Metro Bank is one of those relatively new lenders that falls under the ‘challenger’ banner – billed to disrupt the status quo of the mortgage marketplace.
The FTSE 250-listed bank’s director of mortgage distribution, Charles Morley, smiled gleefully while discussing the company’s mortgage division's financial performance.
A glance at the firm’s latest annual results shows there is reason for cheer. Its mortgage book grew to £3.6bn from £2.15bn.
In all, total lending grew 66 per cent to £5.8bn by 31 December 2016 – which the bank attributes to a host of drivers, notably the continued expansion of the company’s residential mortgage offering.
The results indicate that the bank is on course of fulfilling its ambition to become a top-10 lender by 2020.
Whether the bank will meet this objective is largely down to the performance of its intermediary mortgage business as, according to Mr Morley, 80 per cent of the lender’s mortgage business is introduced by intermediaries.
He said: “It is all about allowing the customer to have a choice. If the customer wants to walk through the doors of one of our branches to speak to a mortgage consultant and access one of our products – brilliant. If they choose to go down the intermediary route, that’s equally good.”
Challenging the market
Its proposition for intermediaries was initially restricted to the south east through John Charcol in 2012, but was later rolled out to brokers nationwide from November 2014.
The challenger bank launched its first loans in 2012 in what was a precarious time for the mortgage market, which was still licking its wounds after being savaged during the 2007 to 2008 global financial crisis.
Its late arrival on the scene means the bank is not subject to issues over legacy systems, which have buffeted many longstanding lenders, according to Mr Morley.
He said: “This means we are able to listen to the market, react and implement strategy quickly.
“We have changed our online system on numerous occasions since we launched our site for brokers three years ago." The ability to scan and attach documents, for example, came very early in the process.
Bank and building society branches have disappeared from high streets all over Britain in recent history in response to a shift in consumer behaviour and a surge in the popularity of online and mobile banking.
Metro Bank adopts a contrarian approach and has pledged not only to keep its doors open, but even to increase its branches from 48 to 110 by 2020.
Having physical branches is a boon when it comes to brand awareness – especially for banks in the ‘challenger’ category, according to Mr Morley. He added: “We opened a store in Brighton recently and our intermediary business from the south increased. The customers see the store and then become familiar with the brand.”
The bank, according to Mr Morley, ensures a low-risk loan book by offering "simple" products for mainstream borrowers, while adopting an underwriting process befitting the "customer-centric" label, because every case is considered manually by flesh-and-blood underwriters.
