vallierojas: Metro Bank plans more 'stores'

The UK's newest high street bank, Metro Bank, has exceeded its own expectations for progress in six months since launch

Six months after its glitzy launch, Britain's first new high street bank in over 100 years this week declared it is proving a big hit with customers keen for a change, and will open another eight "stores" this year to add to the four it already has. Metro Bank also revealed it is set to launch a cash Isa by the end of February.

"So far, so good," said Anthony Thomson, the bank's co-founder and chairman, as he took Guardian Money on a tour of Metro Bank's head office in Holborn, central London. However, he wouldn't disclose how many customers the bank has signed up, arguing that this is commercially sensitive .

Metro launched in July, and offers all the products you would expect: current and savings accounts, mortgages, loans, credit cards and business banking. You can do your banking online, and speak to someone on the phone. One big difference between this new player and its rivals is that customers have been able to walk in and, around 15 minutes later, walk out with a current account and debit card ready to use. And its branches are open seven days a week, from early until late on weekdays.

However, those looking for the very hottest rates will be disappointed. Its instant access savings account pays just 0.5%, while its three-year fixed-rate savings bond offers 3.04%, when you can get 4% or more from some rivals.

Metro's four stores are located in Holborn, Earl's Court and Fulham Broadway in London, and Borehamwood in Hertfordshire. The next to open will be on London's Tottenham Court Road in March, then Kensington High Street in April, followed by Croydon, Uxbridge and Bromley. Other likely future locations include Chiswick, Kingston and Stratford. The aim is to expand to 200 outlets or more, all broadly within the M25 area.

Some commentators have argued that the fact you cannot open a Metro account online will severely hinder its growth. But Thomson said Metro was well ahead of the targets it had set itself. "This store [in Holborn] exceeded its annual account opening target in its first month. The four stores have collectively exceeded our first year's account opening target in three months."

At the time of the launch, Metro came in for some flak ? but also valuable publicity ? for its bone-shaped dog biscuits on the counter and water bowls in the foyer ("dogs rule at Metro Bank!"). It is still clearly besotted with man's best friend, with the bowls and biscuits still there, though dogs are hard to come by in Holborn. However, suburban locations such as Borehamwood are clearly likely to see more four-legged visitors.

"We had a woman open an account just because she could bring her dog in," said Thomson. "I don't mind if they pee on the floor or worse," he declared. Is he throwing down the gauntlet? Money hopes not too many dogs put that to the test ?

Away from canine matters, Metro's two biggest sellers by far have been its current and savings accounts. Thomson said some customers had been "testing" Metro by taking out a current account that wasn't their main bank account. "They will try a few transactions, and when they see the whole thing works, they then switch their salary over."

Meanwhile, he says the bank has a good "pipeline" of mortgage business. "We will go up to 80% [loan-to-value] but typically it is 75%."

But why do you have to go into a branch to open an account? According to Thomson, Office of Fair Trading figures show that the vast majority of UK bank accounts are opened at a branch and, he added: "We want people to get a sense of how different we are." Opening an account at a branch also reduces the likelihood of fraud.

Thomson revealed that Metro has had fraudsters coming in to open accounts with fake passports, and they have ended up being arrested by the police. "We had quite a high incidence of attempts at launch, and that has virtually disappeared now as the criminal gangs have realised there are easier targets than us." Thomson claimed its fraud prevention technology is "the best of any bank in the UK", and similar to that used at airports such as Heathrow.

David Black, an analyst at independent financial research firm Defaqto said Metro has a good product range, and he understood it was making quite a splash with small businesses.

There has been a lot of talk in recent months about other banks that are planning to launch, and Thomson said he would welcome more competition on the high street.

On player is Virgin Money, which said it is currently working on its overall banking proposition, and is aiming to open its first branch "later this year" ? as yet there are no dates. It has plans to expand to 70 branches over the next five years. "Everything is in development at the moment," said a spokesman.

Tesco already has a banking arm, and said last October that it plans to launch mortgages in the first half of 2011, with current accounts to follow. Asked about branches, a spokeswoman said: "We are trialing six pilot branches in stores so we can take customer feedback." It plans to use that "to shape our future proposition".

Rupert Jones

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