Virgin Money makes £38.3m investment to create new digital bank

The firm, which employs more than 200 people at its hub in Edinburgh, is focusing particularly on the SME market with a new offering of online current accounts and savings through a “data-driven, customer-centric” digital bank.

The new digital bank is expected to come online in the second half of this year, with more significant investment expected to follow last year’s £38.3 million outlay.

The company, which yesterday unveiled soaring profits across its already well-established high street, retail and credit card operations, says it aims to take advantage of the technological and regulatory changes shaping UK retail banking, including the introduction of PSD2.

“The Virgin Money digital bank will be underpinned by next generation technology and architecture, offering customers a Universal Account that can be personalised to create a unique proposition tailored to individual needs,” says the company in its results statement. “In addition to our current presence in the mortgage, credit card and retail deposit markets, the digital bank will allow us to expand into the current account and linked primary savings markets.”

Virgin Money signed a contract with 10x Future Technologies, the fintech startup established by former Barclays chief Antony Jenkins, in November 2016 to build a digital core for the new business.

The vendor’s API brings legacy systems together into a single secure network, which will help Virgin Money to pull together all the relevant data about a customer - such as existing finances, lifestyle preferences and risk tolerance - to find them the best product such as a mortgage in a fraction of the time it currently takes.

Jayne-Anne Gadhia, Virgin Money chief executive, said: “Broadening our customer appeal through the development of our SME and digital bank propositions will provide access to a wider pool of UK retail banking revenues and further diversify our funding base.”