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Is Metro Bank the beginning of a new banking era?

Metro Bank launch

There’s a new kid on the banking block trying to wow us with shiny service. Metro opens its first branch today and we’ve scratched beneath the surface to see if it lives up to its claims.

If you’ve passed through Holborn in London recently, you’ll have seen banners publicising Britain’s first new high-street bank in over a century – Metro Bank.

Today’s opening day, but I went behind the scenes earlier this week, and I have to say I’m impressed by the setting.

Farewell to stuffy bank ‘branches’

High ceilings, a bright and airy branch (or ‘store’, as Metro prefers to call it), no security screens, fun coin-counting machines for the kids, lollies, toilets. There are even biscuits for your dog.

It’s all a very long way from the stuffy, traditional bank branch. Still, the concept behind the bank owes more to traditional banking than you might think. It’s refreshing to see that they’ll take in savers’ money and lend it to customers taking out the bank’s mortgages, loans and credit cards.

No structured products, no payment protection insurance, no investment products. And it’s open 7 days a week. Great.

Is it time to switch banks?

But is all this enough to make you switch from your current bank? Metro Bank’s products appear (on first look) to be straightforward, but the rates on offer aren’t earth-shattering.

The main current account doesn’t pay credit interest and charges a market-average 15% overdraft rate. If you go overdrawn without prior permission, you’ll have to pay a £10 fee for each paid item and £5 for each bounced one, up to a maximum of six times a month. While not the best, it’s far from being the worst deal on the market.

For savings, you’d get an above-average 2.5% on a 1-year fixed-term savings account and 3% on the 3-year version. The credit card charges 13% for everything – purchases, cash withdrawals and balance transfers, all without those sneaky fees charged by other providers. Again, the rates aren’t the best, but the simplicity and customer-friendly approach could be.

The key for Metro Bank is that it’s also pledged to offer fantastic customer service, promising to ‘surprise and delight every customer’. We’ve seen this approach pay dividends for First Direct, so Metro could be onto a winner with Londoners looking for a new current account with easy branch access.

With all of this in mind, would you switch? Personally, the small hit you take on interest in return for excellent customer service seems a worthwhile swap, so I might just be tempted.

Do you want your bank to be more like a shop, like Metro Bank?

Only if it doesn't affect the quality of its products (45%, 55 Votes)

Yes, customer service is key (34%, 41 Votes)

No, banks are fine as they are (21%, 25 Votes)

Total Voters: 121

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Comments
Guest
Peter Vaughan says:
29 July 2010

As far as Metro Bank is concerned, haven’t we seen it all before? Some years ago now, we had the Giro Bank, operating from Post Offices and very good it was too. I had a current account and never had any complaints at the services offered. Then it was taken over by Alliance and Leicester and the service went rapidly downhill. Thankgoodness I moved my account to Smile which, as Which will confirm, is a best buy current account. I have never had any problems with Smile, and thoroughly recommend it to everyone.

Guest
dutchynick says:
30 July 2010

As far as i’m concerned Metro bank offers one thing and one thing only – better opening times. 8 till 8, till 6 on Sat, and till 4 on Sunday is a godsend to working people everywhere. I won’t necessarily be switching straight away, but hopefully enough people do and other banks start paying attention.

Guest

Small drops in a big ocean, but let’s hope the ripples spread. It’s been one way traffic so far, do it the bank’s way or not at all. Presumably the interest rates are governed by the difference between the interest the bank can make on our money and the amount they pay out and run the bank itself. Greedy banks will stretch this and, of course, you and I don’t know what the margin is. So, an honest bank trying to to be equable to its customers? Well, it’s about time. Let’s see how this grows. It’s only when it’s big enough to disturb the other fat cats that it will become a force to be reckoned with. It’s what we have all been waiting for.

Guest
George Micheal BARTO says:
2 August 2010

I have banked with the Natwest for over 50 years. Over the last couple of months the number of counter staff at my local branch has been reducer to TWO—-and on a Friday this leads to a wait of over 30 minutes to get to the counter, with the end of the queue being in the street outside the bank. The current TV campaign being shewn on ITV extolling the virtues of Natwests customer service has caused nothing but bad feeling in the waiting throng.
It would appear that the reduction in staff is a national move to cut costs, there was no mention of getting rid of those idiots from the toxic loan department. So it would seem that Natwest regard their customers as a hindrance to making a profit and as such are expendable.
After all my years with Natwest I never imagined that I would be glad to switch my accounts to a competitor but I cannot wait 2 hours per month just to get served.

Guest

moved over to metro bank from natwest, been with them since i was a teen. They started to dwindle. Metro Bank so far has been brilliant, i hope they expand.