How are things going at Metro Bank, I wonder?

Finding himself non-exec Chairman of Metro Bank, my old friend Anthony Thomson now spends a good deal of his time flying round the world giving case history presentations to groups of foreign bankers on How Metro Bank Reinvented Branch Banking In The UK.  I’ve never heard Anthony say anything other than that Metro Bank is a huge success and has regularly beaten – nay, smashed – all its targets since launch.  I wouldn’t expect him to say anything else.  But still, I wonder what’s really going on.

Metro Bank clearly has one huge advantage in what it’s not – a big bad legacy bank with huge rafts of negative headlines, loathsome behaviour and customer detriment behind it.  And it has a biggish advantage in one of the things that it is – supposedly, at least, a network of local branches with staff empowered to get out into their local catchment areas and beat the trees in search of new customers.  (When the Tottenham Court Road branch opened a couple of hundred yards from my office, I was genuinely impressed by the way that I kept meeting groups of staff wandering up and down the road waving flags, handing out free pens and inviting us all to drop in, although I haven’t seen them out there for a while now.)

Against that, it seems to me that it has two even huger disadvantages. First, as a network consisting of a handful of branches, it has virtually no affordable, targeted and appropriate marketing communications opportunities available to it other than what it can do in its branches and what groups of staff can do out in the street with flags and pens.  I suppose they can just about advertise in the Evening Standard, or Time Out online or offline, but even this is horribly wasteful – and that’s about it.  How you recruit a customer base in that situation is a mystery to me.

And then of course over the long, long haul while you’re aiming to build that customer base, you’re saddled with enormous and potentially crippling costs – not just the costs of running the branches themselves, but, even more than that, the costs of running a full-fat Head Office with a whole C-suite of full-fat Heads Of on big salaries presiding over product and service areas still only provided to handfuls of customers.  In a business which is as much about scale as retail banking, I just can’t imagine how you thrive when you have the cost base of a retail bank and the customer base of a few corner shops.

That doesn’t mean that there won’t be a profitable exit available for Anthony and his fellow-shareholders when they decide the time has come.  A small branch network which makes no sense as an independent business may make very good sense as an add-on to someone else’s.  For all I know, this – rather than an eventual move into profit under its own steam – may have been the objective stated in the business plan from the outset. But speaking for myself, whenever I think of Metro Bank, I see a line on my wall up near the ceiling which represents the cost base, and a slowly-rising line down near the floor which represents the revenues.  And I’m not at all sure that there’s enough wall in the world to reach the point where the two lines cross over.

What exactly is it that stops investment people from writing in English?

Someone told me a story about a meeting in which an investment company client was briefing a very senior adman.  When the client got to the end, the adman said:  “I didn’t understand a single word of that.  Do it again, and for every word you use that I don’t understand, let’s both pay a pound to charity.”  By the end of the client’s first sentence, they owed the charity £7 each.

It’s an easy story to believe.  Here are two current examples on the same theme.

Among the many new second-generation online investment services launching at the moment, probably the one attracting the most attention is Nutmeg ( The brand promise is attractive:  in their words from their home page, “Putting your money to work has never been so simple, smart, or fair.”  But a bit further down the same page, we find this explanation:

Automatic, intelligent diversification and rebalancing.Our investment approach is grounded in Modern Portfolio Theory – the Nobel Prize-winning research that seeks to optimise returns for any given risk level. For each fund you create, we design a unique allocation from a set of carefully selected investments across different asset classes, industries and geographies. The more you invest, the more we diversify your funds, and if your allocation drifts off course, we rebalance it – automatically.”

Well, that veneer of simplicity turned out to be pretty thin, didn’t it?  Within three paras, we’ve broken through it to the usual investment mumbo-jumbo beneath, complete with a full set of the dullest, deadest words in the language – not just “optimise” (one of my own least-favourites) but also “approach,” “allocation,”  “selected,” “asset class,” and “rebalance.”  It’s the worst of both worlds – impossible for most people to understand, and dull as ditchwater to boot. They may be Nutmeg by name, but there’s little spice in the way they talk to me.

