Chairman’ s Corner
Michael Lafferty
No new British bank has attracted as much interest from retail bankers around the world over the past decade as Vernon Hill’ s Metro Bank, the first branch bank to be opened in the country in more than 100 years. And rightly so – Metro’ s branch-based High Street business is growing rapidly, having already attracted over 1 million consumer and commercial customers from what Hill calls“ the existing oligarchy”. Investors love the business, valuing it at some four times book value in dramatic contrast to the miserable P / B values of the major UK clearing banks, which generally trade at a discount to book.
Writing in his book Fans, Not Customers, Vernon Hill is scathing about the giant UK banks, which he says have used their monopoly power to under-invest in facilities, infrastructure, people, and service. He says the system“ is saddled with legacy systems, legacy delivery channels, funding problems, capital shortages and customer dissatisfaction”.
The book is a great read, not least when it debunks the“ four myths of UK retail banking”, which he lists as:
1. No one switches bank accounts 2. Rate is everything 3. A bank can only make money by cutting costs, and 4. The branch is dead
In fact, Metro itself has proved all these myths wrong – not least in regard to branches, where it is aiming to have 100 by 2020.“ Our stores are lifelines to our customers,” he asserts – and then sets out a number of general precepts which Metro Bank operates:
• The establishment of emotional branding
• Brand marketing
• Decentralised delivery, centralised control
• Over-investment in real estate and fittings
• Provision of a service value proposition vis-à-vis the competition
• Uniform store design
Hill is a great believer in retailing with a human touch, and lauds the fast-food model in particular. The bank is open seven days a week from 8 am to 8 pm and its call centre, where every call is answered by a human being, never closes. With the motto“ Love your bank at last”, the Metro culture is“ to put the customer first at all costs and profit from the adventure that brings”.