The phenomenal success of the new bank without branches, set up by Midland Bank, is forcing others to follow suit.
Most British banks will probably launch some form of telephone banking service, but they may have missed their chance to compete with Firstdirect, says Kevin Newman, chief executive, a 34 year-old information technology specialist who talks about the bank with almost religious dedication.
The 24-hour bank has achieved 350,000 accounts in its third year, and 1,000 employees.
'There is the possibility we could clean up here,' Mr Newman said. As Firstdirect's account base and reputation spreads, it is becoming harder for a competitor to come in and shake its foothold. 'They may have left it too late,' he added.
Many of the high-street banks are starting or have started some form of telephone banking, after watching with considerable scepticism the early growth of Firstdirect. But other banks are offering telephone banking as an add-on service for their branch customers, rather than setting up a full banking service without branches.
'There is no way a branch bank with an added-on phone service can compete with us, because the costs are so high to run both,' Mr Newman said. 'A phone isn't a guarantee of a great level of service. It has taken us a long time to learn how to deliver a quality service.'
Customers of other recently opened telephone banking operations complain that phones are never answered, calls are not returned, and that the account officers assigned to them are rarely on duty when customers call.
Mr Newman estimates that the market for direct banking has the potential to grow to at least 20 per cent of all banking customers; 80 per cent of people in Britain still prefer to use a branch. 'We are getting more bullish all the time because we think the appeal is broader than we did originally,' he said.
A poll commissioned by Firstdirect recently showed that 24 per cent of its customers are extremely satisfied with the service they get, 58 per cent are very satisfied, 15 per cent are fairly satisfied, 2 per cent have no opinion, and 1 per cent is fairly dissatisfied.
Asked the same questions, customers of the large clearing banks were less satisfied with their banks in all categories, and some were very dissatisfied.
'The message coming through is that big isn't quite so beautiful,' Mr Newman said.
Firstdirect has concentrated on delivering quality service to customers. In its first two years it had to stop advertising while it employed and trained new staff because it was acquiring customers too fast to keep up its standards.
One customer in three comes to Firstdirect from personal recommendation, up from one in four last year. More than 70 per cent of customers come from competitors of Midland Bank, the parent company.Reuse content