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Can smaller banks worry the big boys?

Small pigs and big pig

A year has flown by since Metro Bank became the first new high-street bank in a century to open its doors. So, as one bank reaches a milestone, perhaps the others should take note?

Last July, Metro Bank cynics said it wouldn’t last because it couldn’t compete with the big banks. But, 12 months on, it’s still here, and claims to be growing faster than it ever expected.

Although it’s not quite shaken up the UK banking market in the way that some predicted, Metro appears to be having an impact in the handful of local London communities where it has set up shop.

Metro Bank has its fans

Local business owners have been one of its keenest advocates; attracted by its simple charging structures and longer opening hours. And the personal customers who have switched have been impressed by the speed with which accounts can be opened and the easy-to-understand terms and conditions.

However, Metro’s real chance to make an impact in the consumer banking market will come when it finally allows customers to open accounts online next year.

For the moment, you need to be living or working near to one of its eight branches in and around London for it to be worth considering. Alternatively, if you’re in the area, you can open an account at their branch and then manage your finances online.

Will you switch to a smaller bank?

Once Metro Bank’s accounts can be opened from anywhere, its combination of good customer service and simple financial products will provide a real challenge to the big five banks that currently control the UK market. Banks which continue to rely on complex products and customer inertia to swell their bottom line.

The introduction of Virgin Bank to the high street is also imminent, while Swedish group Handelsbanken has already opened 100 UK branches and promises to offer a fairer alternative to the current big players.

So the consumer banking revolution is hopefully just around the corner. But the newcomers will only be able to shake up our banking market if we are willing to given them our business. So will you take a chance on them, or do you feel more comfortable sticking with a big bank?


Problems begin when the big fish swallow up the minnows to eliminate competition and maximise their own profit. The smaller banks will succeed if they give good, reliable, transparent service; be it a little more expensive.

john says:
12 July 2011

I love metro bank! i dont live in london nor work in london, but im more than happy to pay the train fare every now and then only if i need something or cash in a cheque. Metro bank has saved me so much aggro compared to the big banks. I have had it up to here with the big banks with false and misleading information and very poor customer service. when i heard about metro bank being open for the first time last year, of course i waited for a few months to see what would happen, but later on i went to holborn and opened up a new account, and nearly a year on, im still a happy metro bank customer, plus i get free lollies!!! Go metro bank Go!!!!

Jim Parker says:
14 July 2011

Been with Metro Bank about 10 month’s , easy to open an account, never a problem , nice people to deal with , let’s hope it continues that way (-:

I switched to Metro Bank a few days after the new branch opened locally.

I would not have closed my old account but I was forced to as I have paid off my Virgin One Account mortgage and they won’t continue to provide banking services once the mortgage part of the account closes. Pity as I have had no problems with Virgin One in the 10 years I was with them.

I considered Co-Op & Metro, and had Metro not opened a branch locally I would certainly have gone to the co-op. The switch was easy – Metro handled everything for me and so far have been pleasant to deal with.

The problem with anyone new opening up in the UK is that, sooner or later, they succumb to the temptation to join in with what is a cartel, and thus increase their profits. Our banks are all virtually identical – hear that, OFT? – so you have nowhere to go, and get hammered.

The real Metro Bank/ANOther Bank will emerge after they have collected enough customers to make a reasonable profit, and face the prospect of making even more by joining in with the others. Remember how ‘nice’ the building societies were, compared to the banks – and what happened to them?!

Well put emm. Have you noticed also how the small friendly building societies are being swallowed up on the pretext of being saved. The big boys of the building society cartel are now too big to save. Reminiscent scenario of the two big American building societies that had to be saved by the American government because they owed billions.

Cheers, ggdad. While I’m on a roll – the ONLY half-effective way forward is to recognise that:

1. all positions of power/money attract the same kind of unscrupulous predator – including those who run charities, health services, god organisations, etc.;

2. as these types cannot be eliminated, they must be controlled as far as is possible. This means VERY tough laws, applied extremely conscientiously.

Unfortunately, politicians are easily bought, so it is the legal system that has to be the ‘saviour’, for the very top judges (Supreme Court) are mostly beyond the ‘normal’ avarice.

Given the cost and sheer grind of litigation, it should be the likes of Which? who take up the cudgels on our behalf. They have the means and the legitimacy to hold the banks, and anyone else, to some sort of account.

I don’t think they will.

Emm, in my original post I meant to put, ‘too big to fail’. Hence the tax payer has to rescue them.
I agree with your post above but, sadly, too many vested interests involved. And, when things do go wrong, very rarely is anyone called to account or prosecuted.