Virgin Money, the bank that snapped up most of the Northern Rock assets after it went bust a decade ago, is moving into small business services in 2018.
The UK government has repeatedly said that it wants banks to be more proactive in the lending to and servicing of SMEs. But the anecdotal evidence has long been that the big old banks are not just lacking in understanding for SMEs in general but particularly ignorant when it comes to digital businesses and ecommerce start-ups who might need even just a little help.
Virgin Money Chief executive Jayne-Anne Gadhia says: “We are also delighted to announce the start of our journey into SME banking and we will be launching a new SME savings account in January 2018.”
“This will enable us to start developing relationships with business customers and lay the foundations for potential broader future development in this attractive, but poorly served market. We start the next phase of our evolution from a very strong position.”
Any new entrant into the SME lending market is very much welcome. The traditional banks haven’t addressed the gap in the past decade, especially when it comes to start-ups and digital and ecommerce businesses. So hopefully Virgin Money can make a difference here. But it must be said that they have been trailing these changes for nearly a year and we’ve yet to see them arrive for SMEs. Savings accounts will arrive in 2018, but the new digital platform won’t launch until 2019.
Virgin Money say that the new platform, that will help SMEs, is more than a year away. Gadhia says: “Traditional banks are investing in digital transformation but are burdened by legacy systems; whilst digital start-ups currently lack the customer base to disrupt the sector on any significant scale.”
“Our end-to-end platform will enable us to capture market share by taking full advantage of our unique position and competitive advantages which are defined by a well-known and trusted brand, no legacy issues and an established scalable customer base.”