First new bank in a century gets lukewarm reception

The first of the new banks has hit the high street - but it's already seeing the scale of its challenge.

Last Updated: 31 Aug 2010
Fed up with your bank? Metro, the first new high street bank to open its doors for 100 years, wants to change that. It claims it will make banking fun (yeah right), and hopes to tap into public resentment against the present incumbents, doing away with the industry's stuffy image and focusing on customer service and convenience. With friendly language (the 'magic money machine' will exchange your loose change for cash), free lollipops for kids, and convenient opening hours, it says it’s starting a ‘revolution’. Unfortunately for though, its initial product offering haven’t exactly set the world alight.  Metro is the first of several likely new entrants to this market in the coming years - but will any of them be able to topple the old guard?
Metro's plan, apparently, is to teach us to love our bank. Not only is it open after work and on Sundays, but it has scrapped security screens and promises a bank card ‘within 15 minutes’, instead of making customers wait for it to arrive in the post. Its branches even have – gasp! – customer toilets. It reckons that in the wake of the recession, customers don’t trust their banks any more and are desperate for something fresh. The bank’s first branch opened today, in Holborn, and its founders Vernon Hill and Anthony Thompson say they want to open another 200 over the next five years.
But while its positioning may be refreshingly different, the same can't really be said for its offering, unfortunately: with a 13% interest rate on credit cards and a flat interest rate of 10% on all loans, not to mention fairly paltry current account rates, it doesn’t really stand out from the current crowd - hence its lukewarm reception. Presumably, it’s relying on customers being fed up with banks’ attitudes, rather than their products.
Even with its bright colours, free dog biscuits (seriously) and unarguably convenient opening times, Metro is going to have a tough time persuading people to switch. When punters are choosing where to put their money, they're likely to trust in familiar brands - so it might actually be easier for the likes of Tesco and Virgin to attract the 1.2m people who switch their bank accounts each year than it will be for unfamiliar newcomers (and even that's only a small slice of the overall UK banking pie). If you can't offer that, youat least need to appeal to those people who switch accounts to find the best rate. But if you do neither, you're going to have a hard time attracting business from the established players...

So do UK customers want gimmicky marketing and a cheery smile, or are they still focused on the bottom line? Only time can tell…

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