Virgin Money said the new account aims to support financial inclusion and includes features not typically available with other basic bank accounts.

Research by the Treasury shows that 1.23 million adults remain unbanked in the UK.

Meanwhile a study by the University of Bristol found the unbanked can be affected by a ‘poverty premium’ of an average of almost £500 per year as a result of the extra cost of accessing basic services. Almost half of this poverty premium relates to energy costs.

Fergus Murphy, group personal banking director at Virgin Money, said: “There’s no reason why a basic bank account should only provide basic features, which is why our new account offers a full range of digital money management tools to make a real difference to our customers’ financial wellbeing.

“Our linked savings account and savings pots, plus budgeting tools and an energy switching service, can all improve financial resilience and help to tackle the poverty premium.”

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John Glen, economic secretary to the Treasury, said: “Promoting financial inclusion is a key priority of this government. All consumers regardless of their background or income, deserve the ability to access financial products and services which meet their needs.

“Having access to a bank account is the key to becoming financially included and I welcome new products to the market that go beyond the legal definition of basic bank accounts, enabling customers to save and manage their money on a day-to-day basis effectively.”

The key features of the M Account include:

• Full digital servicing through both a mobile app and an online portal
• Mobile cheque deposits using a smartphone app
• A linked savings account paying interest of 0.5% AER
• Savings pots
• Auto-sweep functionality between the linked savings account and current account
• Budgeting tools and transaction tagging
• Spending and balance alerts
• Digital payments
• Apple Pay and Google Pay
• An energy switching service in partnership with GoCompare
• Access to Virgin Group discounts and Virgin Money Lounges