Less than only a month after Metro Bank was granted a license by the FSA to bank in the UK, along comes Richard Branson.

The UK entrepreneur has paid £12.3 Million for Church House Trust, a small regional private bank based in Yoevil, Somerset. The bank will be re-branded Virgin Money as a first step into retail banking for the group.

Virgin Money joins US provider Metro and Tesco as the UK’s pioneer boutique bankers. Conventional banks, paralysed from the credit crash left the door open for new arrivals. Could this be the end of the high street bank as we know it?

A growing and exciting banking party

Boutique banking offers unique opportunities to those brave enough to enter retail finance. The conventional banks, whose services have increasingly lost focus with their customers and the recent troubles have finally shattered the illusion of competence they projected.

Seen as arrogant, milking customers and overcharging, our high street banks have only themselves to blame for their own demise.

Too big to function

High street banks are unwieldy and out of touch. They’ve failed to take advantage of social media to understand their market, relying on outmoded, inappropriate products and clumsy marketing that’s consistently missed the mark.

Boutique banks with their modern, lightweight internal processes moulded by today’s market have a powerboat agility in a market awash with oil-tanker-slow dinosaurs who simply cannot react to a market that is leaving them behind.

But what will Virgin Money bring to the party?

Cutting through complexity

Richard Branson sees banking bureaucracy as a root cause for the High Street’s failure. “Virgin Money aims to bring simplicity to the UK banking market which has traditionally been a complex sector”.

But this move won’t be the only one Virgin intends to make to gain a share of this market. Virgin Money’s CEO Jayne-Anne Gadhia hinted at more to come, describing the acquisition as “a strong and sensible first step in delivering Virgin Money’s banking ambition”.

While no details have so far emerged of just how Virgin will change the banking landscape, Ms Gadhia suggests that the services Virgin intends to offer will be “different and better” with new delivery channels to change the playing field for the UK’s banking sector.

Good to go

Initially, Virgin Money’s services will be delivered on-line, but a branch network is planned. Whilst UK consumers have been quick to adopt both PC and mobile banking, they also value high street branches, something that both Metro and Virgin recognise.

Even if our high street banks wake up to this competition, the boutique banks quicker path to market will see them well established before the old banks can respond to the threat.

It looks like full throttle for Virgin. The FSA has already approved Virgin’s application with a grant of license. It looks like I was right. 2010 is going to be great year for boutique banks. Now that is something to be positive about.