HSBC is planning an overhaul of its First Direct brand to attract younger customers and compete with fast-growing new digital rivals such as Monzo.
Joe Gordon, First Direct’s chief executive, said the bank would make a string of changes over the next 12 months to improve its services, introduce new features and become “more accessible to a wider population”.
Some of the new products it is working on include an in-app marketplace and a “financial autopilot” that would use artificial intelligence to make personalised recommendations and automate activities such as topping up savings accounts. Successful features may eventually be introduced to customers of HSBC’s main brand.
“We have a proud heritage of being the original challenger bank back in 1989 . . . now we’re making a real digital pivot to tackle the environment as it is now,” said Mr Gordon.
The plans highlight the impact app-based challengers have had on Britain’s established lenders. Companies such as Monzo and Revolut have signed up millions of customers in the past few years, prompting big banks to modernise their services and, in some cases, build entirely new bank brands to compete.
First Direct will also, for the first time, allow customers with limited credit histories to open accounts, and provide services to help them improve their records.
“First Direct was never set up for a specific demographic, it was for people who wanted to do things differently,” said Mr Gordon. “Maybe the approach to credit scoring over time meant some people felt they couldn’t be part of that.”
He said the bank was working with a number of fintech companies, including London-based Bud, which HSBC invested in alongside Goldman Sachs and several other banks this year.
First Direct was launched 30 years ago as a branchless division of Midland Bank, before it was taken over by HSBC. It has about 1.45m customers, and its focus on telephone-based customer service has helped it to consistently appear near the top of official customer satisfaction surveys.
It does not report separate financial results, but says it has been consistently profitable since 1995, and the bank is hoping its established record will give it an advantage over newer competitors. None of the so-called neobanks have yet been able to turn their popularity into profit, and some have struggled to convince customers to trust them as their primary bank.
In addition to the consumer-focused First Direct, HSBC is separately working on a new digital business banking service known internally as Project Iceberg.
The approach compares with rival Royal Bank of Scotland, which is building a pair of new standalone digital banks — Bo for consumers and Mettle for business customers.
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