If the bank branch is supposed to be doomed, what on earth does Metro Bank think its doing?
The “challenger” bank has just released its latest set of results, and they were cheerful enough.
It’s on course to report its first full-year profit, is pulling in deposits at an impressive clip (more than £1bn in the first three months of the year) and continues to grow its customer base (which was close to breaking the 1 million barrier at the end of March).
That customer base seems quite keen on Metro’s branch based business model (it does have an app and web operation too) at a time when other banks are falling themselves other to close theirs. It has a long term target of growing its network to 250 from the current 48.
What’s going on? Forget the gimmicky stuff, such as doling out free dog biscuits, which generated some useful PR hits and helped to get the name known when the business first launched in London.
Its branches do lots of other things that your bank might not.
Lost your card? Hot foot it down to the nearest store and you can get a new one. Need a new cheque book - and people do still use them - they’ll print one off for you. Want to access to those services on a Sunday - small businesses tend to be quite keen on that - and you can get them.
Tailor your branches to your customers, give them what they want from them, and it seems that there is life in the format after all.
Of course, Metro Bank’s great advantage is that it isn’t tied to clunky legacy systems that make some of those things hard to do for bigger banks.
As the new(ish) kid on the block, it also knows it can’t afford to take its customers for granted, like they often do. A financial services business where the word “service” counts for something. Who knew that could work?
Metro is showing what banking can be like if you just make the effort. Its challenge is to keep it up when those 48 branches become 108 and then 148 and then 250.
CEO Craig Donaldson says he understands that and is taking it slowly as a result (he’d like to see one in his native Sunderland, just not yet). But, of course, you’d expect him to say that.
Analysts fretted a bit about the latest results. Metro’s lending its growing more slowly than its deposit taking so the loan to deposit ratio fell. Mr Donaldson counters by saying his bank is on track to hit its full year target of getting it up to 80 per cent and that the pipeline is rosy. A link has been established with a peer to peer lending platform to help the bank channel excess deposits into loans, but he also talks up the virtues of a cautious approach to lending. It’s hard to disagree with that.
Setting the City’s worries aside, if Mr Donaldson can continue to keep what Metro’s customers like about it in place as it become a bigger business, then it might just start to become more than just an irritating mosquito buzzing around the big boys, and nipping at their customer bases.
They might have to start thinking about pinching some of its better ideas (and no I don’t mean the dog biscuits) to prevent Metro from stealing away too many of those customers.
Ain’t competition in banking grand?
