29 July 2015
Can Atom Bank live up to its own hype?
If you haven't heard of Atom Bank yet - you will have done in a few months time. I say that with some confidence, as its founders are two of the most effective marketeers in the banking world - and it's clear from the Bank's holding website that they intend to make a splash when they launch.
While the website is slick and witty, it doesn't yet give much away about how Atom Bank will be different to its competitors. It talks about great apps, 24 hour service, simple account opening, excellent customer service - and no branches. So essentially, it appears to be a newer, slicker version of First Direct - the bank which chief executive Mark Mullen ran before he left to work on Atom. The chairman, Anthony Thompson, was one of the founders of Metro Bank - and Atom clearly borrows from the Metro playbook too.
A more nimble bank
But presumably, the advantage it will have over both these players is a significantly lower cost base. Unencumbered by an expensive branch network, and outdated IT systems, it is also managing to keep staffing costs down by basing itself in the north-east.
Another advantage it will have over First Direct is its freedom from any large banking parent organisation. By and large, HSBC has left First Direct to its own devices over the years - keen not to upset one of the biggest success stories in retail banking. But talking to senior execs at the bank, it's clear that HSBC can't resist the temptation to mix in from time to time.
So with lower costs as a starting point, Atom will have the fire power to offer a compelling proposition to customers. But it will need to be special to lure people away from the comfort of their own banks. Of the minority of people who switch every year, a significant number are the savvy deal chasers - exactly the kind of customers that Atom doesn't want. The other large group are the disenfranchised, who have finally been driven to switch by a bad experience with their existing provider.
What can Atom do that might galvanize the indifferent mass market into action?
Is there a rabbit in Atom's hat?
For the moment, Halifax's £5 a month handouts, and Santander's debit card cashback deals, are winning over most of the switching market. But they're not enough to make most people change the bank they've been with for years.
I think an excellent packaged account could be a good starting point for Atom - a step towards some kind of mass market concierge service for financial services, helping customers meet all their banking and insurance needs in one place.
But utility and convenience are clearly going to be two of Atom's key selling points. Most apps - even First Direct's - are still a bit clunky and slow. So there's room for improvement at that end of the market. And presumably, with no branches to rely on at all (which sets it apart from First Direct whose customers can use HSBC branches), it will need to have clever ways of allowing customers to pay in cheques and carry out more complex transactions, which currently require a branch.
If it can offer something that saves people time and hassle, that may well prove a pull.
Uber-isation of banking
Last night, I used Deliveroo for the first time - an Uber-style takeaway delivery service that serves restaurants that don't normally do take-out. I've been using Hungry House for years, but the simplicity of Deliveroo's app - and the much faster delivery times impressed me enough that I may never go back to using Hungry House.
Transfer that logic to the world of banking, however - and the difference will have to be significant to get people to switch.
I'm excited to see what Atom comes up with. And frankly, some genuine competition for the likes of First Direct can only be a good thing.
First Direct may lead the way on customer service, but much of its customer literature and small print still leaves a lot to be desired. So there's room for Atom to demonstrate that it's truly on the customer's side - by going even further than First Direct has done in the realm of simplicity and transparency.
As soon as Atom is up and running, we'll be road testing it - and letting you know what we think. Watch this space.