That said, I suppose that being boring and incomprehensible is marginally less damaging for the author of the communication than being almost universally misunderstood.  Schroders are advertising in the Tube at the moment, with a poster which, as far as I can see as I walk past, displays only the words “DEFENDING YOUR INCOME” as well as the logo and the small print.  I just can’t begin to imagine how those responsible for this headline, on client and agency side alike, didn’t realise that for Londoners travelling to and fro to work on the tube, “YOUR INCOME” must mean the money you earn from your employer, and if the idea of “DEFENDING” this means anything at all, it must mean something to do with protecting you against the financial consequences of unermployment.

Of course this isn’t at all what Schroders are proposing.  I’m not quite sure exactly what they are proposing, but I’m pretty sure it’s to do with some kind of income-generating fund that may offer some kind of secure or protected level of income – or, perhaps more likely, may just “DEFEND” your income in the sense that it offers you more of it than you can get from High Street savings accounts.

Assuming it’s the latter, it really isn’t a very difficult message to get across.  But Schroders have managed to make a pretty comprehensive hash of it – the problem, I suppose, being that even the simplest messages are quite difficult to communicate when you can’t actually express yourself in English.

In praise of the great Ted Ettershank

A grim sight met my gaze on page 37 of this morning’s Times.  It was a business banking ad for Lloyds TSB, and like most business banking ads it fell well short of mediocrity.

I probably ought to scan in a copy, but honestly you don’t care.  If you can be bothered, just imagine, briefly, a 25×4 ad with a picture of a bloke in ear defenders doing something in a factory, and a headline that says FLEXIBLE FINANCE SOLUTIONS TO MEET THE DEMANDS OF YOUR BUSINESS, and about 100 words of dreary copy and a logo.  That’s it.  You’ve got it.

Given that, as I say, this ad is no better and no worse than the large majority of business banking ads, why am I so depressed by the sight of it?  Simply because its very existence proves the final and I fear permanent destruction of the great Ted Ettershank’s business-within-a-business, almost bank-within-a-bank, the mad, impossible, surprisingly long-lasting Independent Republic of Lloyds TSB Commercial Finance.

Ted had run this business – which he would be incensed to hear you describe as a factoring specialist – for many years and under many different ownerships.  Whoever was nominally in charge, Ted ran it as an independent state – and, over the years, continued to make enough money that no-one was ever quite brave enough to try to drag him into the corporate fold.  He maintained exactly the same stance when Lloyds TSB snapped the business up (and merged it with another, the former Alex Lawrie Factors). From separate offices in Richmond and Banbury, Ted carried on ignoring and rejecting almost every initiative and requirement emanating from the corporate centre.

None more so than those to do with marketing and communication.  Ted despised this whole area both in principle and in practice.  Most of all, he recognised – rightly – that if he signed up to the Group-wide approach and was allocated to one of the central team’s relationship managers and one of their giant roster agencies, he would get a useless service.  He would be a very small pimple on the Group marketing and communications bum – a tiresome, complicated, low-spending corner of the business which would be pushed down to the dullest people on the team with instructions to get their stupid boring advertising done as quickly and profitably as possible.

Instead, he appointed us.  And we worked about ten times harder and ten times smarter than any Group roster agency would have done.  (That’s not because we were wonderful people – it was just because, as a smaller agency specialising in financial services, we were really quite excited about having his business, and didn’t think of it as a tiresome chore that we had to get out of the way before getting back to some consumer stuff.)

He had asked us for an integrated idea which could be extended across advertising, direct marketing and, crucially, their most important marketing activity, hospitality.  We came up with an idea based around a national student art competition, which would offer hospitality opportunities at eight regional heats and a national final – and provide us with a fresh, engaging and pleasingly low-cost source of artwork for use in a case-study based advertising and direct marketing approach.  I’m not saying it was the greatest thing ever, but we worked really hard on it, and the does-what-it-says-on-the-paint-tin advisers Arts In Business worked really hard on organising the competition, and over a period of five or six years the whole thing did really well for them.

