starling, the bank has focused a lot on its mobile offering.
The current account comes with tools that enable customers to set budgets and organise savings into pots within its app, a timeline of all transactions across all accounts and real time spending updates broken down into categories.
Virgin Money’s new portrait debit card
The features are all staples of mobile-only banks which have since been emulated by bigger players, while Virgin has taken an even more obvious leaf out of Starling’s book by choosing to offer a ‘portrait’ debit card.
Like Starling, it also offers an in-app digital store, including a feature developed in partnership with GoCompare which will let users switch energy supplier in-app.
Andrew Hagger, the founder of personal finance site Moneycomms, said: ‘I like the linked savings account and ability to sweep money across, but apart from that does it offer any more than Starling Bank, which pays 0.5 per cent up to £2,000 and 0.2 per cent between £2,000 and £85,000?
‘Virgin was always one of the innovators but I think it’s now playing catch up with some of the fintech banks.’
According to figures from the Current Account Switch Service, Monzo and Starling have collectively gained a net 42,343 customers between January and September this year.
Clydesdale Bank meanwhile has lost almost 15,000 over the same period.
Does Virgin have any future plans for the account?
Virgin Money’s Fergus Murphy said: ‘The launch of our new current account marks the start of an exciting journey to transform our offering to customers and disrupt the financial services market in the UK.
‘There’s plenty more to come as we improve the digital customer experience by introducing new functionality within the mobile app and offering even more value to customers through the introduction of other Virgin company rewards.
‘And we know our customers love to travel, so well ahead of the summer holidays we’ll be making our new current account fee-free for debit card and ATM transactions overseas.’
THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS
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