Wednesday, 17 November 2010

Burger King Banking - is it a Whopper?

Vernon W. Hill II, the founder of Metro Bank, the first new high street bank in the UK for over 100 years, likens growing Metro Bank to growing a Burger King franchise. He should know as he owns a large Burger King franchise in the US. He also successfully grew Commerce Bank in the United States to 500 'stores'. What he means by the similarity of growing a Burger King franchise is that every 'store' looks identical, operates identically, has the same level of service and operates as a retail outlet. In Metro's case some of the gimmicks are giving away free pens (Barclays has been quietly doing that for some time in their branches), free dog biscuits and cash counting machines built to look like one arm bandits.

None of this is particularly new either in the US, the UK or the rest of the world. We have seen over the last decade or so banks attempting to become more like retail outlets whether it is the Abbey experiment with branches co-located with Costa Coffee outlets, which lent heavily on the experience of Washington Mutual with its co-located branches with Starbucks or the Australian branches with their offer of waxing your board while you are doing your banking. We've also seen banks recruiting senior executives from the retail sector to drive that retailing mindset into the branches. As tax payers no one should be allowed to forget the impact of having a retailer running Halifax Bank of Scotland had on that particular bank.

The point is that on the surface it may seem that a bank branch is just like any other retailer, but it only at the surface that that analogy works. When you go into a burger king to go to buy a standard product that is entirely disposable, highly commoditised and which you own for only a very short time. For a product such as this a bright, open plan store with little or no privacy is entirely appropriate. However opening a current account or a loan or a mortgage is nothing like a burger. Buying these types of products is a  long term, for many a life time, acquisition, intensely private (sharing how much you earn or are worth continues to be one of societies taboos that simply isn't going away) and are not quick purchases. So when you sit down in an open plan office, where the people on the street outside walking past can see the screen that the banker is operating as he types in your salary or looks at your overdraft, and the person at the desk next to you is ear-wigging on your conversation don't forget to ask whether your value added account comes with fries!

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