Ted actually retired three years or so ago, exhausted, I think, by the pressures of defending his territory against the endless attempted incursions of the mighty parent.  The wheels didn’t immediately fall off. Ted’s replacement, Simon Featherstone, and his Head of Marketing, the delightful Ian Byers, took up as best they could where Ted had left off.  But Ian also retired, and after that …well, I left the agency, so I don’t really know how the tale then unfolded, but I can see the eventual outcome in that grim, vacuous, generic, utterly humdrum ad in the Times this morning.

As I’ve said many times, I don’t really know what the economies of scale are, but whatever they are they must be extremely powerful, because the diseconomies and disadvantages are so huge and so obvious.  This stupid bloke in the ear defenders and the headline which is just the proposition from the creative brief set in the Lloyds TSB typeface isn’t an ad at all.  No-one has cared about it.  No skill or wit or craft or flair has gone into it.  And no-one except a Group compliance manager will ever read it, which may be just as well because in the first line it commits the cardinal sin of describing Lloyds TSB Commercial Finance in the plural, not the singular (LTSBCF “have” a range, not “has”).

Oh well.  All good things must come to an end.  I loved working for Ted’s Independent Republic, but all those most closely involved with it are all gone now – myself, of course, included.

I hope Ted is happily enjoying a well-deserved retirement.  And I hope he doesn’t see page 37 of today’s Times.


Excuse me while I just praise one of my clients again

I know, I know, consultant praising client isn’t always the most authentic of experiences, and I’m back on how smart St. James’s Place are for the second time in the last month.  Still, they are.

I experienced the latest example of their smartness yesterday, at Claridge’s, where, every month, SJP puts on a day for people who are thinking of joining the Partnership – virtually all either IFAs or bank advisers.  Yesterday there were about 70 potential recruits in the audience, and I must say I’ll be surprised if, I don’t know, say 60 of them don’t come on board.

Here are some smart things about the day.

1.  It’s at Claridge’s.  Not the Novotel Hammersmith or the Holiday Inn Victoria.

2.  The invitation carries an SJP logo and the heading VIP INVITATION TO CLARIDGE’S.

3.  SJP organises and pays for all travel and accommodation.  The arrangements, as always with SJP arrangements, ran like clockwork.

4.  The seven presenters include three main board directors (in fact, the two joint MDs and the CEO, David Bellamy).

5.  Two of the others are real-life SJP partners who have successfully made the transition.

6.  (Smartest bit of all)  They’re thinking of adding me to the programme, and so wanted me to come along and sample the event.  (Joke about smartest bit of all.)

7.  Missing no opportunity to improve, rather than just have me sit there watching they asked me to write a report on the strengths and weaknesses of the day.

All right, none of this sounds absolutely brilliant, and some might say that going to so much trouble to impress a bunch of IFAs and bank financial advisers shows a certain anxiety about the ability to persuade them.  But I don’t agree.  SJP probably has two key messages that it wants to get across to these people:  first that it is a business absolutely focused on its advisers, and second that its brand stands for quality and excellence.  Before any of the speakers had said a word, the whole nature of the event had delivered both of these messages with maximum clarity and volume.

At the opposite extreme, I can remember receiving countless briefs in my ad-writing days from organisations aiming to be seen as prestigious, confident and successful, and wanting me to create these perceptions in black-and-white newspaper ads about the size of a postcard.  In hindsight, I should have invited them to Claridge’s to explain where they were going wrong.

Infamy, infamy, I’m afraid my JV partner’s got it in for me.

To posh modern restaurant/brasserie/bar/whatever Manicomio in the City this morning for the launch breakfast to mark the publication of the new Direct-to-consumer Investment Platform report, co-authored by Platforum boss Holly Mackay, her team and yours truly.

A good event in almost every respect – good venue, good turn-out, good coffee-and bacon sandwiches, good presentations, good advance orders – except one.   Bear in mind that Holly sends out a weekly newsletter that goes, I think, to about 8,000 people in and around the industry.  And then imagine my distress and alarm when she says that she has found out something she didn’t know about me, and then when I ask what it is she just starts humming the tune which I instantly recognise as “underground overground wombling free.”

