Ambitious Atom Bank approved as UK’s first digital-only lender

WHEN did you last visit your bank?

A lender that aims to take five per cent of the market without opening any branches will launch at the end of this year, after the Bank of England last week awarded it a licence.

Durham City-based Atom Bank will start to offer current accounts, mortgages and business accounts as a direct challenger to high street operators in the coming months.

Bank bosses scouted five locations across the region before choosing Durham to launch Atom which will bring competition to an industry tainted by scandals over executive bonuses, payment protection mis-selling and rate-fixing.

Atom is billing itself as the UK’s first digital-only bank, offering its services via apps for customers to use on their mobile phones, tablets and laptops. It will operate no high street outlets, but it hopes to attract customers online by offering high quality service and innovations are transforming the way we deal with our banks.

New banks have been labelled as ‘challengers’ to Britain’s largest lenders. Between them the so-called big four - Lloyds, NatWest, Barclays and HSBC, control about 75 per cent of the personal current account market and 85 per cent of small business banking, but regulatory changes have made it easier for new entrants to gain a foothold in an industry plagued by scandals and crises.

While other online brands, such as Egg and Smile, have launched in the past, the regulator said Atom was the first bank focused on a mobile app to gain a licence

When Metro Bank was launched in 2010 it was the first new company to be granted a banking licence in 150 years. Anthony Thomson, its Newcastle-born founder, is also the driving force behind Atom, which is one of several small lenders set to bring greater competition to the sector in the next few years.

Asked last week whether the launch of Atom of Metro had given him the bigger thrill, the told The Northern Echo: “It is a bit like asking you to choose which is your favourite child. But I would have to say Atom.

"When we launched Metro it was based on an American model. Whereas with this we have built it from scratch; shaped and developed it ourselves into something that is truly amazing.

"It has been done right here in the North-East. Wherever possible we have used North-East contractors.

“This has been an incredible team effort and I am so proud of our people. We have a fantastic group of people here. Mark (Mullen), Edward (Twiddy) and I might be the high profile side of Atom, but what we have achieved is a collective effort.

“We have been working on this since July last year. It was clear a few weeks ago that there were no more major stumbling blocks but until that letter landed we could not be sure. It was an incredible feeling. We had a little celebration barbecue for staff and their families. It felt like we are already embedded in the local community.

"This is a great North-East success, and another step towards the region playing a major part in the Northern Powerhouse.”

The team at Atom’s Aykley Heads offices, a site previously occupied by Durham County Council, have been building the bank’s systems alongside its licence application. More testing will take place before Atom launches its products on the market by the end of this year.

Mark Mullen, Atom's chief executive who used to head First Direct, said: "Atom will offer a quality of digital experience without parallel in this sector or in many others. Our team reflects this. Between us we’ve built and run some of the most highly respected banks in the UK, brought ground-breaking innovation to manufacturing and service businesses, and created great software with a worldwide reach. Now all of this is being poured into building Atom so that customers will have a bank in their pocket that is ready whenever and wherever they need it.”

It has 100 permanent and contract staff and is set to employ at least another 60 before the end of the year. After 5 years of trading Atom expects to employ 340 in its own purpose-built offices at the Rivergreen Centre close to its existing offices.

James Ramsbotham, NECC chief executive welcomed the announcement, when he said: “It’s a huge fillip for the North-East to have such an innovative business based in the region. We greatly look forward to working with them as they grow here in the months and years ahead.”

Jeremy Middleton, managing director of Middleton Enterprises and a board member of the North East LEP, invested in Atom Bank in 2014.

He said: “The granting of the licence is a great opportunity to deliver upon Atom Bank’s potential to open up new ways of banking here in the North-East. It will add value to our regional economy and it is a great example of forward thinking, in respect of creating an environment for businesses to thrive.”

“If things go as planned we could have a FTSE 250 business right here at Aykley Heads in a few years,” Edward Twiddy, Atom Bank’s chief operations and innovation director, told The Northern Echo in April.

Following confirmation that the business could now call itself 'a bank', Mr Twiddy, said: “We’ve set about designing a banking app that’s in tune with how people think about their money.

Our customer service team will provide support and technical expertise to customers all-day and everyday by phone, chat and email and through social media. Our customers will also have access to the UK and international ATM network and the ability to pay in cash and cheques when needed.”

Atom is considering adopting Apple Pay, the US tech group’s contactless payment system, which launches in the UK next month.

It is expected that the bank will partner with a high street lender, or the Post Office, so that its customers can pay in cash or cheques. But it will look to distance itself from the big four by highlighting its position as a new player unencumbered by legacy IT systems, or PPI scandals. Atom wants to look and feel different from the competition.

It remains to be seen how many people will be attracted by Atom’s app that has biometric security, including face and voice recognition. The bank said it would provide a customer service team available every day by phone, email and social media.

The goal is to take five per cent of the market within five years.

Mr Thompson added: “We think that is very ambitious but all of the thinks we hear are that mobile banking is the way forward.”

His confidence was supported by the latest figures from the British Banking Association (BBA) which show a revolution is taking place.

A total of 74 million transactions a year are done in the UK via telephone, 427 million at branches, 705 million by the internet and 895 million via mobile devices. In five years mobile has gone from being the least common way to bank, to being the most popular.

The BBA estimates mobile will be used three times as much as branches and telephone banking combined.

“Ours is the right model at the right time,” added Mr Thompson.