Virgin Money boss David Duffy has got his eye on almost 800,000 new current accounts. That is roughly the number of customers the 59-year-old chief executive expects to lure from rivals at Lloyds, Barclays, NatWest, HSBC and the rest with a bold new strategy that – he hopes – will set the cat among the pigeons in the banking world.
This week, Duffy is set to unveil a rewards scheme that will give Virgin Money current account customers access to hefty discounts on the broadband, gym memberships and holidays sold by its sister brands in the Virgin Group.
Initially, all Virgin Money current account customers will be offered a discount worth £225 on selected 18-month Virgin Media packages – potentially slashing up to a fifth off the cost of broadband, TV and a phone line.
Experience: Virgin Money boss David Duffy started his banking career at Goldman Sachs
Customers who switch to Virgin Money from another bank will also get a case of 15 bottles of wine worth £180 through Virgin Wines. Then in future, Duffy hopes to broaden the current account perks to include other Virgin group services – including Virgin Holidays packages and Virgin Active gym memberships.
Nothing like Virgin’s scheme – which it has labelled Brighter Money Bundles – exists at its rivals. Elsewhere, cashback on purchases and bills is about as exciting as current account perks get – unless you’re willing to pay a monthly fee for a so-called packaged account with a bundle of insurance deals.
Duffy is so confident in the strategic move that Virgin is setting a target of raising its market share from 2.5 per cent to 3.5 per cent of the UK’s 77 million current accounts – and adding about £840million to account balances.
‘We want to offer both banking and lifestyle services in the same place – and we can do that because we’ve got the brand recognition,’ he tells me over Zoom from his home office in Fulham, West London.
‘We want to provide banking products with a better service and technology than anyone else, but also a range of other services – whether that’s gyms or wines or something else – through a marketplace.
‘It will be for the personal customers starting out, but we think we can take that model and do the exact same thing for small business customers as well.’
Duffy’s home office is adorned with Virgin Money posters – on the video call I can’t see a single personal item behind him – which he explains stops people getting distracted by a book case or something more interesting.
Last year, he steered the bank through a major merger with CYBG – owner of the centuries-old Clydesdale and Yorkshire banks. CYBG actually took over Virgin Money and adopted its name. Duffy, who was CYBG chief executive before the takeover, says his new model for cross-selling products was part of the reason for the tie-up.
The deal also gave the enlarged group a national branch network – inherited from Virgin Money’s 2011 takeover of Northern Rock – and a brand name that is recognised throughout the world. Sir Richard Branson remains a major shareholder with a stake of 13 per cent. accounts and personal and business current accounts through its reward offers.
And Duffy is counting on an income boost from cross-selling all those other deals, raking in fees from its Virgin sister companies when it sells packages or subscriptions.
The timing of a potentially profitable new initiative couldn’t be better. Record low interest rates – which may even go negative next year – are putting huge pressure on margins. Last month, Duffy warned that banks would have to find new revenue streams – potentially leading some to charge fees for current account services. He won’t be drawn on whether that list could include Virgin Money.
Duffy has plenty of personal experience of stormy times. He started his banking career at Goldman Sachs and became chief executive of Allied Irish Bank in 2011, tasked with rebuilding the bank’s balance sheet and reputation after it almost collapsed in the financial crash.
He became chief executive of CYBG in 2015 to help its owners National Australia Bank float the lender on the London Stock Exchange. He then ran the separate entity and spearheaded its takeover of Virgin.
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FREE £180 TIPPLE TO TEMPT SWITCHERS
Bank customers who switch their current account to Virgin Money will receive a free case of 15 bottles of wine worth over £180.
Under the sign-up offer launching this week, customers will be able to choose from red, white or non-alcoholic bottles through Virgin Wines.
Raising a glass: Under the sign-up offer, customers will be able to choose from red, white or non-alcoholic bottles through Virgin Wines
To qualify, you must use the current account switching service, download the Virgin Money mobile banking app, deposit at least £1,000 into a linked savings account within 31 days and have at least two direct debits set up.
The current account pays 2.02 per cent on balances up to £1,000 and offers free overseas debit card transactions. Virgin’s linked savings account pays 0.5 per cent.
The Irishman says the years of CYBG and Virgin experience among his team of bankers has been essential in guiding the company through the coronavirus crisis, dishing out £1billion in Government-backed loans to struggling businesses extremely quickly.
‘We have been helping small businesses plan for all of this, and when you’ve been through multiple financial cycles, you can do that,’ he says.
‘We can provide all the advice, and the credit, but lots of businesses don’t want lots more debt. So it’s not just about pushing out a large volume of lending.’
Duffy says Virgin is better placed to beat the app-based banks such as Monzo and Revolut – which have hoovered up younger customers in the past few years – because of its know-how.
‘Our advantage is that we are big enough – we are national, and we have every product and service. We can offer everything our customers need, so we are well-placed to deal with this crisis.’