UK banking revolution: Metro wins FSA license; Virgin to charge monthly account fee

UK banking revolution: Metro wins FSA license; Virgin to charge monthly account fee

The Financial Services Authority has granted a banking license to start-up Metro Bank, which promises to usher in a new era of financial services provision based on old-fashioned deposit-based lending and superior customer service standards.

The new bank plans to open two branches in central London in the next three months, and aims to expand to more than 200 outlets in Greater London within ten years. The high street branches will be supported by a telephone and Internet operation.

Metro Bank has been in gestation for over a year and has so far raised £75 million from private investors to fund the roll-out. It is looking to cash in on consumer distaste for traditional banking methods in the aftermath of the credit crunch.

Using the slogan 'Love your bank', the start-up says it will open seven days a week and promises a 15-minute turnaround time for approved account applications over-the-counter.

Anthony Thomson, Metro Bank chairman, says: "With the FSA authorisation of Metro Bank we are entering a new era of banking, one where we go back to a more traditional banking model where customer service is key and there is deposit based lending."

Metro Bank is one of a rash of greenfield operators and non-bank retailers looking to leave a mark on the UK high street.

Virgin Bank is likely to launch later in the year, and earned its own banking license following its recent takeover of regional bank, Church House Trust. In a radical departure from other UK banks, Virgin says it will do away with hidden charges and instead levy a low monthly fee for current account holders.

Virgin Bank chief Jayne-Anne Gadhia, told the BBC: "We want to live up to Virgin's ethos of making sure people aren't ripped off, that they know what they're paying for with no hidden charges and I think that's really important."

Comments: (2)

A Finextra member
A Finextra member 08 March, 2010, 21:01Be the first to give this comment the thumbs up 0 likes

I'm always amazed how company representatives can slip into "marketing speak" without any sense of irony. For the head of Virgin Bank to claim Virgin has an ethos of not "ripping people off" does not pass the "red face" test for me. Has anyone from Virgin ever travelled by Virgin Train?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 09 March, 2010, 14:42Be the first to give this comment the thumbs up 0 likes

In over 25-30 trips on Virgin Trains between London, Crewe, Manchester and elsewhere in UK, I have surely encountered a vast range of ticket prices depending upon the time of the day and the day of the week. But, I never thought I was being ripped off because the widely-varying prices were known to everyone in advance.

Unlike most airlines, Virgin Atlantic conducts onboard customer satisfaction surveys. Not just that, when I'd complained about something or the other not working on the aircraft, someone from the CEO's office of Virgin Atlantic actually bothered to reach out to me. In another instance, when I contacted Virgin Atlantic in connection with a ticket that had been declared void at the time of check-in, I got a prompt response and a resolution to the problem that was found to be caused by the online travel agency through which I'd booked the ticket.

Based on my personal experience, therefore, I have no hesitation in believing Virgin's claims of not ripping off its customers, and wish its banking initiative all success.