As my friends and regular readers will know, I work at one of the UK's most innovative financial companies, GoCardless
- we're working hard, day in day out, to revolutionise the world of online payments, trying to make taking money online cheaper and easier for small businesses.
I work with banks on a day to day basis and I suspect I probably see their ugly side more than most. Given my personal involvement in the industry, I'm always very interested to see change (...and even revolution) in the world of banking. Today, I've had my first experience with Metro Bank
who put themselves forward as "A Revolution in Banking". In this article, I will outline my experiences and the challenges that I believe this fledgling bank will face.
I've always been somewhat captivated by the mission of Metro Bank - they really are trying to achieve something pretty challenging by being the first high street bank to open in the United Kingdom in the last 100 years. The market is highly entrenched, and at least for personal customers, it's completely homogenised. In this launch, we're seeing simply a company trying to do what so many startups are trying to do - disrupt. Their disruption is to offer "unparalleled levels of service and convenience" and this is something that all of us must welcome in a world of impersonal and unfriendly service.
But what does this revolution actually look like? Well, it seems to me to be manifested across the operation, from the its ability to open accounts and print debit cards on the spot to free dog biscuits and bowls in every branch. At the end of the day though, these kind of features are largely meaningless. It's not that difficult for a bank to make its branches look a bit different and to offer a few different things - after all, especially within the Barclays chain, we've seen a rapid programme of modernisation with banks in high streets across the nation taking on a suddenly modern look. We've got to look for something at least a little
more skin deep.
To be honest, what Metro Bank will actually mean remains to be seen. But the first signs are good. I visited the branch in Romford today to open a current account in preparation for a trip to Washington DC I've got coming up for the presidential inauguration from 18th January. Usually, I'd use a prepaid currency card like Fairfx
but I've decided this time to go for a Metro Bank current account since it's far more convenient (with online banking, bank transfers etc.), and they charge no fees for foreign transactions, even cash withdrawals. A pretty revolutionary feature.
On arriving at the branch, I was offered a tour by a guy named Winston - he was on secondment from the South Kensington branch for this new opening in Romford. He showed me their cash machines (located inside the bank, yet open 24/7, with your debit card acting as a key to the front door), safe deposit boxes (fairly cheaply priced, with access during the bank's opening hours...and yes, they're even open on Sunday) and coin counting machine (like the Coinstar machines you see in Sainsbury's, except
free for everyone and with prizes for kids). Winston offered to answer my questions at any time (genuinely, I felt, not as "part of the script") and he seemed generally excited by what he was doing. He even divulged that he had worked for NatWest, and to quote, he was "never going back". After about 20 minutes chat and a cup of coffee, I came out with my Mastercard all printed up. Ready to go, with online banking and PIN number set up too.
All in all, it seems that Metro Bank really are offering something different in terms of their in-branch experience and the accounts themselves. But I can still see that there are some hurdles that are going to hold them back. Of course though, I don't condemn them off the bat - I imagine that they may well be able to surpass them, especially since they successfully completed the very difficult task of getting regulatory approval. We at GoCardless know how fun that is of all people. They're obviously adept at getting shit done
I suspect that the biggest difficulty will be gaining traction, and this is intrinsically linked to the issue of opening branches quickly.. For one, many people will be reluctant to open an account with the bank unless they're a trusted "high street name" - whilst Metro Bank is covered by the Financial Services Compensation Scheme
, many will not understand this and will perhaps be looking for more than that. Another difficulty is that Metro Bank will find it difficult to offer a universal service where you can visit a branch just about anywhere across the UK and be served, at least in the short term. If you bank with the major banks, there are branches just about everywhere. At present, Metro Bank has just 12 branches, and these are highly concentrated in London and the South East. This means that for Londoners, Metro Bank is becoming more convenient, but for most it is still not close to hand.
I suspect trust and ubiquity will come hand in hand - and the only way to achieve these things, which are essential conditions for traction, is to open lots of branches. The company plans to open 200 branches by 2020. I can't help but feel that this will be difficult for them, and memories of the failed UK launch of Best Buy
cannot help but fill my head. Getting land for new outlets is fairly challenging - the company aims to have a fairly unique style of branch (or "store", as they call it) - and suitable properties aren't available everywhere. In Romford, their premises are purpose-built, and judging by talking to Winston in the branch, plans to open other outlets are restricted by issues of planning and property. In particular, he mentioned that the City of London branch is proving to be challenging in the territory of listed buildings and high rents that is the Square Mile. There's also a "chicken and egg" problem to be found here. Metro Bank will need at least a degree of success to fund its new stores, but equally, it may find it difficult to get customers before it has a lot of them. How this will be resolved remains to be seen.
I'd love to hear peoples' views on Metro Bank, and what it means - my in-branch experience has been highly promising, but this isn't necessary universal. From an economic perspective, do you think that there is room for another bank, and is their USP just unique enough to take them all the way?
(Originally posted on my blog as A revolution in banking