Metro Bank Founder Goes Digital With Atom

By Mark Kleinman, City Editor

The founder of Metro Bank is switching his attention from high street to digital banking with secret plans for the launch of a new national retail and business lender.

Sky News can exclusively reveal that Anthony Thomson, who stepped down as Metro Bank chairman in 2012, is close to unveiling Atom, a digital-led bank that aims to start trading next year.

Mr Thomson has recruited Mark Mullen, the chief executive of First Direct, to run the new venture, sources said.

An announcement about the launch of Atom could be made as soon as Wednesday morning, they added.

Details of the new bank have been closely-guarded by Mr Thomson, but a person familiar with his plans said that licence applications were about to be submitted to the Financial Conduct Authority and the Prudential Regulation Authority.

Assuming the applications are approved, Atom could be among the most significant new banks launched amid a concerted political push to broaden competition in the sector.

The new business will not have any physical branches and will be primarily accessible through the internet and digital apps.

Mr Thomson, who insiders said would become Atom's chairman, and Mr Mullen, who will be its chief executive, are understood to be planning to offer a full range of products aimed at personal and small business customers.

These will include current and savings accounts, as well as loan products.

It is not clear whether the pair have secured external financial backing for Atom, which will be headquartered in northeast England, close to the Newcastle base of Virgin Money, another of the so-called challenger banks.

The plans for Atom come amid an explosion in the demand for digital banking services and a commensurate decline in footfall at thousands of retail bank branches.

Last week, the British Bankers' Association (BBA) published research showing that UK-based customers conducted almost 40m mobile and internet banking transactions each week last year.

The BBA insisted that branches would "remain at the heart of banking in the 21st century", but it emerged just days later that the taxpayer-backed Royal Bank of Scotland was closing 44 branches, sparking a fresh political row.

RBS responded by pointing to a 30% fall in branch transactions since 2010, a statistic echoed by some of its competitors.

The growth of digital banking has also sparked concerns about the robustness of the high street lenders' IT systems, particularly in the wake of high-profile failures at Lloyds Banking Group, Nationwide and RBS, among others.

The archaic nature of some of that infrastructure has provided encouragement to new entrants to the market that they can win significant numbers of customers by avoiding such mishaps.

They also hope to take advantage of the new current account switching regime, which forces banks to transfer customers and their direct debits within seven days.

Under revised rules aimed at bolstering competition, the FCA has pledged to decide on banking licence applications within six months.

The process historically took several years, frustrating Treasury officials in the aftermath of the 2008 banking crisis, which sparked the merger of Lloyds TSB and HBOS, and the disappearance of several other UK banks.

Some applicants, such as Home & Savings Bank, a telephone and internet-based lender, were effectively forced to abandon their plans because of difficulties securing regulatory approval.

Metro Bank's launch in 2010 as the first new high street bank for more than a century came after a similarly tortuous process.

It has since taken billions of pounds in deposits, opening more than 20 branches, and attracting high-profile investors such as the Wall Street hedge fund tycoon Steven Cohen.

The new regulatory timetable should put Atom on track to launch sometime in 2015, although a firm date has not been decided.

Mr Mullen's involvement is a coup for the new venture, since First Direct frequently scores highly in customer service polls.

Neither Mr Thomson nor Mr Mullen could be reached for comment on Tuesday.

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