Magazine article Marketing

Mark Kleinman on Marketing and the City: Breaking into Banking

Magazine article Marketing

Mark Kleinman on Marketing and the City: Breaking into Banking

Article excerpt

Entrants to the financial-services sector may struggle to convert consumer disaffection into custom.

Not many people outside the City have heard the name Sandy Chen. Yet, for those with an interest in how British banking is likely to develop over the next 10 years, it would be worth taking some time to study his plans.

Chen, a respected banking analyst at the stockbroking firm Panmure Gordon, has set his sights on achieving something that few manage: launching a bank from scratch, and succeeding.

Chen's Walton & Co is plotting a flotation on the Alternative Investment Market, and already blue-chip investors, such as Invesco Perpetual and M&G, have offered financial backing.

The bank intends to fund itself by gathering deposits from wealthy individuals and concentrating its lending activities on businesses that have struggled to access credit.

Walton & Co is just one of a group of banks set up to take advantage of the purported consumer disaffection with high-street financial-services brands.

Banking sector marketers should take particular note of Metro Bank, since one of its executives is Anthony Thomson; he chairs the Financial Services Forum, which promotes marketing effectiveness across the industry.

Metro, which, like its peers, is awaiting a banking licence, intends to focus on elements of customer service at which the mainstream high-street lenders have traditionally been poor.

According to a fundraising document circulated to potential investors last year, it aims to open 200 branches for a market of what it says are 3m customers keen to switch their banking provider because of poor service.

That is also the belief of the Home and Savings Bank, another start-up lender, which is likely to be backed by private equity giant Blackstone It will launch as an online and phone bank, but is expected to consider bidding for the taxpayer-owned Northern Rock, as well as branch networks being sold off by RBS and Lloyds Banking Group.

My understanding is that those behind the Home and Savings Bank, who include a former Tesco Personal Finance boss and a former chief executive of Abbey National, intend to spend at least pounds 5m marketing the venture in its first year of operation.

Of course, not all of the new kids on the banking block are unknowns. Having secured a banking licence through the acquisition of the little-known West-Country lender Church House Trust earlier this month, Virgin Money is well along the road to offering current accounts and mortgages. …

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