Virgin Money is reported to be preparing the launch of an online banking offering as consumers become increasingly wary of traditional high-street institutions.

It is understood that the firm will apply to the Financial Services Authority for a banking licence.

If successful, the business would expand its service capability to offer current accounts and mortgage lending, in addition to existing services ranging from credit cards to insurance.

After its failed Northern Rock bid, Virgin Group said it would build the presence of its financial services arm, and would be looking to explore different opportunities to expand in the sector.

The news follow Tesco’s announcement that it is working on the IT migration of its recently-acquired financial services arm ahead of plans to open 30 in-store bank branches by year end.