Metro Bank continues its 'challenger' marketing

This post updates the preview and closer look at Metro Bank in Chapter 11

Metro Bank's marketing has, from its founding in 2010, encouraged customers to 'join the revolution'. This means, for example, an emphasis on retail hours that are convenient for customers, with lively and colourful branch interiors that have an attractive retail ambiance. It also means offering safety-deposit boxes when competitors are closing branches and eliminating boxes.

Despite intense competition, Metro Bank, as a challenger bank, has become profitable and is expanding its branch network, although a bit less aggressively than previously planned. The acquisition of a home loan portfolio is another way Metro Bank has added new customers in pursuit of growth. On the other hand, rising interest rates are putting pressure on profit margins.

Understanding that many customers want e-banking as well as retail banking services, Metro Bank has introduced a 'developer portal' for third-party developers who are creating apps to complement and enhance bank services.

At the same time, Metro Bank University is providing apprenticeship training to prepare new employees for delivering quality customer service in its busy branches--service that Metro Bank sees as being a differentiating factor in its competition for customers.

HSBC's marketing for growth

HSBC Facebook: https://www.facebook.com/HSBCUK/

UK-based HSBC bank has a new CEO and a new growth strategy, supported by new marketing.

John Flint, the new CEO, aims to expand HSBC within the UK market and market mortgages more aggressively.

Technology investment is key to the bank's future growth strategy. Meanwhile, recently appointed group head of marketing Leanne Cutts is looking at HSBC's traditional roots for connections to the bank's marketing future.

As shown in the illustration from the bank's UK Facebook page, HSBC's traditional red-and-white logo is being reimagined for the digital age. 'Most of our transactions with customers are digital, so having something easily recognisable is incredibly powerful. It helps the customer to cut through the clutter', Cutts explains.

The same logo is shown on HSBC's YouTube channel at this time, as well as on its Twitter account. The bank uploads not only adverts to YouTube but also videos about how to use its mobile banking app and other topics of interest to bank customers.  The bank has thousands of followers on Facebook, YouTube, Twitter and LinkedIn. HSBC is now reviewing agencies for its social media activities, which means changes as the bank positions its marketing to support future growth.

What's happening to the bank branch?

If you're banking with Virgin Money UK, you don't walk into a branch, you walk into a lounge. Above, a map showing some of the Virgin Money lounges open to customers who want to play billiards, listen to a jukebox, watch a movie, enjoy free coffee or complete a financial transaction.

Each lounge is unique, because the design and amenities fit the building. In Wales, the lounge is located in a former pizza restaurant. Naturally, Virgin Money is serving free pizza to customers.

If you're banking with Metro Bank UK, you don't walk into a branch, you walk into a store. The company keeps its stores open late and on weekends to allow customers plenty of time to have coins counted or bring dogs in for free water or even open a new account.

And despite the growing popularity of digital banking, branches still attract customers. Metro's data show that 55% of its customers go to its stores. Of course, its customers also use mobile banking and online services.

Yet looking at the UK bank industry overall, more than 700 bank branches around the UK were closed in 2017--the largest number of closures ever recorded in one year. Are banks going to carefully tailor branches for each community rather than have one-size-fits-all banking? Or will they shrink the size or number of branches to reduce costs while offering selected in-person services? Let's see what happens in 2018.

This post updates the Metro Bank example in Chapter 11 of Essential Guide to Marketing Planning.

Inside the marketing plans of UK challenger banks

Challenger banks are recently-founded banks challenging the traditional UK high-street banks. As some high-street banks close branches and adapt IT systems to multichannel requirements, challengers begin with the latest technology and lessons learned by studying the established competitors.

Monzo is a challenger bank targeting digital-savvy customers. Originally named Mondo, Monzo operates no branches but instead delivers services electronically. Its marketing plan involves continuous customer input--asking for feedback on products for cocreation, and even soliciting ideas for the brand name Monzo. It hosts periodic get-togethers for customers to meet each other. 'People in corporates roll their eyes when startups talk about values and vision, but the brands who succeed are those who can define that for the people on the journey with them', says Monzo's head of marketing.


Another challenger is Metro Bank, founded by the experienced bank entrepreneur Vernon Hill, with retail branches that are open for extended hours every day of the week. Looking at the UK bank industry, he observes: 'There had been no entrepreneurial tradition in banking. Maybe there was 50-100 years ago, but there certainly hadn’t been one here for a long time'. So Metro bank's marketing plan is based on competing with convenience and friendly service, as well as multichannel marketing to allow customers to bank when and where they choose.

Also competing as a challenger bank is Atom Bank, which is digital-only, no branches. Its marketing plan relies on differentiation via customer focus. Customers can choose a personalised look for their Atom Bank app and even call the bank whatever they wish. Atom's CMO says: 'The traditional old banks constantly reference their relationship with its customers, but our brand strategy is about us helping people understand money much better'.

Tesco, Hudl and multichannel marketing

Now that Tesco is out of its disastrous Fresh & Easy US convenience store chain, the UK retail giant is (like every smart retailer) focusing on multichannel marketing strategy. It's also thinking global and looking beyond retailing to enhance relationships with consumers.

• Tesco has been introducing drive-through grocery pickup at select locations. Shoppers log onto the Tesco website to buy, indicate a two-hour window for pickup and then collect their groceries from the store or pickup location of their choice.
• Supporting its online grocery sales, Tesco has opened its sixth warehouse for picking and packing customer orders.
• Tesco is getting good reviews for its Hudl budget-priced tablet computer (right), and plans a new model this year. Putting the spotlight on tech updates the retailer's image and reinforces its commitment to multichannel marketing. It also helps Tesco compete against Asda, which has its own Lifetab tablet.
• Tesco is moving ahead in India, a continuation of its partnership with Tata that began in 2008, to build sales and gain experience in this unusual retail environment.
• Years after launching Tesco Bank, the company has begun offering a current account, which in combination with its mortgage offerings will raise the firm's profile and attract new interest. Especially with the "easy switch" banking rules now in effect, Tesco Bank sees new opportunity to deepen its relationships with consumers who shop in its stores.

Metro Bank aims for market share

Remember Metro Bank's 2010 debut? It's a built-from-the-floor-up, new kind of bank that offers convenient hours and customer-friendly services to UK customers. But gaining market share with so many strong, entrenched competitors is a big (and expensive) challenge.

In three years of operation, Metro Bank has spent £100 million readying info systems, hiring employees and opening high-street branches month after month. The marketing plan emphasises new customer acquisition. In fact, its customer base is growing at a double-digit rate, a good indicator of progress.

A key element is the colourful storefront branches, which are open every day of the week. The bank is also introducing drive-through teller service, a point of differentiation that demonstrates its commitment to customer convenience. 'Dogs rule' is another point of differentiation: free water and dog treats are available at each branch.

In 2010, Metro Bank set a five-year goal of having 60 branches open around the country. Now, in the middle of 2013, it's approaching 20 branches and expects to have a total of 25 by yearend. Still, having dozens of branches or even a few hundred might not be enough to mount a serious challenge to the thousands of branches operated by the big high-street banks.

You can follow Metro Bank on Twitter or check out its website.