Virgin Money confirms that store network is likely to reduce further as it accelerates move to digital banking

The lender, which was born out of the merger of CYBG and Virgin Money, said it had secured a strategic partnership with Microsoft to deliver a modern simplified IT infrastructure. It also aims to cut £175 million from its costs over the next three years.

David Duffy, the bank’s chief executive officer, said: “Following our decision to accelerate the next stage of our Digital First strategy, we are today announcing our medium-term growth, investment and efficiency targets, as well as details on FY21 (full year 2021) performance.

“We performed very strongly in FY21, with an expected return to statutory profit before tax underpinned by significant underlying profit growth. We increased our net interest margin, reduced costs, improved impairments and delivered a strong capital progression which enabled the proposed reinstatement of a dividend.

“Our accelerated digital strategy will result in new propositions, including a digital wallet, and will deliver efficiency and agility improvements. The combination of these factors will help us to become a growth-oriented digital bank that offers a best-in-class experience and unique loyalty rewards for customers, and delivers double-digit returns for shareholders.”

Statutory profit before tax for this financial year is expected to be £417m. The bank said its strategy for staff and property will focus on embedding a “Life More Virgin” remote working model, supporting the rationalisation of its property footprint over time, including stores and offices.

A spokesman added: “That is an acknowledgment of the current position, which is that we will continue to follow customer trends in terms of transactions and financial performance of stores, but given the pace at which customers are switching to digital, it is likely that the size of the store network will reduce further.”

The statement added: “The group will use offices as hubs for collaborative working and invest in these sites. This plan will also invest in our colleagues with improvements in technology, greater flexibility to working location and harmonisation of contracts ensuring we have an efficient bank with motivated, productive colleagues.

“Digital investment will drive automation throughout the business, delivering productivity gains and will provide the enabling platform for our commercial growth aspirations.

“As part of our strategic partnership with Microsoft, we will invest to deliver a simpler technology platform with modern architecture, creating a scalable, secure, and resilient infrastructure platform.”

In September, Virgin Money announced plans to close 31 stores with the loss of around 112 jobs.

Bosses said the move comes as more customers switched to online banking during the pandemic.

They said the number of customers using bank branches for day-to-day transactions has been on a downward trajectory across the UK banking industry for a number of years, and this has been further accelerated by the pandemic.

Virgin Money plans to launch a digital wallet with its strategic partner Global Payments.

The new digital wallet will sit at the heart of Virgin Money’s payments, loyalty and unsecured credit offering to customer, the bank said.

Virgin Money Chief Executive Officer David Duffy said “Our branded digital wallet will truly bring to life the benefits of Virgin Money’s unique customer offer. By fully integrating the Virgin Red rewards club alongside our broader suite of products and services, we can create compelling value for both customers and the bank.”

The digital wallet is anticipated to be available to customers in the second half of 2022.