The bank also revealed plans to take advantage of the introduction of Open Banking next year with a digital banking platform that will “transform the outlook for the business”. It expects this to gain £10bn of new deposits within five years of launch.
Virgin Money said it was still on course for its lending target this year but that next year its share of home loans will be at the lower end of the 3-3.5% market share previously predicted, as the group looks to maintain margins and sustainable returns. In 2016 it was the eighth biggest lender with a 3.4% share of the UK mortgage market worth £8.4bn according to UK Finance figures.
Overall the UK economy remains supportive amid a resilient housing market, with house prices expected to rise by 2.1% in 2018, the lender said in a strategy update.
Its Open Banking offering will centre around a universal account that aims to take £5bn of customer deposits within five years of launch, driving an increase in customer numbers by more than 50%.
Virgin Money will also target small businesses with the launch of a savings account in January 2018, which could lead to broader offerings in the future. It expects this to gain a further £5bn in deposits over the first five years of operation.
New offerings to transform market presence
Chief executive, Jayne-Anne Gadhia (pictured), said: “To realise our vision for the future, we are building a differentiated, market-leading, data-driven digital bank that will be capable of meeting individual customers’ tailored needs and provide significantly more than the functionality of a current account.
“Traditional banks are investing in digital transformation but are burdened by legacy systems; while digital start-ups currently lack the customer base to disrupt the sector on any significant scale.
“Our end-to-end platform will enable us to capture market share by taking full advantage of our unique position and competitive advantages which are defined by a well-known and trusted brand, no legacy issues and an established scalable customer base.
She added: “Broadening our customer reach through our new digital and SME businesses will transform our market presence. We believe they will double our access to UK retail banking revenues.
“We will improve the depth of individual customer relationships and expect higher product penetration.
“We expect to capture around £10bn of deposits from new sources through these new initiatives within five years from launch.”