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May 08, 2013


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Alexander Peschkoff

As for Metro Bank: "We will be the #1 retail financial stores in Britain by 2020"

What can I say... Seven years ago there were no iPhones, no iPads, Facebook was an infant, Google's revenue was 1/10 of what they earn today, etc. etc. etc.

Metro has a strong ambition, based on assumptions. We all know what you get when you ASS-U-ME... Smartphones and mobile banking are spreading faster than Metro can build branches. Perceptions and habits change even faster - look at Hailo.

"Never mind that we are losing money on every transaction, we'll make it up on volume"...



A great summary as usual. I too believe Branches will be around for a long time to come, but in a different form and vastly reduced numbers. I do believe there is a rapidly growing segment of the market that want the utility of banking, but aren't fussed by the poor service they receive en-masse via branches.

The economics too, will drive a significantly different distribution mix. On the numbers you're showing for Metro, Moven will be making $750k per month in profitability because of our vastly lower distribution costs. In that respect, I think they are dummies - because why would you run a business at loss as they are right now when you don't need to if you are smarter about engagement and service.

You are right about the broad dissatisfaction stimulating switching or multi-bank relationships, and the transportable account number will only increase that. But in my mind thinking branches are the best service mechanism to cater for this switching tendency or new revenue is like re-arranging deck chairs on the Titanic. Ok, some banks will make it into the life boats and have a few core service branches that will survive. However, it doesn't make branch banking any more profitable than it is today - which compared to alternative engagement methods just isn't very profitable at all.

I believe that the likes of Moven will be able to do it fast, with better service sans branches, at margins that existing players won't ever get close to.


Laurence Trigwell

Love the debate. It seems like we have the germs of agreement. Bank branches in their existing form will continue to be seen as expensive (even more so if their focus is transaction execution) but offer potential for increased service levels. Those banks that can offer transaction execution alternatives at lower costs will find sources of margin as lowest cost provider. The issue that remains of course is balancing service, margin and efficiency by product, channel and customer in the grey area between self service transaction execution and higher value services and sales. The question goes unanswered because of the challenges understanding branch & channel profitability and manual building of network strategies. The debate seems set to continue.

Alexander Peschkoff

As for branches, don't forget what Google, Amazon, PayPal and Facebook taught the world: self-service skills.

If banks focused on providing world-class tools for self-service instead of operating branches, the banks and their customers would be much better off. For crying out loud, I cannot even call my branch anymore... Let alone walk in for ad hoc service (apart from some basic "over the counter" ones for which branches are not needed anyway).

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