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 ”.