Yes, someone has spilled the beans (I expect a Womble will clear them up) and it’s not so much the cat but rather the Womble that is out of the bag.  Four million years ago, it is true, I did spend a few surprisingly agreeable months playing the bass guitar in Mike Batt’s great Womble enterprise.  Honest, guv, cross my Womble heart, I never wore the Suit (you didn’t really need to in the orchestra pit or the recording studio) and sadly I didn’t appear on TOTP.  But I did play the tunes, and four million years later I reckon I probably still could, or at least most of the famous ones.

I sometimes tell this story on a one-to-one basis, on occasions when I think a desperate move is required to make me seem a bit more interesting.  But I fear that Radio Holly is going to broadcast it on a one-to-eight-thousand basis in 24 hours’ time – not sure how I feel about being quite as interesting as that.


With grateful thanks to all deceased pioneers

I can’t remember if it’s a theory sufficiently formalised to have its own name, but there certainly is a theory that in the early stages of development of new markets, the earliest pioneers very rarely make any money or indeed in most cases survive at all.

The theory, I think, goes on to explain that these pioneers fail for one (or actually often both) of two main reasons:

–  as subsequent waves of market entrants come along with more sophisticated and better-developed products or services, it becomes clear that the pioneers’ offerings weren’t actually very good;

–  and since the golden rule of new businesses is that acquiring customers always takes longer and costs more than you thought, they run out of money.

At the moment, we’re starting to see some of these early pioneers proudly unveiling their new services, invariably online, in the new and emerging investment-services-for-unsophisticated-private-investors market.

As I shall be demonstrating over breakfast tomorrow (no need to feel sorry for my wife, the breakfast is a biggish launch event for the new report into the direct-to-consumer investment platform market which I have co-authored with Holly Mackay and her team at The Platforum), the D-I-Y market for unsophisticated investors undoubtedly exists, and has outstanding future prospects.  Sooner or later, some firms are going to make a lot of money in it

I fear, though, that few if any of the first early pioneers are going to be among them.  Look at the websites of businesses like lovely Andy Creak’s rPlan, or smart Justin Modray’s Candid Money, or DCisions Group’s InvestorBee, and you can see lots of bright ideas, strong content and fresh thinking.  But you also see two kinds of things that alarm you:

–  First, important parts of what’s on offer are amazingly badly-conceived or presented.  InvestorBee, for example, pioneers what I believe to be the single most important new idea in the next generation of financial services, namely the opportunity to make your own decisions on the basis of insight into the decisions which other people like you are making:  but the brand is just all wrong, silly and childish and twee when it ought to be big and populist and vibrant.  rPlan’s actual financial management functionality is pretty strong, but it’s so hopeless at explaining what it is, who it’s for and why they should bother that I can’t see many people getting as far as the functionality.  And Candid Money is a bit of an odd-man-out, because as far as I can see it’s a pure labour of love with no business model or functionality at all, but anyway its credibility is shot to pieces by its homespun appearance, crude graphics and rambling copy style.

– And then second, although all these sites are fairly new (Candid Money by some distance the oldest) there is already a good deal of tumbleweed blowing through them.  Blogs that have no entries written by anyone except site founders, and even then nothing much for several months;  Q&A sections without a single Q;  out of date information;  all the signs that the cyberdesert is starting to reclaim the little patch of territory marked not so long ago with its shiny new white picket fence.

We shouldn’t overlook the fact that as well as dodgy functionality and presentation, the pioneers’ big shared weakness is lack of money for promotion.  No-one – and when I say no-one, I mean no-one – has heard of rPlan, Candid Money or InvestorBee, and with no promotional budgets no-one ever will.

It may sound a bit as if I’m giving these fledgling businesses a hard time.  I don’t mean to.  If you stole all the best bits of what they’re doing, but then also dumped all the worst bits, and added in marketing and customer acquisition budgets of, say, £12 million over the next three years, you’d have something pretty close to a brilliant, successful and highly-profitable business.  And frustratingly, in a few years’ time, when there’s nothing left to be seen of these pioneers except a few of those big hand-painted plywood posters like the ones that Warren Oates paints in Badlands, faded and peeling by the side of the highway, that’s exactly what some much less agreeable, less innovative and all-round less admirable firms will have done..