HSBC Eyes 'Non-Bank' In First Direct Revamp
HSBC will seek to exploit new rules governing the length of time it takes to switch current accounts by relaunching First Direct, its telephone and internet-based bank.
I understand that HSBC, which launched First Direct in 1989, plans to target younger consumers with a revamp of First Direct that will position it as 'the non-banky bank', according to insiders who have been briefed on a new marketing campaign which is scheduled to launch in May.
HSBC disclosed last week in its annual results for 2012 that its UK operations had lost more than £650m, although this was largely due to a near-£2bn provision for the mis-selling of payment protection insurance and interest rate swap products.
The lender, the largest in Britain by market value, does not separately disclose First Direct's financial results, but the internet bank's customer base has stagnated in recent years, according to insiders.
First Direct has approximately 1.2m customers, and HSBC is understood to be targeting an increase of roughly 10 per cent by the end of the year.
The new image for the business, which will include First Direct's first television advertising for many years, will, HSBC executives hope, enable it to take advantage of new rules for account-switching that come into effect later this year.
The Government has pushed for the new rules, which will force banks to help customers switch providers within a week, in order to bolster competition, one of its priorities for reforming Britain's banking sector.
New entrants to the sector, such as Metro Bank, are also expected to increase their spend on marketing with the advent of the new regime, while high street giants such as the taxpayer-backed NatWest and Halifax, will use the new regime to seek to entrench their positions, analysts expect.
First Direct is frequently praised for its customer service, but a lack of marketing spend behind the brand has left its performance "underpowered", according to one HSBC executive.
The bank recently lowered the threshold for customers to use a First Direct account free of charge from a £1500 deposit base or monthly credit to £1000.
Based in Leeds, First Direct will mark its 25th anniversary next year. An HSBC spokesman said:
"We are currently working on a new marketing campaign to reawaken the appeal of the UK's best bank for customer service. In line with this we have just reduced the monthly amount customers need to credit into their accounts from £1500 to £1000 for a fee free account with us.
"The new brand campaign which launches in a couple of months will mean we will back on TV again. The campaign is based around the 'nonbanky' nature of First Direct. It's an exciting time for First Direct and we want be a natural choice for customers looking to switch their banking this year."