Virgin Money is preparing to jump on the buy now, pay later bandwagon through the development of a digital wallet in collaboration with Global Payments.
The move into the BNPL space was provided in a trading update from group CEO David Duffy, as the merged Clydesale and Yorkshire and Virgin Money brands anticipate a return to profit for FY21.
Set for introduction in mid-2022, the digital wallet will offer integrated payments, with BNPL capability and the potential for customers to earn and utilise Virgin Red’s points. The wallet will be available to all UK consumers, providing them with the opportunity to bring together payments, Virgin Money cashback, rewards and credit facilities.
The initiative is part of a 'digital first' strategy that is expected to reap cost savings of £175m targeted over the next three years, fifty percent of which will be re-invested in the business. Restructuring costs incurred over the period would hit £275m to achieve this - far higher than analysts had been expecting.
Additional cost savings would include cutting branches and offices and embedding remote working over time. The bank in September announced plans to close 31 stores - a fifth of its branch network - as it adapts to changing customer demand.
Key to achieving a digital-first approach will be Virgin Money's recently announced deal to hop aboard Microsoft's financial services-specific cloud offering, with the aim of simplifying the bank's IT infrastructure and creating an agile development platform for the creation of new business- and consumer-focused services.
Says Duffy: “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.”