Yesterday we ran news about a new financial institution, Metro Bank, opening its doors in London, and its founder Vernon Hill, who also founded the U.S.'s own Commerce Bank. Metro Bank promises to offer better service than its local competitors by keeping its branches open 361 days a year and offering a 24/7 London-based call center, along with online banking and quick account opening services. The bank gave out free dog treats at its London branch opening.Today, Ovum analysts blasted the new bank, saying it will only appeal to a niche segment of the metropolitan population - those that work long hours, aren't online at home and aren't financially savvy or interested in getting a good deal on their savings.
"This profile points towards the lower end of the mass market where customers may not care so much about getting good value," says Datamonitor's retail banking analyst Jonathan MacDonald. "While gimmicks such as free ice cream, stilt-walkers, and a three-piece brass section put a smile on the face of many passers-by, one wonders how many financially savvy Londoners will be attracted by the rather uncompetitive rates on offer. "
Alex Kwiatkowski, financial services technology analyst at Ovum, takes up this point: "Metro Bank seems to have made no attempt to reach affluent and aspirational audiences by providing an online banking service at launch, nor has it engaged with social media channels despite them having the capability to do this and a brand message which implies creativity and innovation is core. The bankers may see such things as trivial, but surely not as trivial as dog-biscuits. Having a Twitter handle, for example, would have allowed the bank to engage directly with customers and potential customers in new and innovative ways, reinforcing their launch commitment of exceptional customer service."
Kwiatkowski suggests the bank should give up and go home. "Metro Bank does not have the muscle to overpower its far bigger rivals and should not attempt to slay Goliath," he says. "If it is to establish itself as a credible player it will need to rely on nimbleness, accuracy and the right ammunition. From Ovum's perspective, it has yet to convincingly prove the existence of any of these elements."
Say what you will about Vernon Hill (and there are numerous articles on the internet about the banker's questionable practice of hiring family members, for instance paying his wife's design firm $50 million to decorate Commerce Bank branches), Commerce Bank is a success story. In 1973, it had one office, nine employees, and $1.5 million in capital. Just before its sale to Toronto-Dominion Bank in 2008, it was a $50 billion, 470-branch bank. Hill clearly has some business and customer savvy and it will be interesting to see what he does with his new British bank.