Firstdirect pioneered the phone banking concept four years ago and now has 400,000 customers. It is piling on 10,000 clients a month, 80 per cent of them from rival banks.
Kevin Newman, chief executive of Firstdirect, attacked TSB's plans yesterday as 'a recipe for disaster'. He said that by linking phone banking to TSB's branch network, instead of enjoying the cost savings of an unencumbered stand-alone phone service, TSB would not emulate Firstdirect's profitability.
TSB said it would not be closing branches following the launch of the phone service. Instead, the two would complement each other.
A spokesman for TSB denied that linking the phone service to the branches would dent profits. 'We've done a lot of customer research. This is just one channel of distribution. Unlike Firstdirect, we've got an existing customer base of 7 million. That's not a negative factor at all.'
Chris Ellwood, chief executive, maintained yesterday that by setting up a service centre in Newport staffed by 260 financial advisers, TSB was putting itself in 'an enviable position in the highly competitive banking sector'.
The TSB service will allow customers to discuss their overdrafts, pay bills, order statements, determine balances, and transfer money between accounts 24 hours a day, 365 days a year.
Lloyds Bank is launching a pilot phone banking service in the spring of 1994 for 10,000 selected customers.
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