EP Business in Hospitality Issue 48 - January 2014

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Metro Bank sees itself as different from traditional banks through its “unique customer-focused retail business model, reinventing the rules of retail banking, making every effort to offer simpler and more convenient banking”. With stores operating longer hours, seven days a week, Metro Bank’s customer service can rival any good hospitality establishment. The bank’s strategy is about creating colour and experience. As you enter a store you are welcomed by a customer service representative, who shakes your hand and takes you to a seating area. They even have lollipops for children and water and biscuits for dogs. Metro Bank was founded by an American, Vernon Hill, who is also the Chairman. Vernon knows and understands retail banking. He founded American bank Commerce Bancorp (known as Commerce Bank) in 1973, which he sold for $8.5 billion in 2007. Prior to Commerce Bank, Vernon worked with McDonald’s, sourcing and developing new sites. Commerce Bank has won numerous retail banking awards and Vernon has been credited with revolutionising American Banking. Can he repeat the same success with Metro Bank in the UK? Vernon certainly feels “the appetite for a new bank in the UK is far greater than that in America”. 5 March 2010 was the day that Metro Bank PLC was granted its licence by the FSA. Four months later, on 29 July, Metro Bank opened its first store in Holborn. Since then the business has grown to 22 stores, with plans to increase to 24 by the end of 2013 and 200 by 2020. By mid-2013, Metro Bank had 200,000 customers, including 15,000 business accounts and 850 employees. Transactions at the Holborn store have reached 40,000 a month, which annualised are equivalent to a mature bank in the US. The UK appetite is certainly there! So what are the factors that have contributed to Metro Bank’s success? Jason believes it’s the bank’s “relationship-led approach, face-toface contact, direct line into your branch and our commitment to customer service all the way through to the end, not just the front end- and longer-term committed finance. When customers require significant investment, you need continuity of funding; you need a longer-term THE BRITISH BANKING REVOLUTION Metro Bank is the first new high street bank in over 100 years and is the new patron of British banking. However, with losses of around £100 million to date, is it really changing the market? JAZ NOTAY met with Metro Bank’s Commercial Director, JASON OAKLEY 6 |January 14 | EP
BUSINESS horizon to get the return on your investment. We see ourselves as the entrepreneur’s bank and our customers have built up their business from inception, but are still very much the decision-makers and what they want from their bank is someone with the same level of decision-making, proactivity and responsiveness.” Jason says he “spends a significant part of his week with customers as it is a core part of our model to spend time with the entrepreneurs and really understand their objectives and their business and build a joint approach. It makes such a difference and customers really like that intimacy.” Timing of entry into the UK market has also contributed to Metro Bank’s successes. The British public had lost faith in the traditional banks due to a series of scandals, PPI, derivative mis-selling, government bailouts and money laundering. But since there were so few players, and all have been tarnished, Metro Bank was almost seen as a breath of fresh air. “Our model is a clean model; we offer loans, make deposits and traditional banking services. Some of our competitors, in their desire to broaden their offering, have gone into pensions, investments, life cover, etc. and this has its own set of issues. We have a simple range of products and we don’t have any product sales targets – it’s all service led. What you tend to find is if you offer great service, customers trust you and you build a good relationship. You look after your customers and they will keep banking with you.” Metro Bank has no desire to diversify into offering products such as pensions, insurance and investment funds, due to the risk associated with misalignment of customer interests and the bank. Seeing an opportunity to offer more traditional services the company “The appetite for a new bank in the UK is far greater than in America” has begun offering Safety Deposit boxes – the uptake for which has been phenomenal, with almost all boxes having been sold already. While HSBC have disbanded their Asian business unit and diverted customers back into normal portfolios, Metro Bank is about to launch their Asian business unit for Indian, Pakistani and Bangladeshi customers. They want to get closer to the community and add value. In July, the bank acquired SME Invoice Finance, a provider of alternative forms of finance and working capital to small and mediumsized businesses. SME was a “great cultural fit”, and has meant the bank is able to offer an enhanced proposition to their SME customers by providing additional services such as asset finance and debt finance. Customer service is a key part of Metro Bank’s strategic proposition. This commences in the recruitment process, where the selection criteria requires all potential employees to be genuinely customer orientated and have a real desire to want to help customers. Every experience is seen as an opportunity to enhance the relationship. “There are training programmes to foster and nurture customer service, which is important for every employee. It’s about providing excellent customer service externally as well as internally. I’ve worked in this industry for over 30 years, and this is the most positive culture I have experienced. I know a lot of banks talk about being customer orientated, but it’s in our DNA. We want to provide a retail-led experience and we measure ourselves against the likes of John Lewis and Apple, we don’t measure ourselves against the likes of other banks, as they are not sufficiently challenging enough for the service experience. We want to be the best in the industry for service, not just banking.” What have been the biggest challenges to break into the British market? “You need to get to a certain size and scale to get visibility. We can relate to entrepreneurs because four years ago we didn’t exist and had the same growing pains when building our business from scratch. What’s really encouraging is the level of brand awareness – we are getting a lot of customers through word of mouth. There’s a level of momentum and growth, which gives us a real sense of confidence.” Many growing businesses tend to suffer due to insufficient resources, funds, manpower, etc. or they do not have the infrastructure in place to cope. Metro Bank have taken steps to avoid this risk by rolling out in phases – slower at the beginning and accelerating over time. “It is a geared model, as the first stores have become profitable and that allows increased investment.” Store openings have been concentrated in London and the South East, as the store network supports each other, which facilitates the growth. The Metro Bank concept is new and refreshing, but it comes at a cost. The bank has reported losses of £100 million in the three years to July 2013. So when does the bank envisage making a profit and bringing value to its shareholders? “Our growth is ahead of plan and there is an appetite to continue to support the brand and its growth.” With aggressive expansion plans, can Metro Bank continue to provide customers an unrivalled service and give shareholders a lucrative return on their investment? Only time will tell, but it will no doubt be an interesting journey. • EP | January 14 | 7
Page 1: Issue 48 January 2014 £5.00 EPBusi
Page 4 and 5: “Afternoon tea for most is synony
Page 8 and 9: UK Hospitality Confidence The UK Ho
Page 10 and 11: MANAGEMENT In 1997, the Worshipful
Page 12 and 13: inside luxury LIFESTYLE unplugged i
Page 14 and 15: Fast forward six years and Creative
Page 16 and 17: The Irish connection Relations betw
Page 18: ADAM TAYLOR OPINION Zero-hours cont
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Page 24 and 25: PEOPLE Harry recalls his time manag
Page 26 and 27: If the never-ending march of coffee
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Page 31 and 32: GRAEME SMITH OPINION The changing f
Page 33 and 34: MANAGEMENT Dawn Browne, Fuller’s
Page 35 and 36: BUSINESS Opened in 1854 and origina
Page 37 and 38: BUSINESS Employing the best We met
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Page 41 and 42: BUSINESS Amelia and Michael, for pa
Page 43 and 44: MIKE DAY OPINION Technical Determin
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Page 47 and 48: MANAGEMENT Miriam Staley, encourage
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EP Business in Hospitality Issue 48 - January 2014

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