Why Metro Bank is flourishing in the low growth banking business
WHEN we first opened Metro Bank’s doors in 2010, the prevailing response was that we were a little crazy. “How can you expect to drop into London and do something nobody’s done in more than 100 years: create a differentiated new bank model? It can’t be done!”
But we knew that the UK banking market was crying out for something new, and the overwhelming customer acceptance – by both business and consumers – validated our presuppositions.
Metro Bank is the first UK high street bank to open in 100 years. Its inspiration came from my experience of building Commerce Bank in the US, which started in 1973 with one office and expanded into a 500 store, $50bn (£31.5bn) bank. Commerce grew 25 per cent per year compounded for 30 years, and produced a 30-year, 23 per cent annually compounded shareholder return. That’s dramatic growth in a slow growth industry.
Part of our success was treating banking like any other customer service industry. Like McDonald’s, Apple and Starbucks, we’re an American company that has built its fortunes on a unique model that was then successfully transplanted into the UK. What Metro Bank also shares in common with UK-based John Lewis, is the idea that the customer relationship is everything. This is dramatically different from the traditional British bank model, which views the customer solely as a target for more product sales.
Apple was a 5 per cent market share player that reinvented the mobile phone and personal computer industry. With a leader dedicated to bending the future, Steve Jobs created a differentiated model, a fanatical culture and his execution was characterised by precision and focus. In a similar vein, three expressions make up the mathematical equation for Metro Bank’s success.
First, our unique model. Unlike the existing London financial industry, our banks are integrated into the local community. Metro bankers know and deal directly with their customers – local bankers making loans to people.
The second is culture. I am frequently asked how it could be possible to train the English to deliver service. But I believe that if we hire men and women with the right attitude, we can teach the skills necessary in any industry. We now have more than 500 people working for Metro Bank in the UK, and it’s been easy to find people with both a good attitude and a belief in our model. Because a good model makes good people better. That’s what we did at Commerce Bank for 34 years and that’s what’s happening at Metro Bank now.
Big banks in Britain have developed into large, impersonal, product sales-focused institutions where the relationship between the customer and the banker has long been lost. Our model has exploded in popularity, as banking customers realised how energising a good banking relationship could be their bottom line.
Finally, to complete the Metro Bank mathematics, you must have proper implementation. To create fans, you have to build an emotional brand that you are enthusiastic about. Service, delivery, design, look, appeal and the execution of the brand are our central focal points.
We have learned a few lessons in developing the Metro Bank model that could be applied to any business.
No one needs a “me too” company. Successful entrepreneurs create differentiated, value-added models. Great companies create business models that create emotional brands and turn customers into followers. Great brands deliver great customer experiences through financial execution, delivering a culture that is both persuasive and reinforcing. Design is a competitive weapon. And if you eliminate endless rules, you will make the customer experience enjoyable.
Britain is a great place to build a growth business. If we can create a new differentiated growth model in the non-growth business of banking, anyone can redefine their industry and create similar value.
But creating a great business is difficult. It requires inspiration, motivation and persistence. Everything that can go wrong will go wrong, but great entrepreneurs turn adversity into opportunity.
Vernon W. Hill II is founder and president of Metro Bank and the author of Fans Not Customers: How to Create Growth Companies in a No Growth World (Profile).