A CHALLENGER bank is making a fresh push to target the established elite in a £10bn double market move.

Virgin Money has confirmed the launch of a digital bank with a savings account for small and medium-sized firms (SME) founded to complement the venture.

Bosses at the Newcastle-based lender say they expect to capture as much as £10bn in deposits over an initial five-year period from the endeavours, adding they hope to increase an existing 3.3 million customer base by more than half.

The SME savings account will come into force in January, with the digital bank projected to roll out in 2019.

Confirmation of the plans come just days after boss Jayne-Anne Gadhia told The Northern Echo that Virgin’s £30bn deposit book stands higher than it ever did under predecessor Northern Rock.

She said the move into digital banking will meet “individual customers' tailored needs”, adding it was looking forward to developing relationships in an “attractive, but poorly served” business lending market.

She said: “The UK economy has remained resilient and we start the next phase of our evolution from a very strong position.

“In order to capture a number of highly-attractive opportunities, we have refreshed our plan, taking into account expectations for the UK economy and the competitive landscape.

“To realise our vision, we are building a digital bank that will provide significantly more than the functionality of a current account.

"Traditional banks are investing in digital transformation but are burdened by legacy systems and digital start-ups lack the customer base to disrupt the sector on any significant scale.

“Our platform will enable us to capture market share by taking full advantage of our unique position, which are defined by a trusted brand, no legacy issues and an established scalable customer base.

"We are also delighted to start our journey into SME banking.

“This will enable us to start developing relationships with business customers and lay the foundations for potential broader future development.”

Virgin Money, which employs in excess of 2,000 people in the region, paid the Government £747m for the so-called ‘good bank’ element of Northern Rock back in 2011.

Speaking to the Echo last month, Ms Gadhia said its digital bank will have no impact on its traditional services.

Instead, she said it will allow the company to cater for a changing banking landscape, where convenience is key, while retaining a traditional feel through its branches.

“It will be transformational for the business,” added Ms Gadhia.

“But we don’t think it will be the end of branches because we find that some people still like to have that face-to-face relationship.”

Latest third quarter financial results, for the period to September 30, showed Virgin’s deposit balances were up to £30bn, from the £28.1bn recorded at the end of December.

Mortgage balances had risen to £33bn from £29.7bn, with credit card balances standing higher at £2.8bn.