The future of banking

The Franchise Magazine spoke with Metro Bank’s founder Vernon Hill, on the rise of the company in the UK since it opened in 2010 with 4 stores to now having 36 stores across London and the South East, and why it is slowly changing the convention of banking.

The Franchise Magazine: Could you tell us a bit about the specific business products and accounts and loans that you offer to customers?

Vernon Hill: Well, firstly we deal with cash management and deposits; we open all kinds of business accounts, everyday accounts and several other types of current account. On the lending side, we offer franchise loans for businesses and real estate loans. We offer a full range of almost every kind of lending product that your readers could want. We want to make it easy for you to open an account with us. One of the interesting numbers in the five years since we have opened, our brand recognition in Greater London has risen to 72%. That is an unbelievably high number in such a short space of time.

TFM: How many stores do you now have across greater London?

VH: We now have 36 stores across London and the South East

TFM: You have set yourself a very ambitious target of 200+ stores by 2020. What is your strategy for expanding and how do you intend reach this target?

VH: Developing multiple franchise sites is what I do for a living. Our bank, America Commerce, went from one store to 500, all of them built from scratch. Now, London and Greater New York have a lot in common, and our philosophy on new stores is the store and its location has to be simpatico. We have got to have the best site in the best towns. We got to have our unique glass look. We often rent the ground floor and the first floor and physically take the first floor out. We have learnt over the years that high ceilings really have an impact on the aesthetics of the bank. So we have to have a lot of stores in the best locations and I personally approve every site. The location look is a very important part of our brand.

TFM: You described your customers as being fans and not customers. Why?

VH: First of all, fans are very important. Fans join your brand, they remain loyal to your brand and they bring their friends. Apple is the core example of fans not customers. Every Apple user is trying to convince their friends to switch to Apple. So fans mean a building of a business model that is completely different, completely value-added where the customer in that case can commercially see a value at it. Then we design every part of the model to improve the customer experience. Not to make the extra pound every quarter, but to build a brand over time.

TFM: How do you differentiate yourself from traditional banks in the UK, from your competition?

VH: Well, the British market is made up of 5 big banks that control the majority of the market. One of the main reasons we see ourselves as different, is that they haven’t had any new competition in years. So our brand is completely fresh, on a consumer side, everything we do, we aim to make banking with us friendly, fun and easy to use. From 7 days a week, long opening hours, to humans answering call in our centres, we have a whole list of things designed to make your experience fun. On the commercial side, you get what you want; you get an old fashioned banker who can handle your 5 million pound loan, the mortgage on your house and the loan for your kid’s car. The old-fashioned relationship banking of the past is something we are keen to bring back.

TFM:So it is all about customer experience and convenience then?

VH:Yes, this company is open not only for the customer’s convenience, but to show how banking should be done. When you call our call centre, it is not a robotic answering system; it is human beings in London answering every time. You have a relationship with the call centre. What happens if you have a jar of coins on the desk and don’t know what to do with them? We have free self-service coin machines, you come in, you drop them in, you get a receipt, get the money, job done.

TFM:What else do you offer customers?

VH: If you go in a bank branch, do you remember when they had a cheque counter with a pen attached to the counter? Most banks feel like they have to protect their pen. With my former role at Commerce in America, we give away thousands of pens. I would rather have every household in London with a bunch of our pens rather than chaining them to the desk. It make sense, it’s simple branding and a small gesture to the customer. We also have what is called a ‘dogs rule policy’, we want your dog, we know his name, we give him a treat, we have a Metro Bank dog ball to take home, we have a lot of dog-related events around the store. We’ll even micro-chip your dogs in our stores. We want you to enjoy banking with us.

TFM: How will franchise owners and prospective franchise owners’ benefit from Metro Bank’s approach and what can Metro Bank offer them that rival banks cannot?

VH: First of all, commercial banking, including commercial lending accounts for almost half of what we do. We have a dedicated franchise team that knows the market, knows the business and often knows the people. I have been a franchise owner or franchisor my entire life. I am a Burger King franchise owner in America, and I have worked with franchises in America most of my life. So we have a really deep understanding on how the business works. Generally in Britain, the lender that your borrower meets and the credit approval officer are completely separate from each other. In other words, the borrower will never meet the person that makes the final credit decision. We give you an old-fashioned banker who knows you, visits you, makes the final decision; it is very different from current commercial lending.

TFM:What is Metro Bank’s approach to loans with established franchise owners who want to become multi-unit owners? How do you help them acquire more locations through funding?

VH: We obviously lend money; not only are we happy to fund and finance more stores, we are very aggressive on financing the land and building, if they buy their facility instead of leasing it. I am a big believer that the great well in the franchise area is created when the franchise is able to own his land and building.

TFM:Finally, could you sum up why franchise owners and prospective franchise owners come to Metro Bank first before going to any of the big 5?

VH: They get a new fresh bank; they get a banker who knows them, and knows the business and who will put them first.