There’s a new bank in town – well London town anyway

Today sees the opening of the first Metro Bank store in London. This is the first UK consumer bank to have opened in over a century, which is a refreshing change given the chaos that ensued in the UK consumer banking space at the height of the credit crunch in 2008.

Just in case you had forgotten, 2008 saw Northern Rock, Bradford & Bingley and RBS partly or fully nationalised, in addition to HBOS being taken over by Lloyds TSB, as a direct result of the global sub-prime crisis. This has meant less high street banks are available to consumers and businesses. The aftershocks of the global financial crisis are still being felt around the world, with ongoing consolidation in the banking sector and the advent of financial stress tests upon lenders.

At this point Metro Bank appears to be specifically targeting the consumer sector although their website does say they are able to offer business banking facilities as well. Given that their founder, Vernon W Hill, originally founded and then sold Commerce Bancorp in the US to Toronto Dominion Bank Group in 2008 this is no surprise. Some sources have suggested that Commerce Bancorp’s original business model was based on a similar model to Burger King, which would explain why Metro Bank is targeting customers with services that promote on-the-spot convenience.

While the opening of Metro Bank certainly provides consumers with an additional high street choice, it will be fascinating to see how quickly the firm decides to target business customers. There is still the underlying feeling from businesses and within the advisory community at large that our main high street banks are reticent to lend to businesses and finance deals, despite government incentives and ongoing strong rhetoric about linking bankers’ bonuses to lending.

That said the new bank on the block should look north sooner rather than later; there are consumers and businesses outside of London who also want greater choices.

Filed under: lending, UK, Banking