In 2007, the idea of starting a new business amid one of the worst financial crises in history was too risky for most. Entering the sector at the very heart of the implosion, by launching the first new high-street bank for 150 years, must have seemed like madness. However, serial entrepreneur Anthony Thomson, 59, felt his timing was perfect. High-street banks were mistaken to compete solely on price, he thought. "There can only be one lowest-cost provider." They were also ignoring the benefits of establishing a decent relationship with customers by providing great service and convenience.
Developing customer relationships was something Thomson knew a lot about. In 1987, surprised by the financial industry's reluctance to use even basic marketing techniques, he set up City Financial Marketing. Starting with just £5,000, he turned it into the largest financial marketing firm in Europe, before selling it to Publicis in 1997. But starting a high-street bank was altogether trickier. His first step was to persuade American financial entrepreneur Vernon Hill, who had built a national retail banking chain in America on similar customer-focused principles, to work with him. Having secured Hill's support, he then approached outside investors. Scared off by the financial crisis, British backers were unwilling to invest. But US financiers were much more receptive, despite the recession Thomson managed to raise £75m in funding by 2010, mainly from fund managers such as Fidelity and Wellington.
As well as raising seed capital, he also had to deal with the huge administrative headache of opening a new bank in the UK. A firm believer that "banking is not a complicated business", he worked out that "although there were 1,000 issues, 997 of them were relatively minor". The three big' tasks to focus on were customer relations, credit management and balance-sheet management. As chairman he delegated the latter two to his team of experienced backroom staff, while he focused on customer service.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely 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
Unlike most of his competitors, this meant taking a great deal of care over recruiting customer-facing staff. Metro Bank ended up interviewing more than 3,500 people for 60 roles. A firm believer in "recruiting for attitude and training for skills", Thomson insisted the emphasis should be on hiring those who could communicate best with customers, and training them up, rather than just hiring those with the best CVs.
In July 2010, three years after Thomson had his initial idea, Metro Bank opened its first branch in Holborn, London, in a blaze of publicity and large queues. Once-sceptical investors rushed to invest, putting another £53m into the institution that year, followed by a further £126m in 2012. Strong demand from the army of dissatisfied customers of other banks meant Metro Bank had little problem in opening other branches, going from eight at the start of 2011 to 20 today, with 200,000 accounts between them.
Thomson has now stepped down, handing the reins to vice-chairman Hill. While he enjoyed working with his "great" colleagues, he says he always saw his main role as setting up the bank and creating the template for its success, rather than becoming a banker for the long term. He's now focusing on new ventures, though he retains a large stake in the bank.
-
Two investment trusts riding the AI boomRemain invested in investment trusts despite high valuations, as computing breakthroughs are likely to change the world
-
Water companies blocked from using customer money to pay “undeserved” bonusesThe regulator has blocked three water companies from using billpayer money to pay £1.5 million in exec bonuses
