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HSBC is considering an overhaul of its First Direct brand to attract younger customers and compete with new, fast-growing digital competitors such as Monzo.
Joe Gordon, chief executive of First Direct, said the bank would make a series of changes over the next 12 months to improve its services, introduce new features and become “more accessible to a wider population.”
Some of the new products he’s working on include an in-app marketplace and a “financial autopilot” that would use artificial intelligence to make personalized recommendations and automate activities like reloading savings accounts. Successful features may eventually be presented to customers of HSBC’s main brand.
“We are proud to be the first challenger bank in 1989.. . now we are making a real digital hub to tackle the environment as it is today, ”said Gordon.
The plans highlight the impact of app-based challengers on established UK lenders. Companies such as Monzo and Revolut have recruited millions of customers over the past few years, prompting major banks to modernize their services and in some cases create whole new banking brands to compete.
First Direct will also, for the first time, allow customers with limited credit histories to open accounts and provide services to help them improve their records.
“First Direct was never set up for a specific demographic, it was for people who wanted to do things differently,” Gordon said. “Maybe the approach to credit scoring over time meant some people thought they couldn’t be a part of it.”
He said the bank is working with a number of fintech companies, including London-based Bud, in which HSBC has invested alongside Goldman Sachs and several other banks this year.
First Direct was launched 30 years ago as a branchless division of Midland Bank, before being acquired by HSBC. It has approximately 1.45 million customers, and its focus on customer service over the phone has helped it consistently rank among the top of official customer satisfaction surveys.
It doesn’t release separate financial results, but says it has been consistently profitable since 1995, and the bank hopes its established record will give it an edge over new competitors. None of the so-called neobanks have yet been able to turn their popularity into profit, and some have struggled to convince customers to trust them as the main bank.
In addition to consumer-focused First Direct, HSBC is working separately on a new digital business banking service known internally as Project Iceberg.
The approach compares to that of its rival Royal Bank of Scotland, which is building a pair of new standalone digital banks – Bo for consumers and Mettle for professional clients.