Last week we were delighted to welcome Anthony Thomson, entrepreneur and founder of Metro bank and Atom Bank for a discussion on the future of banking sector and the interplay between established brands and the ‘disruptors’. Here are five things we learnt:
Momentum vs disruptive innovation
Anthony kicked off with a joke from an acquaintance, who said that to launch one bank is commendable, to launch two is certifiable – something which I suspect he wears as a badge of honour. But for Anthony, Metro Bank and Atom Bank are two very different propositions. Metro Bank, Britain’s newest bank in 100 years when it was launched in 2007, is best described as momentum innovation. It took a concept which already existed and improved it, with a specific focus on the customer experience. Atom Bank, a digital-only bank, is disruptive innovation – essentially setting out to redefine what a bank should be. As Anthony pointed out, a challenge for disruptive innovation is demonstrating at the outset how it will be different to what already exists. But following the recent launch of the Atom app, and with a number of products in the pipeline, he predicts big things for the year ahead.
A new breed of customer
There is an old (and potentially spurious) statistic that an individual was more likely to go through a divorce than switch provider of their current account. For Anthony, that is all set to change. This is a result of a gradual decline in trust in high street banks over recent years combined with the rise of millennials, who are much less likely than their parents to feel brand loyalty to a particular bank. The increasing influence of millennials will also trigger a broader shift in banking behaviour. For digital natives, ‘remote banking’ is a much more accurate description of visiting a bank branch than it is accessing and managing an account on a smartphone or tablet. This provides a huge opportunity for Atom Bank. Anthony claimed that in 12 months’ time the reasons to switch will be so compelling that this trend will continue to accelerate.
An evolving landscape
The regulatory landscape has changed significantly since Metro Bank launched in 2007. For Anthony regulators are much more helpful and more experienced now than they were back then. In a bid to foster better working relationships with start-ups, one regulator has developed a ‘regulatory sandbox’ – encouraging new entrants to share ideas in a safe environment.
The media landscape has also evolved in that time but that didn’t necessarily make launching a bank more straightforward the second time round. Despite launching the first new bank in 100 years, Anthony believed that they got “an easy ride with Metro Bank” as many journalists were happy to use them as a stick to beat (and point out the flaws) of their more established rivals. With Atom Bank, there is much more new competition, more noise and as a result more confusion. According to Anthony, the real test for Atom Bank will be when they introduce their current account.
A brave new world
Atom Bank’s vision statement is to change banking for good, permanently and for the better. This bold vision drives everything the bank currently does and will aim to do. From utilising data to predict what customers want and need, to introducing new technology to the UK banking market in the form of biometric security, Atom will always drive the market forward and put the customer first. Looking ahead at the competitor landscape, Anthony claimed that the winners, whether established banks or new entrants, will ultimately be those who best manage data. This sentiment was reflected by roundtable guest, James Haycock from Adaptive Lab who in his book Bye Bye Banks argues that like other sectors – retailing, media, travel – the traditional retail banking model is set to be transformed by technology start-ups.
The small things
When Metro bank launched it pioneered many firsts – 8am-8pm opening hours, branches that opened on a Saturday and Sunday, and a front of house team that wasn’t incentivised by selling targets – an innovation that had a big impact on customer experience and was later copied by traditional high street banks. Yet for many it was the bank’s dog-friendly approach made it stand out from the crowd. So much so that post-launch one journalist asked Anthony whether the banks in-branch dog bowls were its main competitive differentiator. Anthony’s response was no but that it did capture the zeitgeist and enabled Metro bank to show that it cared more about its customers (and their dogs). This supports the old adage that in business small things – even plastic dog bowls – really can make a big difference.