Vernon Hill didn't want a conventional job after he finished at university. So he turned to real estate and began helping McDonald's, then a relatively small firm, develop new sites. In 1968, Hill set up a real-estate company specifically to help McDonald's, and ended up driving round America with Ray Kroc, the man who had bought the company for $2.7m and would turn it into a multi-million dollar business.
This taught him a lot about the importance of delivering the same service and maintaining standards across branches and the importance of picking the right sites for new branches. As McDonald's grew, Hill's business boomed. But by 1973, he wanted something new.
Hill's plan was to take what he had learned from Kroc, raise $1.5m, and launch his own bank. "It might seem crazy here, but in America banking is much more entrepreneurial. Back then there were 24,000 different banks." When Commerce Bank opened that year with one branch and nine employees, Hill tried to win customers by adopting a customer-friendly, McDonald's style approach.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The bank opened seven days a week, handed out lollipops to customers, offered free coin-counting machines, and got rid of the bulletproof windows that other US banks put between cashiers and customers. "All of these measures were meant to tell the customer that their convenience was more important than our convenience."
Customer numbers rocketed. So Hill hit the road again to hunt down sites. "Picking a site is very important. We put in high ceilings and impressive shop fronts. If getting people to open bank accounts is your business, you want to have that wow factor'."
But as the bank grew, Hill struggled. "It was a real challenge. By 1991 we had grown to $1bn of assets and growing pains were natural." In a bid to keep his staff motivated he based bonuses on the results of surveys from anonymous customers. And to keep senior management on their toes he introduced a stupid rule' programme that offered a bonus to anyone who could identify pointless work practices.
By 2001 Commerce Bank had $8bn of assets and was spread across America's northeast coast. Hill decided it was time to tackle the New York City market. "People thought I was nuts. The papers murdered me and said we'd never succeed against the big banks." But, in fact, busy New Yorkers appreciated the bank's opening hours and streamlined processes.
By 2007 it had $48bn in assets. But disaster struck when regulators started probing his family's connections to the bank. He was forced to resign and sell up for $8.5bn. As luck would have it, "we sold it at the top of the market if we had waited six months, it would have been worth half that".
The sale made Hill more than $400m, but the 67-year-old has no plans to retire. In 2010 he launched Metro Bank ("the first new high street bank for more than 100 years") in Britain. "British banks treat their customers terribly. The market is ripe for a bank like us."
Starting from fresh gives him a systems IT advantage too, as his competitors' IT systems are "terrible". Metro has 12 branches in London and Hill plans to expand to 200 across the southeast. So once again, he'll be on the road, looking for sites with "that wow factor".
Vernon Hill's latest book, Fans Not Customers: How to Create Growth Companies in a No Growth World, published by Profile Books, is out now.
Review: Eden Roc Cap Cana – fun, sun and golf in the Caribbean
Reeves delays cash ISA reform, but savers are not out of the woods yet
