STANDARD Life Bank's managing director yesterday claimed that traditional banks and building societies would be unable to compete in the longer term with the new generation of telephone-based financial services providers such as his.
In a hard-hitting speech to the Scottish Call Centre Conference in Glasgow, Jim Spowart claimed one of his telephone operators was bringing in as much in deposits as 11 building society branches.
He declaring his belief that established banks and building societies would be unable to stem the flow of money to lower-cost, telephone-based operations able to offer keener savings and mortgage rates.
Spowart said: ''I don't think the traditional institutions will ever be serious threats to us but the new generation of financial services (providers), without the baggage of costs . . . will continue to keep us on our toes.''
He added: ''There is a revolution sweeping financial services and it has only just begun. We look forward to it.''
Standard Life Bank, launched to the public in January, has already taken #1.61bn in deposits.
Spowart said that this made it ''the fastest-growing bank ever''.
It employs about 450 people, and plans to take on another 300.
Spowart reiterated that it would shortly begin building its lending book and added that, from early next year, it would be able to agree a mortgage verbally in three minutes and complete its processing in nine minutes.
He claimed cynics who had said Standard Life Bank could not keep up its phenomenal growth rate did not realise the size of the lead it had in terms of costs and ''attitude''.
He estimated that banks with branch networks needed a 200 to 230 basis-point (2% to 2.3%) spread between lending and savings rates to make their money.
Spowart, who worked for years with Royal Bank of Scotland and established its Glasgow-based Direct Line Financial Services operation, said Standard Life Bank could survive on a 100 basis-point (1%) margin.
He added: ''We have a gigantic advantage over those institutions stuck with massive estates of bricks and mortar.
''If they set up telephone operations, they will still be stuck with the legacy of a branch network to pay for and deal with.''
He pointed out that some building societies had squeezed the margin between their lending
and savings rates to 150 to 160 basis points.
But he claimed: ''They are still not as competitive as us, yet they are losing money or struggling
to make money on everything
they do.''
Spowart highlighted parent organisation Standard Life's competitors in the insurance field, such as Prudential, Scottish Widows, and Axa, as those which were a challenge.
He also acknowledged Volkswagen, which like Axa has
signalled a move into banking, and the Bank of Scotland and Royal Bank's respective ventures in conjunction with Sainsbury
and Tesco.
But he could not resist a dig at competitor Prudential's new ''Egg'' banking operation, joking that his operation could have been called ''chicken'' or ''bacon'' had it employed image consultants.
And, laying down the gauntlet to established banks and building societies, he added: ''Standard Life Bank is an idea that will make money for its parent (and) customers.
''The only people it will not make money for are the traditional banks and building societies. They deserve all they have coming to them.''
He explained Edinburgh-based Standard Life's decision to launch a bank in the context of the 70% of the #1.5bn of annual proceeds from maturing policies being channelled by customers into
traditional bank and building society accounts.
And, highlighting banks' moves into selling life products, he said it had been ''time for the empire to strike back''.
But most of Standard Life Bank's customers have not done business with its parent.
Spowart said: ''Surprisingly, a minority of our customers are actually existing Standard Life customers.''
Explaining where the money had come from, he added: ''We receive lottery winners' (cash). We have actually received money from transfer deals in football clubs. Most of the rest appears to have come out of accounts in traditional banks and building societies.''
But Standard Life Bank has an advantage over some competitors because its average deposit account balance stands at a relatively high #9500, which probably demonstrates the
benefits of access to maturing policy funds.
Paying tribute to the rapidly evolving call centre sector, Spowart told industry delegates at the conference: ''Without it, we would not have a bank at all.''
Spowart said only 1700 of 610,000 calls received between January and September had had to be abandoned.
He added that Standard Life Bank would eventually do business over the Internet, when the public could access it through television screens. But he believed the telephone would remain its principal communications channel during the next few years.
And he said that he did not believe stories of shortages of suitable labour for Scotland's call
centre sector.
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