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•10 The 100 Greatest Business Ideas of All Time

The huge change to this attitude has been made, whatever one thinks of bank-
ing services, in a remarkably short period of time. Banks have thought the unthink-
able, and a leader in this process was First Direct a division of Midland Bank, now
a member of the HSBC. First Direct started in 1989 to offer a completely untested
and, to the majority of people, completely new idea – telephone banking.

Since 1 October that year, the bank has never closed. It has proved to be a very
successful method of making financial transactions. Within ten years, 68% of their
900,000 customers were in the important 25–44 age group and 11,000 new custom-
ers joined each month. First Direct has over one million customers and over 55% of
those customers are now banking electronically, either by Internet or mobile phone
text messaging.

Maybe the boldest part of the move was the setting up of an autonomous bank-
ing service, affiliated to another bank but not seeking wholly to offer the new service
to existing bank customers. On the contrary, it sought customers who were frus-
trated with the existing high-street way of doing business. Many such customers had
the impression that the branch cashiers took their lunch break at the same time as
everyone else who, of course, wanted to do their banking during their lunch hour.

As First Direct’s commercial director, Peter Simpson, explained, ‘Direct Bank-
ing is a simple concept which has had a profound influence, not just in the financial
services industry but as the rallying cry for a new kind of retailing which revolves
around the needs of the customer – not the supplier.’ He could have added that it is
also a profitable way for the supplier to do business.

From the original telephone service, First Direct added PC banking in 1998.
This is another mutually beneficial move as the customer has no delay in accessing
their banking information and First Direct replaces people with technology. The PC
offering is very wide. Customers can view and print transactions on their accounts,
move money, pay bills, view standing orders and direct debits, send e-mail to the bank
and apply for all the other services of the bank such as personal loans.

The non-core services have also been built up. Home and car insurance, share
dealing and First Direct shopping offers are all available. This last service exploits