Virgin business empire is seeking to bolster its Internet presence, and its executives are looking across the Atlantic for help.

"We're looking for U.S. partners with technology or software know-how to teach us about the on-line environment," said Rowan Gormley, 37, chief executive officer of Virgin Direct Personal Financial Services Ltd. He said the company is involved in joint venture discussions with "two big U.S. companies," which he would not identify.

Four-year-old Virgin Direct, whose Virgin One integrated financial services account has challenged more tradition-bound banking competitors, is expanding its service menu. For example, it is experiencing heavy demand for a product aimed at helping consumers manage their debt.

But meanwhile, officials are saying that Virgin Direct could do much more to take advantage of the Internet. It does not yet offer full transactional capability on its Web site. It mails paper statements to apprise account holders of their net worth, but it does not yet post such information on-line.

Virgin Direct "has always been innovative with products," said Nick Jones, an electronic commerce analyst at Jupiter Communications in London, who is also a Virgin One customer. "But so far it is not delivering the expected innovation with its Internet service."

He said Virgin is still perceived as a telephone bank, which is how it started out. By not being on the cutting edge of Internet services, he said, it could risk losing "the mantle of being an innovator" to Prudential Banking's well-publicized Egg service or the new First-E venture targeting the U.K. market.

Since April, Virgin has been turning more of its attention toward the Internet. About a quarter of new savings products are sold on-line, Mr. Gormley said.

But Virgin's specialty is direct banking via phone. For the second year in a row, its call center won the Diamond Award in the BPS Teleperformance Grand Prix telephone service awards, beating out 135 other U.K. companies across all industries.

First Direct, an HSBC Holdings affiliate widely viewed as the inventor of direct banking, was a runner-up.

Virgin's approach is to build deep, valuable relationships, Mr. Gormley said. "Rather than having 10 calls that we turn into new business, we focus on who our current customers are," he said. If customers have a positive experience and receive good service, then "when they're moving house, we'll be on their shopping list."

Since its launch, Virgin has maintained a 94% customer retention rate, he said, which is well above the banking norm. It has 300,000 customers and $4 billion of deposits.

By comparison, Telebank, the well-known direct bank based in Arlington, Va., recently announced it had 100,000 customers and $2 billion of deposits.

Virgin, however, is much smaller than the year-old U.K. competitor Egg, which has 600,000 customers and $12 billion of deposits.

Virgin has $1.6 billion of assets, $1.6 billion of mortgages, and a $2.7 billion insurance business. Its average customer is 42 years old and has an average yearly income of $60,000. About 70% of its customers are more likely than the U.K. population as a whole to be on the Internet.

Virgin's original mandate was to enable customers to "subcontract the management of their finances to us," Mr. Gormley said in a recent interview.

The Virgin One account, introduced in 1997 with back-office support from Royal Bank of Scotland, aggregates all of a customer's banking and borrowing relationships such as mortgages, checking and savings accounts, credit cards, and personal loans. Customers receive a single, integrated statement.

The integration of loans and deposits enables Virgin to recalculate interest payments on loans daily by using money in the deposit accounts to pay down loan balances more quickly, thus reducing borrowers' costs.

"Virgin doesn't offer the most attractive rates on mortgages," Mr. Jones said, but the daily balance calculation makes it "more flexible than other banks. It is aimed at the savvier investor."

Virgin Direct's best-selling product is the new Individual Savings Account, designed for people in their 30s who are in debt. "Debt management, not wealth management -- that's what our customers need," Mr. Gormley said.

The account comes with personal money managers to help customers reach their financial goals, which might include buying a car or taking a vacation. "We look at what product is right for you to help you organize your finances correctly," Mr. Gormley said. "Most people need incentives, say, to lose weight. So it's like having a personal trainer for your wallet."

One version of the Individual Savings Account lets customers invest up to $12,000 or hold some of that amount as cash for emergencies. The investments are tax-free and go into Virgin's index-tracking fund. The account requires a minimum investment of $1.60. The interest rate for cash deposits is not lower than 1% below the U.K. clearing bank base rate.

The privately held financial services company has been profitable "before marketing expenses" for the past two years, Mr. Gormley said. But he added that "we're not being aggressive enough."

Over the past five years, Virgin has spent $167 million on marketing, considerably less than the $600 million that he estimates Egg spent in its first year.

Mr. Gormley said he is optimistic about Virgin Direct's overseas plans.

"We're very good at taking a relationship and making something of it," he said. "The Virgin One account could make a huge impact in the U.S. because it is a revolutionary product."

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