Jim Spowart, managing director of the new Standard Life Bank, yesterday appealed to customers not to inquire until the bank goes fully live on 5 January, when it will offer a telephone-based savings account with an interest rate of 6.76 per cent.
He said the bank had learned from the experience of Tesco and its partner the Royal Bank of Scotland, which a year ago struggled to cope with a deluge of new customers hungry for its savings rate of 6.7 per cent.
The bank, which has hired 70 staff to handle inquiries, is counting on receiving roughly 3,500 calls a day. Mr Spowart said all inquires were being dealt with but asked customers to note the date.
Standard, previously been seen as an ultra-cautious company, will now compete with telebankers such as Virgin, Direct Line, Sainsbury, Prudential, Scottish Widows and most high street banks.
Jim Stretton, chief executive of Standard Life, denied that the move into banking was a risky diversification. He said: "If we do something new, we do it because we think it is really important. If we had not done this, we would have been missing a golden opportunity."
Mr Spowart said Standard's 3.5 million customers were being paid pounds 1.5bn a year and left with no choice but to leave it with a bank paying little interest. "Some banks would give their left arm for that kind of deposit activity," he said.
Of pounds 508bn savings in the UK, pounds 319bn is left on deposit with traditional high-street banks. Yet traditional banks pay interest to savers of less than 4 per cent. Expensive branch networks, and shareholders' demands for dividends, require them to take a much larger cut of the money earned when they invest deposited cash. "We are determined that this new bank will offer personal and business users highly competitive interest rates," Mr Spowart said.
He said the high rates were far from being a short-term marketing ploy. They were sustainable because of low costs. The group has no expensive branch network as its products are sold by independent financial advisers. Advertising costs are low because the bank's new money will come mainly from payouts to existing customers.
The bank believes it will get up to pounds 4bn in new accounts by the year 2000. It will also begin to offer mortgages and personal loans by the middle of next year.