A steady stream of customers were greeted with an array of
gimmicks. Not only does the bank welcome dogs, it provided them with free
biscuits and offered their owners free breakfast.
“We’re in the business of turning customers into fans,” American
billionaire and Metro Bank co-founder Vernon Hill told Reuters, accompanied by
his own pet dog Duffy.
Metro Bank aims to have more than 200 branches across
greater London over the next decade. It also hopes to end up with a business
evenly split between retail and commercial banking, offering a range of
services including a Metro Bank-branded credit card.
Its business plan is largely inspired by a retail-focused
model used by Hill when he founded America’s Commerce Bank in 1973.
Commerce Bank grew rapidly to become a major force in the US
financial industry and was eventually sold to Canada’s Toronto-Dominion Bank in
2008.
“There seems to be a pent-up demand,” said Hill, observing
the queues building up within Metro’s flagship branch in Holborn, near London’s
financial district.
Metro Bank is one of several new entrants seeking to break
into a retail-banking sector shaken up by the credit crisis which saw the
near-collapse of some of its best-known names.
Britain’s retail bank sector is dominated by the “Big Four”
of Barclays, Lloyds, HSBC and Royal Bank of Scotland.
There is also competition from mutually-owned firms such as
Nationwide and Spanish bank Santander which owns the Abbey brand.
Metro Bank is the first new start-up, however, to get a
licence from the Financial Services Authority regulator.
“I’m not entirely happy with my current bank HSBC. This is a
new bank and it promises it will be different,” said Dileepa Ranawake who was
planning to open an account.
Gregory Mann was also among the first customers, he was
attracted by the long opening hours compared to rival banks.
“These guys are open seven days a week,” he said.
Metro Bank Chairman Anthony Thomson told Reuters last week
that the bank had a long-term goal to grab up to 10 percent of London’s retail
and commercial banking market and has said the company could list on the stock
market in 2013.
Britain’s changing banking industry promises to become more
competitive with various assets sold off from bailed-out groups Lloyds and
Royal Bank of Scotland that could attract the likes of Virgin Money and
supermarket chain Tesco, which also plans to enter the British bank sector.
Metro Bank has said it is not interested in acquisitions and
aims to grow on a branch by branch basis.
Dorothy Armstrong, a senior executive at the banking
industry practice of consultancy Accenture, said Metro Bank would have its work
cut out.
“While Metro Bank and other expected entrants to the UK
banking market, such as Tesco, stand every chance of becoming successful and
profitable niche banking businesses over the coming years, it is most unlikely
that these new players will gain sufficient scale across the full range of
banking services to challenge the dominant five in the high street,” she said.
Critics of Metro said it needed to offer better rates.
Metro Bank is offering a rate of 0.5 percent on its instant
access savings account - below the current British inflation of around 3
percent - and a rate of 15 percent on an overdraft on its current account.
“They’ve got a steady product range but in pretty much every
case, you can find a better deal if you’re prepared to look around,” said David
Black, a banking analyst at financial research company Defaqto.
