Does the Virgin Money digital bank spinoff have the upper hand?

  • By Christine St Anne

Virgin Money will launch a digital bank slated for the end of the year as it aims to deliver on a “truly differentiated service”. 

The strategy was already signalled when the Bank of Queensland announced its five-year strategy last month

RFi Group general manager Julien Wilson said that the new proposition will be well positioned to offer services outside of traditional banking as the tie-up already has a partnership with the Virgin Brand. 

Indeed, at the time of the announcement, Virgin Money Australia CEO Greg Boyle said that the business was “uniquely positioned” to build on its existing relationships with more than 200,000 loyal customers. 

With a home loan portfolio valued at $3 billion, Boyle believes that the digital bank “effectively compete in the Australian market with challenger and incumbent banks alike”. 

“We are at the beginning of an exciting journey as we build an industry-leading digital bank that will be beautifully simple and rewarding,” Boyle said. 

“We are committed to delighting our customers by providing a seamless, end-to-end experience across all channels.” 

As part of the project, the bank will consolidate its range of product lines onto a single platform, creating a centralised, seamless, digital-first experience for its customers.

Virgin Money Australia will offer its new, simplified experience to new and existing customers across its digital channels, reducing client onboarding to just minutes.  

Virgin Money will work with global software giant Temenos and Deloitte Digital to deliver the digital bank. 

Virgin Money will use Temenos’ cloud platform and AI capabilities that will allow the bank to scale. It’s a strategy that allowed for the swift launch neobank Judo

Deloitte will bring a team of more than 100 of its staff from both Australia and Europe in order to expand the Virgin Money offering. 

This includes the designers and technologists delivering the core banking platform and native mobile apps, the process engineers who are designing and implementing the back office, and the firm’s risk and regulatory experts who are supporting the bank in engagement with the relevant regulatory bodies. 

According to Temenos managing director for Australia Michelle Tea, competition from neobanks is driving traditional banks to “build their own greenfield digital banks”. 

Importantly the incumbents still “enjoy the trust of many consumers.

Tea points to global experiences that underpins this trend such as Bank Leumi/Pepper which “can offer consumers all the efficiencies of new technology as well as using years of experience in banking’. 

Closer to home there has been similar partnerships in Bendigo/Up and National Australia Bank/UBank. 

“Often for incumbent banks with complex and legacy infrastructures, it is more efficient and viable to launch as a separate entity, rather than input into their current legacy IT systems. 

“Eventually they can add the old stack into the new, when their strategy allows them to,” she said. 

By “stack” Tea refers to the term “build and renovate” which is an approach Temenos provides which is a cloud-native, cloud-agnostic technology that allows “banks to renovate fast in an affordable way by letting legacy systems die”.