LONDON BRIEFING:But does Metro Bank offer more for the pooch than the pocket?

PHOTOGENIC DOGS, balloons and free lollipops ensured maximum publicity last week for the opening of a single bank branch in central London.

That’s not something the TV cameras and press pack would normally turn out for, even in the silly season. But Metro Bank is the first new bank to open its door for business in the United Kingdom for more than a century and it has big ambitions to shake up the sector.

Its founder is 64-year-old billionaire entrepreneur Vernon Hill, an American, who opened his first bank branch in the United States when he was in his late 20s. The business, which became one of America’s fastest-growing banks, was sold three decades later for $8.5 billion (€6.42 billion). He fell foul of US regulators over contracts awarded by the bank to family members but has been given a clean bill of health in Britain by the Financial Services Authority. Hill, who refers to the newly opened Metro Bank as a store rather than a bank, is positively evangelical about his plans to inject some old-fashioned service into the British banking sector – and a bit of fun.

Thus his “stores” – and he plans 200 of them by 2020 – will open for the convenience of the customer rather than the bank. And that means 12 hours a day, from 8am to 8pm, seven days a week. There will be no “stupid bank rules” and no security glass separating staff from customers.

Senior staff will always be on hand and call centres will be in the UK. Metro promises that credit and debit cards will be issued to customers on the spot rather than a week later through the post. Customers can also avail themselves of the free “Magic Money” machine which changes coins into notes, a service other banks and supermarkets usually charge for.

Then there’s the gimmicks – dog-lover Hill and his co-founder Anthony Thomson, who is head of the Financial Services Forum, have declared Metro a canine-friendly zone: customers can bring in their dogs when they do their banking and they’ll be rewarded (the dogs, that is) with free biscuits and provided with water bowls. Peckish customers can have a lollipop.

It is almost three years since the collapse of Northern Rock – in the first run on a British bank in more than 100 years – and Metro Bank is not alone in seeing an opportunity to shake up the sector. Last week’s launch will have been closely watched by Richard Branson, whose Virgin Money plans to launch a retail banking chain next year. Branson is no doubt even now dreaming up outlandish PR stunts to generate even more column inches than Metro and its dogs.

Others limbering up on the banking sidelines are City grandees David Walker and Peter Levene, head of Lloyd’s of London, who are hoping to build a new chain by buying branches offloaded by Lloyds Banking Group or Northern Rock.

Santander, meanwhile, is poised to overtake HSBC as Britain’s largest banking chain by buying more than 300 branches from Royal Bank of Scotland, a sale the bailed-out bank has been forced to make by the European regulators. Not everyone with ambitions to move into the high street banking business has been successful, however. Former banking analyst Sandy Chen was forced to abandon his plans for a £200 million (€241 million) float of a new bank, Walton Co. Like Metro, he wanted to keep branches open well into the evening to satisfy customer demand for improved service, but investors failed to come up with the cash.

Customers queued outside Metro Bank in Holborn on launch day last Thursday and, although they were often outnumbered by journalists and the bank’s publicity team, a steady stream of new accounts was opened.

But it is the accounts that let Britain’s newest bank down. Its rates are, at best, unexceptional. Its instant access account pays a miserly interest rate of 0.5 per cent and its mortgages won’t be featuring at the top of the best-buy tables. Nor does it pay in-credit interest on its current accounts. Industry observers were, however, more impressed with Metro’s credit card, which has an APR of 13 per cent on purchases, balance transfers and cash withdrawals.

The bank clearly believes customers will be more interested in the service it offers than its rates. It could well be right, particularly in this era of ultra-low interest rates when the difference between the best and worst accounts for most savers is often measured in pennies rather than pounds.

Metro Bank’s experiment in Holborn will be fascinating to watch in the weeks ahead, as we discover just how many customers really want out-of-hours banking – and how many canine chums will accompany them to the cash counter.

Fiona Walsh writes for the Guardiannewspaper in London