Vernon Hill, the marketer behind Metro Bank, is a big believer in customer service. His earlier US banking venture, Commerce Bank, competed against much bigger banks like Citibank and JP Morgan Chase by opening its 'stores' (branches) early, closing them late, offering weekend hours, and streamlining tedious chores like establishing a new account to speed up service. His long-term goal for Metro Bank is to have 200 branches in and around London by 2020.
Although good locations in busy downtown areas are expensive, being visible is the best way to attract customers and bring in deposits. The more deposits, the more profitable a branch will be. And Metro Bank is highly visible--its 'stores' don't look like banks. Instead of the formal, subdued look of an old-fashioned branch, Metro Bank stores have an informal retail atmosphere, with bright colours, friendly staff and open, airy spaces.
The banking industry is highly competitive, however, so Metro Bank will have to maintain very high standards of customer service to win customers away from their current banks and meet its aggressive growth goals. The bank's adverts use the catchy strap line: Love your bank at last! Will customers love Metro Bank? So far, the answer is mostly yes.
PS -- Please read Jeffry Pilcher's comment, below. He's right, loans are more profitable than deposits. However, as a former banker, I know that current accounts in particular are profitable because banks pay little or no interest on them and, with efficient info systems, these accounts need not be expensive to service. Clearly, gathering deposits through branches in densely-populated areas is a relatively cheap way to bring in money to loan.
The Fortune article about Vernon Hill is worth a look, especially the part where he talks about competing against Citi and other banking giants in New York City, one of the toughest markets in the world. Of course London isn't exactly like NYC, but Metro Bank is bringing new rivalry to the market and I expect that other banks will respond.
