The group started with just one branch in Holborn, but now has eight stores and 25,000 customers. The most recent store opened in Croydon at the Centrale Shopping Centre and the bank says it plans to open a further 16 stores over the next 18 months in locations including Guildford, Kingston and Hammersmith.
Here, we take a look at whether Metro Bank really has changed the face of British banking, and which other groups may be poised to join the ‘banking revolution’….
What makes Metro Bank different?
The bank claims that it is its service that sets it apart from its rivals, and it is certainly unique in offering seven-day opening and “on the spot” bank cards.
However, even though it says its model is based on “service and convenience, not product and price” Metro Bank has still come in for criticism that the financial products its offers are by far from the most competitive available.
In these cash-strapped times, earning decent rates of interest is crucial for most people, and on this front the bank generally fails to deliver.
For example, its instant access account pays 1% annual interest a year before tax, when it is possible to earn rates three times higher than this with alternative easy access accounts.
Derbyshire Building Society’s recently launched NetSaver account, for example, pays an impressive 3.11% annual interest, although this rate does include a 2.11% bonus which is only payable for the first year.
West Bromwich Building Society’s WeBSave Easy Access account similarly pays 3.06%, which includes a one-year bonus of 1.06%, and several other easy access accounts are also much more generous than Metro Bank’s offering (insert link to easy access accounts story here).
It’s a similar story with Metro Bank’s other savings products. Its Young Savers account, for example, pays 1.5%, when you can earn 3% with Northern Rock’s Little Rock account.
Metro’s variable rate ISA is probably one of its most competitive accounts, paying 2.35% annual interest tax-free, but this is still less than its rivals. Halifax’s ISA Direct Reward account, for example, pays 3.00% on a minimum investment of £1, or 3.20% if you are a qualifying Halifax current account customer.
Are there any products that set Metro Bank apart from its rivals?
The bank has just introduced a new credit card offering which is different from other cards in that it offers customers an introductory annual percentage rate (APR) 0% for 12 months, however they choose to use it, be it for purchases, balance transfers or cash advances.
After the introductory period is up, the card has a low representative APR of 13% (variable.) However, the catch is that customers need a Metro Bank current account to be eligible for the offer. A 3% handling fee applied to balance transfers.
What’s next for banking in the UK?
Although Metro Bank has been around for a year, they haven’t done a huge amount that is really ground-breaking, and unless they do, they are unlikely to pose a real threat to the main banks.
However, we should see a number of new players making their move into the banking sector in the next few months which could shake things up.
Kevin Mountford, head of banking at moneysupermarket.com, said; “The likes of Tesco, NBNK and Virgin Money will be looking to launch their own branch networks and Metro Bank has plans to increases its network, so the high street could soon look very different.
This change could see banks upping their game to offer the best service which will only benefit consumers."
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