This will be an influential movement in the banking industry as new competition is introduced. It will be fascinating to see the initial reaction of the other four big Australian banks and how this introduction will be helpful to the rest of the banking industry.
The Rebranding of Virgin
Virgin Money has had their fair share of success and have proven themselves with lasting power in the industry. This new relaunch is evidence of the brand’s extraordinary power.
The Velocity rewards points program with Virgin Blue will be linked with a credit card from Citibank in order to raise the competition against Qantas. Both Virgin and Citibank want extra market power, and are ready to prove that competition exists to the politicians.
This market power will be in the form of low fees on the cards. During the last year there is hard evidence that the growth in receivables for credit cards has been driven by low-fee cards. This growth has been more than 5% and Virgin Money and Citibank are ready to grab part of it.
This launch can be considered a family affair since Virgin Money is run by a younger brother Matt, and David Baxby is Branson’s representative on the different airline boards. Both Matt and David joined the Virgin Group 10 years ago in London. Matt was working at Malleson’s and David at Goldman Sachs.
Virgin is considered a brand for young people by many, with a demographic that targets 25-year-old people to people that are 44. The Virgin group is now 40, Virgin blue is 10, Virgin Atlantic 25 and Branson is 60 years old.
The Virgin brand name has been around for quite a while so Citibank hopes that this partnership will drive retail growth in the country. The previous deal between Westpac and Virgin ended earlier than expected since both companies were working on different incentives. While Westpac was doing its best to make money, Virgin kept issuing new cards.
The great influx of cards being issued led to credit control disputes and assessing problems. Then the Macquarie joint venture for home mortgages fell apart when Macquarie could no longer offer mortgages due to the high capital costs.
After the launching of the new relationship with Citibank, Virgin Money is expected to increase its workforce in Sydney from 40 employees to 350. It remains to be seen whether Citigroup and Virgin Money can become a vital force in the world of retail banking, but expectations are high and it’s looking good right now.
Related posts:
- Virgin Money Press Release
- New Virgin Credit Cards Launched
- Interest Rates Rise, Consumer Confidence Falls
Posted on Tuesday, July 27th, 2010 at 5:59 pm
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