Being a relatively new bank on the UK high street, and having launched its private banking unit only four years ago, Metro Bank is operating in a crowded wealth management market. However, Paul Riseborough, MD – customer propositions and private banking at Metro Bank, tells Meghna Mukerjee there’s always space and demand for straightforward and transparent private banking services
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At its launch in 2010, executives at Metro Bank had not intended on promptly offering any private banking services. However, in 2011, it was purely due to the wealthy customers’ demand that the UK-headquartered lender forayed into private banking.
Currently, the private banking division accounts for approximately 20% of the bank. Metro Bank does not provide investment advice or sell investments, but focuses, instead, on providing simple and transparent banking solutions for wealthy customers.
Paul Riseborough, managing director – customer propositions and private banking at Metro Bank, explains that there is a real demand for straightforward private banking.
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By GlobalData"We found that a lot of our wealthier customers – not mass affluent but high net worths (HNWs) and ultra-high net worths (UHNWs) – were in need of a really good private bank.
"Some clients were in fear of being moved to the retail operations of certain banks, or the charges were too high. Also, wealthy clients were particularly tired of being sold to – in wealth management, investment management, and insurance," he says.
Metro Bank aims to provide "excellent banking, lending, and exceptional relationship management", says Riseborough. The private banking division has grown robustly and rapidly. Between June 2012 and December 2014, the division experienced a deposit growth of over 600% and an increase in lending by over 2669%.
Growth of the unit, however, does not seem to be Metro Bank’s problem. "For us it’s about quality of the service, so we set limits on how many clients our private banking directors can really manage," says Riseborough.
"Some banks have thousands of clients, but how can you provide great service to everyone on that basis? We want sustainable growth, and that means we are not out to market ourselves. In time, though, we have to take the differentiating factors of our brand to more people," he adds.
A key differentiating factor is the way the bank has created specialist teams to cater to certain categories of wealthy clients. "We have teams for sports & entertainment, entrepreneurs, boards & partners, and commercial private clients.
"Their core skills are defined. You get a dedicated private banking director and truly personalised services," says Riseborough.
Metro Bank also takes a flexible approach towards lending and that’s where it "comes into its own". Riseborough explains: "It seems like a small point but the wealthy have complex financial lives, and to be able to talk to RMs who have a rounded view of the clients and their assets, and can discuss commercial as well as private banking needs, is a rare thing.
"A footballer, for instance, might have a lumpy income profile. We are good at manually underwriting and taking more of a pragmatic view to different types of lending, which has been successful for us."
Earlier in 2015, Metro Bank also partnered with British wealth manager, St James’s Place, to offer a Money Management account. The new, co-branded account is available to customers with more than £500,000 invested with St James’s Place.
The customer demographic at Metro Bank’s private banking unit is diverse. "We attract entrepreneurs, people who have gained wealth recently, but we also have clients with multigenerational, ‘old money’. It’s a broad spectrum.
"The entrepreneurs and Gen Next clients want to talk to people who share their sense of ambition. Some private banks think, ‘how can I get this person to a balanced investment portfolio’. We keep things simple. If you need a mortgage, come to us," says Riseborough.
Metro Bank doesn’t have a differentiated UHNW offering, but it has UHNW clients. Additionally, several family offices are clients of Metro Bank, and it has relationships with discretionary fund management firms.
HNWI and UHNWIs alike are hungry for high quality information and the RMs "really need to know their clients’ situations and needs", stresses Riseborough.
Wealthy clients are also demanding in the way that they interact with their banks, and uncompromising on their need for good digital channels.
Metro Bank has a three to five-year investment plan to enhance its mobile and online banking platforms. Using Switzerland-headquartered software vendor Temenos’ systems across the board, Metro Bank has the advantage and flexibility of state-of-the-art technology platforms, based on cloud computing.
"We have a great CRM system, and a single customer-view of all the client’s holdings. Other banks have old legacy systems to deal with but we don’t, and digital is key for us.
"We can develop a new product in three days, basically, while other banks can take up to a year. It’s a completely different playing field," Riseborough says.
The advantage of investing in sophisticated technology systems further allows for a smooth client on-boarding process. "In some circumstances you can walk out with an account and a private banking debit card within 15 minutes," says Riseborough.
As Metro Bank private banking does not advertise, approximately 80% of the division’s clients come from referrals whereas 10%-20% come up through the stores. "We focus on the experience – it’s the core of our business. The RM is at the heart of it", says Riseborough. There is a strong focus on training bankers holistically – "hired for attitude, and trained for skill", he adds.
According to Riseborough, the automated-advisory service players are "refreshing" as they help keep the advice side honest. "Businesses like Nutmeg are great. The robo-advisory business model is easy to understand, and some HNWIs like that. It’s about choice."
Plans ahead include adding more specialist teams within a couple of years. "There is a case for building a team that looks at hedge funds and private equity. We are also deepening our sports team’s relationships and increasing that product set, as each sport brings in different dynamics.
"It’s also a lot about technology in the next few years," informs Riseborough.
Metro Bank plans to develop a HNWI card proposition in the next 12-24 months, as well as allow more flexibility to its deposits range to give clients options.
"We are not about having a large product set with bells and whistles on it. Features such as a flexible underwriting process really matters to wealthy people. We want to provide solid, quick, good banking experiences. That’s what the clients want," sums up Riseborough.
