New UK online bank to be launched
Fin24

New UK online bank to be launched

2014-04-09 14:06

London - The founder of British banking newcomer Metro Bank plans to launch an online lender, hoping to take advantage of a sharp decline in the number of customers using branches and challenge established rivals.

Anthony Thomson, who stepped down as Metro Bank chairman in 2012, said he would lead the new venture called Atom alongside Mark Mullen, who last month resigned as chief executive of First Direct, the online bank run by HSBC.

Britain's financial regulator and lawmakers are keen to see new banks emerge to break the dominance of the country's biggest banks - Lloyds Banking Group, Barclays, HSBC and Royal Bank of Scotland - which control about three-quarters of the personal current account market.

They believe a lack of competition was a factor in scandals such as the mis-selling of loan insurance and complex interest rate hedging products.

Thomson said on Wednesday there was a growing trend for customers to bank online instead of in branches and the marketplace had changed dramatically since 2010, when Metro became Britain's first new high-street bank for over a century.

"Bank branch usage has fallen off a cliff. Telephony as a means of accessing bank accounts is in decline. All of the explosive growth is in digital generally and mobile in particular," Thomson said.

RBS said this month that branch footfall had fallen 30% in the last three years and several industry sources have told Reuters that type of decline is being seen across the industry.

A senior executive at one of Britain's biggest banks said the number of transactions taking place inside branches was falling by about 8% a year.

Range of services

Thomson expects Atom, which will have no branches, to open for business in 2015. It will offer a full range of services to personal and business customers including current accounts.

He said the new bank had the backing of a range of private and institutional investors in the UK and overseas but declined to identify them.

Thomson said he had been in talks with Britain's financial regulators about his plans "for some time" and was in the process of applying for a banking licence.

He still believed there was a role for branch banking but forecast that the proportion of transactions taking place online will continue to rise.

Thomson intends to retain his "significant" shareholding in Metro Bank which has 22 branches and plans to expand to 150 by 2020.

"There is absolutely a space for Metro Bank because there are still people who use branches. We're not saying Atom is a bank for everyone but I'd say it's the first real alternative to traditional banking," he said.