Dog biscuits are not typically associated with banks. Walk into Metro Bank, however, and you will get just that, and more. The brainchild of American banker Vernon Hill, Metro will be the first new British bank for more than 100 years when it opens in central London, and it is pulling out all the stops to lure customers from the so-called Big Four (Barclays, NatWest-owner Royal Bank of Scotland, HBSC and Lloyds Banking Group).
Gone will be the dour atmosphere, long queues and impossible opening hours that typify British banks. Branches will open 8.00 to 20.00, cashiers will no longer sit behind bullet-proof glass and pets are welcome – with biscuits available for any hungry passing pooch, customer or not.
Setting up a bank is complex and expensive, and traditionally there has been little incentive. But after a turbulent few years, that is changing. The credit crunch has shaken both the economies of the banking sector and the public perception of it: the British public no longer trust bankers, blaming them for the recession and the billions of debt the country has been saddled with.
At the same time, lending margins have improved. In less than two years, the credit glut has turned into a shortage, as once aggressive lenders cut back on activity or quit the market altogether, while the ones that remain are more selective about the terms on which they lend. So while demand remains high, supply has dwindled.
Technological advances, meanwhile, have simplified the processes involved in running a bank – an extensive branch network is no longer essential – and the political will for more competition is strong.
Little surprise then that Metro is not the only bank focused on the UK. City grandee Lord Levene, US private equity firm JC Flowers and Spain’s Santander are all understood to be looking at entering the market or, in the case of Santander, to step up their existing presence.
Metro is the first though, opening on 29 July. The gregarious Hill, 64, is well versed in launching banks, setting up the New Jersey-based Commerce Bank in 1973; it sold for $8bn in 2007. (He has various other business interests, including chairing Petplan insurance, perhaps explaining his fondness for animals.)
For all the changes, the British market will still be hard to crack. The Big Four have vast resources at their disposal, competition is fierce and customers, no matter how exasperated with their bank, have traditionally been reluctant to switch accounts. The regulator will also be keeping a watchful eye: to award a banking licence and then see that business fail would be calamitous.
The pitfalls are many. But conditions are ripe for new players. Dog biscuits many not be enough to snaffle significant market share, but they are certainly a start.