• Rebecca Crook, Chief Growth Officer at Somo


• 27.08.2019 08:30 am
Banking

To the general public, Metro Bank might look as though it is thriving. It’s just been announced that it’s topped a survey of British customers for overall service quality, and came joint top with First Direct as a bank customers would recommend to family and friends. It has just opened a new store (they intentionally don’t call them branches) in Birmingham and next month will see their 69th and 70th stores open in Solihull and Merry Hill. The Merry Hill store will even be a drive-thru so customers don’t have to leave their car. 

Yet, whilst they are continuing to invest in physical space as we are seeing most major high street banks closing at pace, the bank recently mispriced the risk of a large chunk of its loans and some commercial mortgages, forcing it to have to raise more than £350m to prop up its balance sheet.

So, is the company crazy to go against the industry trend or does it know something the other banks don’t?

Going back to their origins in 2010, Metro Bank were the first new British Bank in 150 years and promised to overhaul the banking experience. Its stores were open 7 days a week and evenings enabling customers more flexibility to access services and advice to suit their lifestyles. It made a point in allowing dogs into its stores (incidentally John Lewis, have recently announced it is now a dog friendly store so clearly Metro Bank were well ahead of the curve) and the layout of the stores has been perceived as modern and bright with no closed rooms and cubicles that is often the case with traditional banking. Gimmicks such as printing and issuing the customer with a card there and then was smart against a back drop of at least a week to wait from the mainstream players. All in all, it created a more informal environment with customer experience at the heart.

The question is, with the arrival of so many fintechs and with consumers adopting to digital-only brands, is what was relevant almost 10 years ago relevant to customers today? Combine this with the disastrous low of its share price, it’s clear to see Metro Bank has to react quickly to make changes.

Firstly, the company has shaken up its staffing. Although the Finance Director has left to join Revolut, the company has hired a new Chief Information Officer and a Chief Transformation Officer. This indicates a recognition to overcome reputational challenges after the turbulent start to the year, and the need to fundamentally change the business to become more digital and customer-focused. But after leading the market, it is now playing catch up as everyone adjusts in response to the likes of Monzo who have intuitively designed a service around changing consumer behaviours, following the ease and simplicity lead by Amazon.

However, new research shows that Metro Bank may be in a better position than we knew. We surveyed 1500 consumers in the UK looking at banking trends, and these showed that the bank branch is more popular and relevant than Monzo-style challenger bank disruption has led us to believe. Over a third (35%) claimed the branch was the main place they did their banking; and more than 2 in 5 (43%) said they’d go to the branch in order to talk to a real person. So perhaps Metro Bank isn’t so crazy to be investing in the physical network.

The winners will be those brands who serve customers seamlessly offering choice. In the era of digital innovation and open banking, banks need to see how they can leverage new technologies but offer customers channels they want, when and where they want them.

I predict if Metro Bank can overcome its financial woes whilst demonstrating robustness to the regulator and the City, customers will continue to use it. It has three key challenges to overcome. Firstly, how it truly merges all touchpoints both digital and physical to give customers a true intuitive and meaningful experience by leveraging its store network. Secondly, how it uses new technologies and builds on the good foundation it has, such as the integration of AI to predictively provide tailored prompts to users spending patterns. And finally, how it innovates wisely with the £120million received from the capability and innovation fund via RBS. Following the positive survey results from customers, If they can address these points they have a great chance of thriving again.