So Virgin is finally going making its entrance into financial services with its acquisition of Northern Rock – and not the clean, sterile world of credit cards, but rather the messy, argumentative and thankless environment of high street banking.
Sir Richard Branson has long argued that the UK banking sector needs “fresh ideas” and an “injection of new competition”. In a recent exclusive interview with Marketing, he promised to put ethics at the heart of the bank and create a “good, honest brand” to win over consumers.
Like a political party in opposition, it is easy to make noble promises, but when you arrive in office a rather more pragmatic attitude can take hold.
People are passionate about a lot of brands, but, other than perhaps First Direct and Egg, few financial services companies have engendered positive relationships with customers. The average consumer expects his or her bank to deliver in the most efficient manner possible, and is appalled by the idea that they must pay for it. When banks fail in any aspect, antagonism quickly follows.
But while established brands like Barclays, NatWest and Lloyds TSB can rely on a laziness among consumers when it comes to swapping banks, Virgin Money must prove beyond reasonable doubt that it truly is a different, customer-friendly prospect. Any lapse into the kind of cynical practices of larger high street banks will be seen as a complete betrayal of its promises.
The arrival of new banks is good for British consumers, and the wait is on to see what kind of proposition new venture NBNK may form. The majority will certainly welcome Branson, given his credentials for providing a genuine alternative to market leaders. But, unlike booking a flight ticket or TV package, consumers are far more averse to engaging with their bank. Virgin Money must play a long, painful game before it receives the kind of kudos enjoyed by its other brands.
