- Virgin Money spent £38.3 million developing a new digital bank last year.
- It will offer current accounts and savings products. Testing starts later this year.
- Virgin Money’s income rose 13.5% last year and pre-tax profit rose by 28%.
LONDON – Virgin Money spent £38.3 million last year developing a digital bank to take on the likes of Monzo and Revolut.
The bank disclosed the spending in its full-year results on Tuesday. Virgin Money said it expects to begin testing its new digital bank in the second half of the year.
App-only banks have become one of the hottest trends in finance over recent years, with fully licensed players such as Monzo, Atom, and Starling Bank springing up and aspiring banks such as Tandem and Revolut also pulling in users.
Virgin, itself a challenger brand, is jumping on the digital bandwagon, hoping that its new digital bank will “allow us to expand into the current account and linked primary savings markets.”
The bank said in its results: “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.”
Virgin Money partnered with core banking startup 10X, which was founded by former Barclays CEO Antony Jenkins, in November 2016 to help develop the new bank.
Virgin is not the first High Street lender to develop a digital side brand. Clydesdale and Yorkshire Banks launched a digital-only current account, B, early last year.
Virgin Money’s full-year results show a 13.5% rise in income to £666 million last year and a 28% rise in pre-tax profit to £273.3 million.
CEO Jayne-Anne Gadhia said in a statement: “We generated market-beating growth across our core products as we continued to capture high-quality market share in mortgages and credit cards.
“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.”