The digital revolution coming to banks and banking in no uncertain terms.
Figures show that on line banking is more popular than ever. Recent research by the Centre for Economics and Business Research (CEBR) estimates that the value of mobile and online transactions will double over the next few years, from £1.7bn a week in 2014 to £3.4bn in 2020. The same figures estimate that the sum of all on line transactions will be £9.4bn a week by 2020, from £5.8bn in 2013. Internet only banks and service providers such as First Direct & Charter Savings Bank have shown that on line banking is the way forward. Banks and financial service providers are keener more than ever to improve, update and modernise often old and creaky back room functions to entice new customers.
With that in mind, a North East start up, Atom Bank, will be the first of its kind- a purely digital bank. There are no branches or customer service phone services. Further, it is the digital aspect that is its biggest selling point; it does not intend to have market leading product, high savings rates, or the lowest overdraft charges but rather “good quality products.” Its selling point to entice customers to switch will be its digital only nature.
Anthony Thomson & Metro Bank
Atom Bank will be led by Anthony Thomson (the founder and former chairman of Metro Bank), and Mark Mullen, the former CEO of First Direct. Mr Mullen recently left First Direct, with no formal announcement, two weeks prior to the announcement of Atom Bank. It will be based in the North East, and will employ close to 120 people – mainly in IT related roles.
In his press announcement introducing Atom Bank, Mr Thomson said of the new bank that “the difference is, we will be able to offer exceptional front-end service plugged into a state-of-the-art back end platform.” Atom Bank will not have any physical branches for customers – except a few for business banking customers – and will not have any telephone banking services either. The bank will exist and operate solely online and via smartphones.
Atom Bank is yet another venture for Mr Thomson, who launched Metro Bank a few years ago atom Bank is a about turn for Mr Thomson, and shows how quickly banking has evolved and changed. At the time of launching Metro Bank, Mr Thomson felt strongly that bank branches, and that personal interaction with staff in a physical presence was important at a time when the major banks were closing branches, and reducing their physical presence. Now, admits to his change of direction, as he is adapting to changes in the banking sector: “a lot has changed since I came up with the idea for Metro in 2007… To put branches in place now would be like BT bringing back phone boxes. Now everything can be done online or through mobile.”
Despite the popularity of internet banking, recent years have seen big banks dogged by computer glitches, system glitches, and security concerns. That, according to Atom Bank’s team, shows that the IT and back office and computer functioning of the bigger banks is in urgent need of modernising and upgrading, to be fit for service in the 21st Century.
Bank branches, or a physical presence, may soon be obsolete, as more and more is done electronically. New banks with a sole on line presence will profit in such a changed banking sector.
Last year, government rules, enforced by the regulators, meant that it was easier than ever to switch banks. An estimated 2.4 m Britons took advantage and moved bank last year – with a similar number expected this year. In this era, the prospect of a digital only bank could be very appealing to many of those seeking to switch banks. With on line banking set to rise, a good and secure online presence and capability is more important for banks. In such an environment, banks like First Direct and Atom are predicted to thrive, and grow.
Furthermore, the new banks and financial service providers that are emerging are giving customers greater choices regarding who they bank with, and stimulating greater completion amongst banks. That can be to the benefit of customers, and personal finances, as customers benefit from competitive financial products and rates on offer.