Outlook: It's a wonderful, wonderful life, is banking

Eighteen months after deciding that it was not very comfortable with its exposure to banking, Standard Life has had second thoughts and concluded it is a jolly good business to be in after all. So good, in fact, that it has launched its very own retail bank.

Standard Life's decision last May to offload its 32 per cent holding in Bank of Scotland caused a frightful kerfuffle north of the border. In Edinburgh financial circles it was regarded as a betrayal to rank alongside the massacre of Glencoe. The Standard explanation - that it would rather not have such a large slice of its funds tied up in one company, thank you all the same - cut no ice with the BoS. Its chairman Sir Bruce Patullo stormed out of the Standard Life boardroom, throwing his directorship in the bin as he went.

But nor did it cut much ice elsewhere. Retail banking and life and pensions are so much part of the same jungle these days that only those with a foot in both camps are sure to survive. Hence we know why Standard Life's chief executive Jim Stretton was so keen to "rebalance the equity portfolio" last May. The day after its BoS shares were sold, he began thinking about Standard Life Bank.

And now another almighty kerfuffle is in prospect because Standard Life is offering savings rates that will make the eyes positively water at every other lender, including the supermarket banks launched by Tesco and Sainsbury. Jim Spowart, who was poached from Direct Line to set up and run the bank, is too polite to say so and anyway he can't too rude about BoS since it remains Standard Life's biggest tied agent. But the fact is that the high street banks with their branch networks will never be able to live on the same margins as a telephone-based bank like Standard Life.

It reckons it will also have an edge over Tesco and Sainsbury who have to share their banking profits and Virgin and Direct Line, who incur heavy marketing costs to attract customers. Instead, Standard Life will market the bank through its 20,000-strong network of independent financial advisers on wafer-thin commissions.

The launch of the bank is also an elegant exercise in financial recycling since Standard Life reckons it will get a fair chunk of its deposits from life policy holdings ploughing their money back in as policies mature. If things go to plan then the target of pounds 1bn in deposits and 100,000 customers in a year could prove conservative.

What yesterday's announcement does not represent is any weakening in Standard Life's commitment to mutuality. With pounds 56bn of assets behind it, there are very few rivals who could force Mr Stretton to think differently and plenty more who will be watching his experiment in banking with special interest, even the putative monster, Barclays Westminster.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Joe Cocker performing on the Stravinski hall stage during the Montreux Jazz Festival, in Montreux, Switzerland in 2002
musicHe 'turned my song into an anthem', says former Beatle
News
Clarke Carlisle
sport
Sport
Chelsea manager Jose Mourinho
footballLatest score and Twitter updates
Arts and Entertainment
David Hasselhof in Peter Pan
theatreThe US stars who've taken to UK panto, from Hasselhoff to Hall
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
News
newsIt was due to be auctioned off for charity
Life and Style
A still from a scene cut from The Interview showing North Korean leader Kim Jong-un's death.
tech
Environment
Sir David Attenborough
environment... as well as a plant and a spider
Voices
'That's the legal bit done. Now on to the ceremony!'
voicesThe fight for marriage equality isn't over yet, says Siobhan Fenton
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

SThree: Graduate Recruitment Consultant

£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

Day In a Page

Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'