Start-up bank Atom aiming to split open financial sector

The Durham-based bank, which will be headed up by former First Direct CEO Mark Mullen, said Yorkshire will be a key target market for the group now it has won its banking licence.

Mr Mullen, who lives near Knaresborough, said: “Northern people have a character and a culture and they’re not being served terribly well by their banks.

“In the North of England there is a genuine affection for businesses based here. We employ local people and that matters to people in Yorkshire. They see a lot of money going South.”

Mr Mullen, who was CEO of Leeds-based First Direct from 2011 to 2014, said Atom’s agenda is to build itself up outside London.

“We are developing a bank that is massively transparent - no tricks, no loss leaders and no penalties.

“People have had enough of being caught out by banks. We are developing an app that will give people an unparalleled ability to control their money.”

The new bank said it has looked outside the banking sector to areas like the entertainment and media industries for models that appeal to customers.

“These industries are massively more imaginative. We think we should be simple and straightforward and offer good value,” said Mr Mullen.

Atom, which will use mobile apps and will not run high street branches, secured its licence from the Bank of England, paving the way for the group to offer a full range of banking services from current accounts, personal lending and mortgages to individuals and small businesses.

It is one of several challenger banks to emerge since the financial crisis in competition with dominant high street rivals such as Lloyds, Barclays and HSBC.

Other new entrants include Metro Bank, Virgin Money and Aldermore.

Atom is being set up by chairman Anthony Thomson, who is also a founder and former chairman at Metro Bank.

He and Mr Mullen have raised £25m to fund start-up costs and are now looking to raise another £100m in the City to finance its balance sheet lending.

The firm is backed by investment industry veteran Neil Woodford.

The bank has 100 staff, and plans to recruit another 60 later this year. Its head office and a call centre are both based in Durham.

Mr Mullen said the bank has big targets and said that from a standing start it is “possible” that his bank may have five million current accounts by 2020, which is five per cent of the UK market.

“It is entirely possible if you are brave enough and good enough to transform the industry,” he said.

“Trust in banks is pretty low, and the customer needs to have a better experience.”

Mr Mullen said the lender will target 18 to 34-year-olds, but added that this type of technology will appeal to a broad range of people over this age group.

Just last week Royal Bank of Scotland suffered an embarrassing IT glitch that saw 600,000 payments fail to go through to customers.

The industry has been dogged by such failures as ageing IT systems become ever more complex.

Mr Mullen said: “I can’t guarantee we will never have an IT problem, but we are building and testing a bespoke system. We are in a hurry to get it right, we are not in a hurry to launch.”

Atom said it is on track for a launch in the second half of this year. It added that it planned to break even over the next three to five years.

It said it will pursue a low-cost, digital approach to retail banking.

“I’m genuinely bemused by how the current banking model pays for itself,” said Mr Mullen.

“Huge amounts of money comes from overdrafts. We will charge for an overdraft but we won’t charge punitive interest rates.”

Mr Thomson pointed to industry data predicting that within three years 60 per cent of all banking transactions will be on mobile devices.

“The future is digital in general and mobile in particular,” he said.