Kirsty MacArthur, head of private banking at Metro Bank, explains why this quirky new entrant into the UK private banking space is ready to take on the big boys with a consciously “back to basics” approach.

Kirsty MacArthur, head of private banking at Metro Bank, explains why this quirky new entrant into the UK private banking space is ready to take on the big boys with a consciously “back to basics” approach. This is the first in a two-part feature, to read the second click here.

Those living and working in London cannot failed to have noticed the rate at which bright red and blue branded Metro Bank branches have been springing up. Metro Bank, which opened its first four branches in 2010, is the first new High Street bank in the UK in over 100 years and has really fired a shot across the bows of the “big four” banks with its focus on customer service. Metro Bank is known for its late and Sunday opening hours, along with wacky touches like providing free dog biscuits and lollipops for customers, but clients are also flocking to its private banking arm.

There’s no denying that the events of recent years have really shaken the UK banking industry up, forcing big players to re-examine their business models and opening the way for start-ups which want to push forward a new way of doing things. A fresh approach to banking has certainly paid dividends within Metro Bank’s retail business and it now boasts over 110,000 customers – not bad from a standing start just two years ago.

Metro Bank continues to go from strength to strength on the retail banking side of things - it is adding another four branches to its existing network of 12 next month, and is aiming to establish 200 by 2020 - and its client roster is growing by 6-7 per cent every month. But to date its private banking offering has maintained a relatively low profile. There have been no glittering events to announce its entrance into the private banking space, nor has Metro Bank mounted the kind of trade media assault one would perhaps expect to raise awareness. And yet Metro Bank now boasts 300 private banking clients – so what is the secret of its success?

A “reactive development”

Speaking at Metro Bank’s headquarters in Holborn, MacArthur told WealthBriefing that the rapid evolution of the private banking business had actually come as something of a surprise to management; although Metro Bank did envisage the development of a private banking business further down the line, this ended up happening a lot sooner due to client demand and was a “reactive development”, said MacArthur. The bank was seeing clients who were disillusioned with the established private banks and who sought a return to simple banking, and this was a “lightbulb moment” for Metro Bank’s chief executive Craig Donaldson, she said.

A key move in its push into the private banking space was Metro Bank’s hire of MacArthur in November 2011. She was previously a high-profile banker at Coutts and UBS Wealth Management, with a particular talent for building books of sports and media clients, and her appointment was a real indication of how serious a tilt Metro Bank was taking at the UK private banking market. But while some might sneer at Metro Bank’s somewhat cheap and cheerful image, MacArthur clearly feels that her new role is no step down at all in terms of brand. On the contrary, she is excited to be spearheading a new approach to private banking.

A fresh take on old-fashioned

In actuality however, Metro Bank’s approach to private banking is anything but new, based as it is on personal, one-on-one relationships and a pared down offering does not include any kind of investment management or advisory services.

So what exactly is Metro Bank’s private banking proposition?

MacArthur describes the offering as a “red carpet retail service”, where the main “upgrade” feature is that each client gets a dedicated private banker. Since investment management is not on offer, these bankers are dedicated to one thing only: client-centric, personalised service. This means that clients are always able to speak to their own banker (or a well-informed back-up) anytime they need to. Mobile phone numbers are given freely and MacArthur jokes that promptly answering any and all client phone calls is a particular hobby-horse of hers. But joking aside, this vigilance is actually well placed since a March 2011 report by SEI found that a failure to return calls is the number one reason high net worth clients fire their bankers.

A noticeable trend in the private banking space has been many firms’ switch to a team-banking approach whereby clients are served by a small team who each tackle one part of their provision. In many ways a bid to make the institution rather than individual bankers “own” the client, this approach is not one that Metro Bank is interested in for its own clients and not just because it isn’t offering the full spectrum of wealth management services in addition to banking.