HSBC plots overhaul of First Direct to meet challenge of digital disruptors

First Direct is looking to launch an in-app marketplace and personalised recommendations to better compete with the likes of Monzo and Sterling.

HSBC is revamping its First Direct brand to lure in younger customers and meet the challenge of digital disruptors like Revolut, Starling and Monzo.

The move comes as challenger banks gain increased traction in the market with younger consumers, signing up millions of customers, who are attracted by their speedy service, real-time updates and in-app features. 

Joe Gordon, Head of First Direct, said the bank would introduce a number of changes over the next year to improve its consumer proposition as it looks to become "more accessible to a wider population".

Speaking to the Financial Times, Gordon said: "We have a proud heritage of being the original challenger bank back in 1989... now we're making a real digital pivot to tackle the environment as it is now."

"First Direct was never set up for a specific demographic, it was for people who wanted to do things differently, " he added.

According to Gordon, some of the new products First Direct is possibly launching are an in-app marketplace and a "financial autopilot” which would utilise artificial intelligence to make personalised recommendations and automate procedures like topping up savings accounts.

Gordon also said First Direct was working with a number of fintechs including London-based fintech startup Bud, which HSBC invested in along with Goldman Sachs and a number of other banks this year.

First Direct, which was launched 30 years ago as a division of Midland Bank, has around 1.45m customers.

The bank will also, for the first time, let customers with limited credit histories  open accounts, as well as providing help to improve customers' credit histories.

Additionally, HSBC is also working on a new digital business banking service called Project Iceberg.