LONDON — Metro Bank, the challenger bank known for its bold High Street branches, is going digital.
CEO Craig Donaldson told Business Insider on Thursday that the startup bank plans to invest £55 million in technology this year.
Donaldson said: “This year we’re going to spend about £55 million on technology development and about £35 million on store development. Stores are still a massive part of the business but for me it’s about how you integrate the digital and physical together.”
Metro Bank already has a banking app for customers who have opened accounts in one of its branches but it plans to launch the ability to let new customers open their first account entirely online later this year.
Donaldson said: “In quarter three, when we launch online, you could sit in Pret, open your account on your iPad or your laptop and then pop in store and collect your card in store. No other bank can do that.”
1 million customers
The plans for digital investment come as Metro Bank announced on Wednesday that it has passed 1 million customers. Launched in 2010 by American entrepreneur Vernon Hill, Metro Bank was unusual in opening branches at a time when other banks were closing them at a record rate.
Hill calls his customers “fans” and sees Metro Bank more as a retail operation than a traditional bank. Branches — which Metro calls “stores” — feature customer-friendly features such as dog bowls, free lolly pops, and longer than usual hours. The 1 millionth account was in fact opened on Easter Monday, a day most banks were closed.
Donaldson said the digital investment “rounds the service out” and will help growth continue. He said: “Customers expect now to be able to do everything on the mobile or the internet or the telephone — and also face-to-face.
“I’ve no doubt we’ll get to over 2 million accounts in a much faster time because of the continued growth and momentum in the business.”
As well as launching online account opening, Metro Bank will be investing in upgrading the technology in its back office.
Donaldson said: “We’re doing a lot of work in the back office around machine learning to try and speed up and automate processes. We’re investing a lot of money in transaction monitoring, again using machine learning and automation to drive productivity.
“My view is technology can be used throughout the process to ensure it’s as slick and as quick as possible. It’s no good having a great front end unless you’ve got that great service throughout every touch-point.”
‘We need to break the oligopoly that controls banking’
While digital is a big focus, Metro Bank still plans to open 10 new “stores” by the end of the year. It hopes to have over 100 branches by 2020. This sets the bank apart from other lenders who are busily shrinking their branch networks as customers move online.
Donaldson says he doesn’t think Metro Bank’s branch network will become redundant as more people go digital.
He said: “I look at Holborn where one of our stores is today. That is an unbelievably busy corner. There’s a tube station opposite and over 37 million people came out of that tube station last year. Do I believe our footfall around that store will ever drop? No, I honestly don’t. I think we are fine.
“We don’t have 2,000 stores with half the stores in the wrong part of town because the town centres have moved. We’re not facing into that. We’ll always be in strong corners with strong anchor tenants around them.”
Metro Bank turned its first quarterly profit last year and is hoping 2017 will be its first year of profitability. Donaldson said: “My view is we’ve hit a point now where we can be profitable and continue to invest for growth.”
Donaldson says he is inspired not by other banks but by retailers like Lush and John Lewis. But he said: “It’s interesting looking at some banks opening hours post-us opening — they’ve changed. It’s interesting looking at some of the things they’re doing in stores. I definitely think some banks have changed some things and made it better for customers because of what we’ve done. I think that’s a good thing. We need more competition.”
He added: “We need to break the oligopoly that controls banking and have underinvested in service for customers for too long. The better competition we can bring, the more other banks have to react and up their game. Everybody wins when that happens.”