Bank with Attitude: The Bank with an in-store attitude

Toilets for customers and biscuits for their dogs caught the headlines when Metro Bank launched in London. But Chairman ANTHONY THOMSON tells Chartered Banker why Britain’s newest bank is greater than its gimmicks.

Everything people dislike about their existing banks,” declares Anthony Thomson, “we do differently.” You’d be pushed to find a single sentence which better encapsulates the mix of loud impatience and assertive self-confidence that’s characterised the launch of Britain’s
most intriguing financial fledgling, London’s Metro Bank.

First off, Thomson doesn’t call it a bank. He calls it a “store”. He and US banking veteran Vernon Hill are planning a string of them: four this year in the M25 corridor, eight next year, 12 in year three and an ambition to have between 200-250 within a decade.

But it’s more than the word “store” which betrays Metro’s retail philosophy. “Why do banks open at 9.30 and close at 3.30 or 4 in the afternoon? We’re open 8-to-8 Monday to Friday, from 8-to-6 on Saturdays and from 11-to-4 on Sundays. In surveys, almost a quarter of people say they want to be able to bank at night and at weekends.

“And we’re keen to give people reasons to come into our stores – free coin-counting machines; safety deposit boxes accessible seven days a week; customer toilets; a bowl of water and bone for the dogs of customers. That’s why people have been switching in such large numbers.”

Actually, Thomson is coy about the numbers who have switched since the early-August launch. Part of his reason, though, is that Metro Bank staff aren’t paid on sales targets, but on satisfaction scores. “Service and convenience are the key determinants,” he explains, “so we do a huge amount of mystery shopping and encourage customers to return feedback forms.

“And we empower our people dealing with customers to make the decisions, to resolve any issues. Our philosophy is: ‘One person to say yes, two people to say no.’ The person dealing with the customer has to try and find a solution. On Saturday, we had a queue of people here opening accounts, and one woman said she’d incurred £12-worth of parking fees while she was waiting. Our account-opener simply said: ‘I’ll repay those for you!’

“Another big difference is that we operate from just one IT platform which holds all of our customers’ details – we call it a Single Client View. This means that, when you walk into a store or phone our customer centre or go online, everyone’s looking at the same data set. It solves a huge problem that confronts existing banks in combining their legacy systems.

“So, if you’re a Metro Bank business customer, for instance, the same person can look after your personal account, your daughter’s school fees and your son’s car loan – it’s a very, very big service differentiator.”

Professional enthusiasm like this – plus that dog-biscuits gimmick – were clearly reflected in the upbeat media headlines that made Metro Bank’s launch something of a PR coup. Not everyone was so positive, though: analysts found Metro’s initial offerings – instant access savings rates, fixed rate bonds, overdraft charges, variable and fixed-rate mortgages, personal loan rates – unexciting compared to the market’s “best buys”.

Thomson saw that coming. “These are the people, of course, who were all saying that this business model would never work. They’ve signally failed to understand that there’s 35 years of this model working in the US where it grew from a one-branch bank into the 18th biggest bank in America with $50bn of assets, a bank that was sold on a multiple of 25 times earnings – higher than any other bank stock in the US or, indeed, the UK. So, there’s a precedent for this.

“Besides, analysts have got it into their heads that the only thing that matters to customers is rate, and they’re absolutely wrong. We see, time and time again, offers to switch to a current account at 7% – until you read the small print and discover that it’s 7% only on your first £1,000, and you’ve got to switch your current account, and it’s time-limited, and I have no doubt you’ve got to hand over your first two children!

“People are seeing through all this. What people want is value and rate is just one component of value. People want to know that the rate is fair, transparent, consistent and not part of this bait-and-switch mentality.

“The analysts are absolutely and utterly fixated on this view that rate drives everything. It doesn’t. Only 6% of money movement is considered ‘hot money’, 94% is pretty stable. Price is not the only determinant, yet the analysts seem to think that banking is somehow different to every other aspect of life. Do they drive the cheapest car? Do they buy their suits at Primark? I suspect not!”

Metro Bank is determined to grow organically, not by acquiring branches from banks that are shedding theirs. “Part of our differentiator is our culture. We know that 90% of customers’ needs are very straightforward. They want competence, banking knowledge which isn’t terribly complicated – and someone who cares. You can’t acquire or merge your way to a new culture. You have to grow your own. So we won’t be buying anyone else’s branches – or anyone else’s problems.”

It seems that good organic growth is already evident. “We’ve opened more accounts in our first month than we had in our business plan for the first year.” 

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