Conventional wisdom in banking is to try to push customers onto digital and online channels and save money on the branch network and face-to-face service.

 
But UK banking start-up Metro Bank has taken the opposite approach and is growing rapidly as a result.
 
Founded in 2010, Metro Bank is the first new high street bank to be founded in over a century and from the outset it put a premium on branches and face-to-face service.
 
Vernon W. Hill II, an American who had also founded a successful bank in the US, wanted to bring an American customer service ethos to English banking. He notes that while European banks were originally founded to lend to governments, US banks were founded to serve businesses and consumers.
 
Hill, who is also chairman, doesn’t talk like a banker: “Our goal is to create a legendary global emotional brand by creating fans who join our brand, remain loyal and bring their friends,” he says.
 
Branches are open from 8am to 8pm, seven days a week and 362 days a year.
 
Some branches even offer drive-thru banking.
 
Customers can open a personal account and leave with their cash card and credit card in just 15 minutes, without having to make an appointment. Business accounts take just an hour to open, compared with days or even weeks for some other UK banks.
 
The results have so far been impressive, although the bank remains a minnow in the UK’s financial system. Deposits have grown from about £600,000 in 2012 to £8 billion in 2016 and loans from £200,000 to £5.9 billion.
 
Martin Newman, executive chairman and founder of UK-based e-commerce consultancy Practicology and a globally-recognised authority in multichannel retailing, has no doubt that Metro Bank’s customer service ethos is delivering results.
 
“What they have done is they have thought: ‘what are all the things we can we do differently? If we were a customer service business which just happened to have a retail financial proposition and services, what would we do differently?’,” he says. “And that’s what they’ve done.”
 
The world has changed: while the store is our public face, the key element to success is that we deliver in every channel: bricks and mortar, online and mobile.

Good service more important than interest rates

From a single branch (although the bank calls them “stores”) in London’s Holborn, Metro Bank now has close to 50 branches and is aiming for 110 by 2020.
 
“The fast-food model influenced much of what we do at Metro Bank, from making all channels accessible to consumers, to saturating communities with stores for their convenience and treating every customer, large or small, like royalty,” Hill wrote in his book Fans not Customers.
 
In fact, while Metro Bank hit the headlines because of its unusual decision to open branches, it recognises that other channels are just as important. “We’re also way ahead of everybody else on the tech side,” Hill claims. “The world has changed: while the store is our public face, the key element to success is that we deliver in every channel: bricks and mortar, online and mobile.”
 
The bank installed safety deposit boxes in its branches at the same time as Britain’s five major retail banks were getting rid of theirs because they were too much hassle. They were a huge success and Hill says income from the boxes almost covers each branch’s rent.
 
Hill says it is a myth that the interest rates on offer to customers are everything. “People will come in for great service,” he says. “Our deposit rates are fair, but our service is our competitive advantage.”
 
Metro Bank has delivered good returns for investors since listing on the London Stock Exchange in March 2016 for £20 a share. At the start of May, its shares were trading at over £34.
 
However, the company hasn’t yet returned an annual profit. Nonetheless, the underlying loss before tax has shrunk from about £50 million per year in the past four years to £11.7 million in 2016 and the bank recently reported its first statutory quarterly profit.
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