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Emerging from the chrysalis


Financial services is having a tough old time with bank-bashing still the flavour of the month. But can the industry emerge from the credit crunch chrysalis a butterfly? Sarah Davidson investigates


Branding is big business and often comes down to that indeterminable warm fuzzy feeling. It’s hard to pin down and is notably absent in retail banking. Technically it’s the name you give a company. Your logo, your corporate colours, your business “ethos”. In fact often it becomes more about how you interact with your customers, whether they go away happy and what they think and feel about your firm. Getting it right isn’t easy and companies spend millions trying. Some brands are so successful their name becomes synonymous with the product itself – Hoover for example. Others can suffer calamities so critical for customers that the brand and scandal become one in the same thing – Enron springs to mind. In banking there have been several scandals to contend with: payment protection insurance misselling; endowment misselling; not least the credit crunch and sub-prime mortgages. But is the time ripe for change? Better banking. This is what Virgin Money claims it will bring to customers. And to be frank, financial services is in need of something better – at the very least in the minds of consumers. The government has said it wants


more competition and with over 80% of gross mortgage lending in 2010 done by the top six high street lenders, it’s true


we could do with a contender. But appealing to the customer isn’t easy and it requires a careful balance of good products, service and feel good factor. Virgin Money however seems to be on the path to getting customers to like them. “We’ve come a long, long way over the last 40 years with the simple aim of making things better,” is the slogan in the Virgin television ad campaign, which plays customers’ emotions about the cool of Virgin Records and the glamour of Virgin Atlantic. “And now our quest takes us into banking. Virgin Money, 40 years of better now in a bank,” it goes on to claim.


But what is better and how do you define it? Getting it right isn’t easy, especially when the legacy you have behind you is tainted, rightly or wrongly, by images of people queuing around the block to extract their savings from a bank on its knees.


NEW BEGINNINGS Last month Virgin Money completed the £747m takeover of nationalised lender Northern Rock. Combined with Virgin, which already offered credit cards and unsecured loans, the new bank has 75 branches, over 4m customers and expects to lend £45bn to customers over the next five years.


28 MORTGAGE INTRODUCER FEBRUARY 2012 Northern Rock has historically done


around £4-5bn gross mortgage lending a year and with the target Virgin has set itself, logic suggests the combined bank will do £9bn a year on all types of lending covering mortgages, credit cards and personal loans. Exactly how and in what proportion on mortgages remains to be seen but it is in the midst of weaving its silk web around the pink and black of Northern Rock, ready to emerge a red and white butterfly through the course of this year. Paul Lloyd, marketing director at Virgin


Money, says being “better” is down to a simple formula. Transparency, being straightforward and offering good service. “The Virgin brand is about being a consumer champion and doing things better,” he explains. “It doesn’t matter if it’s a better airline, better broadband or better banking, if you put a group of consumers in a room and ask them what a Virgin bank would be like all of them would be able to give you an expectation. And by and large that’s a positive expectation.”


TRUST


All well and good but trust is a huge part of banking in a way it isn’t for record sales or a broadband supplier. Research done by YouGov last year showed 92%


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