Metro Bank arrives on British high street
Metro Bank, Britain's first new high street lender for over 100 years, opened its first branch on Thursday in a move aimed at shaking up the sector but ran into immediate criticism over its products.
Metro, co-founded by billionaire US businessman Vernon Hill, hopes to tap into public anger at traditional banks in the wake of the global financial crisis.
The first Metro Bank opened its doors in central London, offering canine treats to dogs accompanying their owners, in a major departure from the stuffy atmosphere that is associated with stereotypical British bank branches.
The new entrant aims to have up to 250 branches in and around the capital within 10 years.
"Everything you hate about your existing bank is what we are going to change," Metro Bank chairman Anthony Thomson told AFP.
"Since the banking crisis, everybody's come to realise (that) the kind of banking we're doing -- which is taking in deposits, making a proportion of those available as loans to customers -- is the way forward," said Thomson, who set up the bank with Hill.
However, analysts questioned the competitiveness of the financial products being offered. Metro's instant-access savings account offers a return of 0.5 percent, which compares with the industry's top-paying rate of 2.8 percent.
Its three-year fixed rate savings bond, meanwhile, pays 3.0 percent, compared with the market-leading rate of 4.3 percent.
"It has been open in stating that it won't be chasing customers through the use of 'best buy' products. Instead it will focus on service and doing things differently," said Kevin Mountford, head of banking at price-comparison website Moneysupermarket.com.
And analyst Andrew Hagger, of competitor website Moneynet.co.uk, also slammed the products for being "uncompetitive."
"The longer opening hours, dog biscuits and bright shiny premises are certainly big differentiators for Metro Bank, and will initially seem like a breath of fresh air when compared to the established competition," Hagger said.
"There's no doubting that customer service will play a big part in the drive to win new business, but with uncompetitive savings and mortgage rates, only time will tell if consumers will be prepared to sacrifice better rates available elsewhere in return for the promise of a more positive experience."
Tens of people lined up outside the first branch, in London's Holborn district, ahead of its opening early on Thursday.
Twenty-year-old student Dikepa Ranawake said he was attracted by the bank's openness.
"I was excited by the prospect of a new bank that was hassle-free, that wasn't confusing ... I think all banks have the tendency to try and take your money and I think the transparency that's been suggested by this new bank, the ease of opening accounts, that kind of thing attracts me."
Metro Bank is focusing on customer service, with branches open long hours seven days a week, with a fast account opening procedure that issues debit and credit cards within 15 minutes.
And for dog-owning customers, branches are providing water bowls and free doggy biscuits. It is based on the model used for Commerce Bank in the US, which Hill founded in 1973.
Meanwhile, other new banks are waiting in the wings. Richard Branson's Virgin Money has ambitions to become a major retail bank, while supermarket giant Tesco appears likely to launch full banking operations.
© 2010 AFP