Metro Bank will be one of the first MMR lenders

02 Aug 2010

Watching the news last week you couldn’t help but think, ‘You wait over a hundred years for a new high-street bank to come along, and then two turn up at once’. 

Unfortunately, if we are to believe recent comments in the Financial Times, we will have to wait a while longer for Virgin Money to enter the banking fray as it looks unlikely that they will be providing current and savings accounts until next Spring, with mortgages to follow after that.

However, the launch of Metro Bank has happened and in today’s environment that in itself is something of an achievement. 

Holborn is the first branch to open, with another due imminently, and the promise of 10 more next year - and up to 200 over the next 10 years. 

It is a clearly ambitious proposition with the stated aims of the operation being to focus on customer service increasing customer ease with seven-day/early morning/late night openings and delivering customer satisfaction through such commitments as providing a 15-minute account opening service. 

There has been some comment around the fact that Metro Bank’s products are not hitting the ‘best buy’ tables however one could argue that its high-street competitors don’t do so either. 

The focus here seems to be on delivering a better high-street banking experience for the customer and therefore price-centric products do not seem to be its raison d’être.

A bank opening on a Sunday will certainly have appeal but without question if they get their customer service right there’s no reason to see why consumers won’t support them, despite them not having the sharpest rates. 

There may be cynics who say otherwise, but a good start to improving customer service is dealing with the little things, for example, their commission-free coin counting machines or the ease and speed with which they can issue a debit or credit card.

Competition in the banking landscape is absolutely vital which is why we should all welcome Metro Bank’s launch and genuinely wish them every success. 

Given the pedigree of personnel involved and the strong management team behind the business, whilst nothing is assured, they have more than a fighting chance; the bank was co-founded by Vernon Hill and Anthony Thomson with Hill being the man behind the highly successful Commerce Bank in the US.

Metro Bank’s model is based on the model used for Commerce and, given it has already raised £100 million from investors to fund the operation, there are clearly many who believe a new UK bank such as this can be a success.

In terms of Metro Bank’s customer base, it says it is targeting ‘everybody’ however there has also been much made about the apparent level of dis-satisfaction many customers have with their existing banks and it will surely be targeting those who would seek out a switch. 

Of course, it will be constrained by the initial small number of branches it has and the fact that customers have to go into a branch to open an account. 

This is why it has chosen major Central London areas and the next branch openings will all be within Greater London.

Currently, its mortgage range is only available direct with no published plans to distribute through mortgage intermediaries. 

However, given the scale and strength of intermediary business this may well change in the future. 

Interestingly, Metro Bank comes to the lending market almost as the first ‘MMR lender’. 

One wonders, as it prepared itself for launch, if it had to change its processes in order to make sure it can survive and thrive in the new MMR environment? 

Perhaps given the lack of legacy issues it will have an edge where new process will have been built to support business in a real MMR environment.

It should certainly be in the right place to compete strongly while making sure it is the new type of lender that the FSA now – and in the new regulatory structure later – want to see trading.

All in all it is a question of ‘watch this space’ – Metro Bank clearly has major ambitions and once the novelty factor has worn off we will be in a much better position to see if it can deliver on those. 

A major new UK bank is not something to be sniffed at and all those working in financial services should hope it can be a success and that there are others who will follow its lead in order to deliver the ultra-competitive banking and lending landscape that we all wish to see.

Bob Hunt

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