Richard Branson To Give Australian Banking Majors A Run For Their Money

Post by Sharat on September 30, 2009 · Under Business News, Company News, banking, credit cards, home loans, insurance, mortgages, personal loans · Comment

Sir Richard Branson’s Virgin Money, part of his Virgin Group intends provide robust competition to the Big Four banking groups in Australia, and is launching a car insurance product followed swiftly by deposits and lending facilities in the coming months.

On Wednesday, Branson launched Virgin Car Insurance in Sydney, and sent a message to incumbents, telling consumers his company could offer Australians car insurance at rates which were 30 to 40 per cent cheaper than their current providers.

“We have a team in Australia who look for businesses where consumers are being taken for a ride. The challenge is to get people to compare, but we have a strong brand and we’ve done this before.” Sir Richard said.

Last week Virgin Money inked a deal with Citibank to use their balance sheet and platform for provision of banking services such as deposit taking and lending. Sir Richard said Virgin Money would begin offering services within the next 12 to 24 months, which would include personal loans, deposits, home loans and credit cards.

In Australia the general insurance market is dominated by a few incumbents, and in car insurance just two players, Insurance Australia Group (IAG) and Suncorp-Metway have captured about 75 per cent of the market according to a report by AAP.

Virgin Money intends to procure between 40,000 to 50,000 new car insurance customers within its first 12 months of operation. The company would offer its customers products which are capped over two years and 12 months.

Virgin Money’s car insurance will be underwritten by Auto & General Insurance Company Ltd, one of South Africa’s biggest general insurers, which is aiming to expand in Australia.

Branson said he wanted to leverage the strength of the Virgin brand in Australia to market financial products.

“The Virgin brand is strong and we will be tying the brands together,” he said.

That may involve offering deals on flights with airline V Australia for customers of the financial products, Sir Richard said.

Virgin Money managing director Matt Baxby said the company’s aim was to sell products mainly online, backed up by call centers. The company also may open retail stores.

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