First new UK bank in 100 years opens doors
The first high street bank to launch in the UK for more than 100 years opened its doors to customers today but its products received a lukewarm response from industry commentators.
Metro Bank promised to revolutionise the British banking experience through offering retail opening hours, unparalleled service and a simple range of products that will be suitable for everyone.
But none of the products launched today was competitive enough to make it on to the best-buy tables, while many paid below the industry average.
However, the group did win praise for its longer opening hours, which will see its branches open from 8am to 8pm Monday to Friday, as well as from 8am to 6pm on Saturday and from 11am to 4pm on Sunday.
The bank will be closed on only four days of the year, namely Christmas Day, New Year's Day, Good Friday and Easter Sunday.
It also promises customers that it will take just 15 minutes to open an account in one of its branches, including obtaining a credit or debit card, which will be printed in store.
The group, which opened its first branch in Holborn today, was co-founded by US billionaire Vernon Hill and Anthony Thomson, who is chairman of the Financial Services Forum, and it is based on the model used for Commerce Bank in the US, which was founded by Mr Hill in 1973.
It plans to open a second branch in Earls Court next month, with 10 further branches opening in Greater London during the coming two years, expanding its network to more than 200 outlets within the M25 during the next decade.
The branches will have toilets in them and, in what is thought to be a nod to its dog-owning financial backer Mr Hill, will allow dogs and provide them with a bowl of water and a bone.
The group will also have free coin counting machines in its branches which can be used by both customers and people who do not have products with it, as well as safe deposit boxes that can be rented out for £100 a year.
As well as its range of consumer products, the group also plans to offer personalised business banking services, with local managers making decisions on loans for local companies.
Craig Donaldson, chief executive of Metro Bank, said: "We know that UK banking customers are looking for a new, convenient way of banking with easy-to-understand products and that's what we will offer.
"We will deliver a service that exceeds expectations with customers at the heart of everything we do."
But commentators were underwhelmed by the products the group is launching, despite its promise that they would have no small print and no gimmicks.
These include an instant-access savings account offering a return of just 0.5pc, compared with a best-buy rate of 2.8pc, as well as a three-year fixed rate bond paying only 3pc, significantly below the market leading rate of 4.3pc.
The group's mortgage offering is equally uncompetitive, with a two-year variable rate mortgage for someone with a 40pc deposit of 3.5pc, while a two-year fixed rate deal for the same borrower is 4pc, compared with best-buy rates of 2.29pc and 2.99pc respectively.
It also raises its mortgage rates by 1pc for people looking to borrow up to 80pc of their home's value.
The group's current account charges interest of 15pc on overdrafts, compared with an industry average of 14.1pc.
However, its personal loan rate of 10pc is more competitive, although still not a best buy, while it is charging interest of 13pc on credit card purchases and cash advances, compared with an industry average of 18.5pc for purchases and 25.6pc for cash.
David Black, of financial information group Defaqto, said: "It's going to be a slow burn to get moving in terms of market share. Its products aren't going to trouble the best-buy tables."
He added that as the group was not using risk-based pricing, under which rates for unsecured credit vary according to a customer's credit rating, they were likely to have to turn down a lot of applicants.
Michelle Slade, of Moneyfacts.co.uk, said: "Although they are offering all these other benefits, such as longer opening hours, one of the main things for people is a competitive interest rate.
"If they haven't got at least a reasonable rate of interest people will discount them. They are going to struggle to get market share."