Julian Knight: Strap yourself in for a bracing ride now Branson's in charge


You rarely get exactly what you wish for in life, but sometimes you can get fairly close. I wanted Northern Rock to be re-mutualised once it has passed out of government ownership.

This would have given the bank back to its customers and returned it to the status quo which existed successfully for a century before the disastrous decision to demutualise.

However, the Treasury doesn't want to wait. and although the price looks a poor one the guarantee of no compulsory redundancies at the Rock for three years is a welcome fillip for the recession-haunted North-East.

So, instead, we have Sir Richard Branson's Virgin Money buying the Rock. Almost as soon as the queues started forming outside the Rock four years ago Sir Richard started stalking. And at £747m the bearded one has yet again bagged himself a potential bargain, particularly as the new group doesn't have the riskiest Rock loans attached.

But what will Virgin's long-trailed entry into the bank market mean for customers?

Well, those close to Sir Richard say he is as passionate about the Rock as he is about his airline.

Improved customer service is being rightfully identified as key, and the Rock will benefit from the contrast between the tainted big high-street names and that of the Virgin brand.

I'm an unashamed fan of most things Virgin branded – apart from the ghastly cola. I always look to fly Virgin first; I have their travel insurance, and am even a regular passenger on their trains which these days do actually seem to arrive on time. There is a feeling of a little greater care being taken with most things Virgin. Not quite as clearly so as say John Lewis, but not a million miles off that.

However, in the harsh world of retail banking a slightly funkier feel to branches – the 70-plus Rock branches can expect a facelift soon as well as perhaps a sharper call centre operation – isn't going to pull up any trees. What the Rock will need is a brand-new range of products and I don't mean irresponsible ideas such as the Together mortgage which lent customers up to 125 per cent of a property's value and helped bring the bank to the brink of collapse in 2007.

The savings rates and mortgages offered by the Rock at the moment are, at best, middle of the road. In the case of the Esaver at 0.5 per cent, downright stingy.

Personal banking is very price sensitive and no amount of Virgin marketing sparkle will be able to dress up a bad deal. Nearly every major breakthrough product in personal finance sector in my memory has been primarily been based around an eye-catching rate. However, at a time when the base rate is just 0.5 per cent and there is the real possibility of the chaos in the eurozone leading to another credit crunch, designing a real market offering a real stand-out rate is going to be an Olympian challenge.

But Virgin Money has a good record of innovation. The One account, the first truly flexible mortgage in the UK and one that Sir Richard was very keen on, was a standout, while the credit card, thanks to a good deal struck with MBNA, has always been among the most competitive out there.

If I was at the Rock and looking for areas in which to do something different, it would be for today's first-time buyers, who wrongly feel there are no borrowing options; inflation-proof savings and a free current account with the sort of services attached that you'd only normally see with the fee-charged package account.

If Virgin wants to really shake up the high street then the company is going to have to think differently, price keenly and not just rely on gimmicks. It's going to be as interesting to see Virgin take on the big banks as it was the transatlantic airline carriers a generation ago. It surely will be a rocky, but exciting, ride.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones
    Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

    Why are we addicted to theme parks?

    Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
    Tourism in Iran: The country will soon be opening up again after years of isolation

    Iran is opening up again to tourists

    After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Transfer window: Ten things we learnt

    Ten things we learnt from the transfer window

    Record-breaking spending shows FFP restraint no longer applies
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent