The launch of Metro Bank looks set to be a fascinating case study for the financial services industry. Its founders promise 200 branches in and around London, very high levels of customer service, but not particularly competitive rates of interest.
That model is the exact opposite of what the established banks have been doing in recent years. Closing branches has been the norm while customer service operations have largely been contracted out to anonymous and often inefficient call centres. Instead, the banks have competed on rates, battling for places in the best buy tables.
Metro isn't likely to find itself name-checked in these rankings any time soon, which prompted many personal finance analysts yesterday to write off its chances of success. That may prove hasty, not least because many people have tired of the best buy game — the banks have become far too adept at designing products that perform well in the tables, but turn out to be disappointing in the longer term.
The more fundamental question is what people really want from their banks. For a current account, the meat and drink of the high street providers, it is not at all clear that interest rates are much of an issue. Most people keep only small sums in their accounts and the biggest banks have barely seen their market shares diminish at all over the past decade, despite the concerted efforts of consumer groups to draw people's attention to their poor rates.
In fact, all the evidence is that when it comes to current accounts, what both personal and business customers want is better service. Speaking as someone who banks with a provider that has only two branches within 25 miles of my home, yet has just expected me to get by without a debit card for a week, Metro's promise of plastic produced in 15 minutes, for example, sounds attractive.
If Metro Bank really does deliver on the service it promises — and it is a big if — the current account customers will come. And though interest rates may be a more important consideration with savings products and mortgages, if Metro Bank has a captive audience to sell to, it will be able to do so.
This model has already been hugely successful in the US. And though America's banking market is structured very differently to our own, Metro Bank stands more of a chance than its critics think. In which case, it might even force the big banks to reconsider their own business models.
The reaction of the British Bankers' Association to proposed new rules from the Financial Services Authority on bonuses has been drearily predictable: yet another warning that the City's finest will flee the country if we police their pay more stringently than other jurisdictions.
Although we have been hearing this lament from bankers since the credit crisis began prompting greater regulation and new taxes, there has been no flight from London as of yet.