The travails of Metro Bank and its need to raise more finance have reinforced my conviction not to invest in bank shares. In theory there is a gap in the market for a bank that can provide a good local service through a branch network when the major UK banks are closing branches as fast as they can (there is not a single bank left in Chislehurst where I live when there used to be several only a few years ago). My sole brief contact with Metro Bank did not convince me they were a good alternative.
Esther Rantzen had an article published in the Daily Telegraph headlined “I’m furious with Barclays – I’m leaving after 70 years” which spells out the common gripes. It included the comment: “Barclays, for example, is paying a rate of just 1.6pc on its “Everyday Saver account”, while charging mortgage customers rates ranging from 5pc to more than 7pc. Certainly Barclays and other major UK retail banks seem not to care less about retaining long-standing customers by offering competitive savings rates. If you have a “no-notice” savings account there are now much better alternatives.
It’s surely a mistake in marketing terms to close bank branches. A customer visiting a branch is a great opportunity to sell them something new and to build a personal relationship. Post offices and pharmacies know the benefit of a steady stream of old and new customers walking through their doors every day so why have banks not developed services to do the same?
Following other traders
There was an interesting article in the FT today headlined “Copy trading: a road to riches or risk?”. Apparently some share trading platforms now enable you to follow other popular traders and replicate their trades. This is a service for those who don’t want to think about their own trades but just want to follow some guru. Or likely just follow the herd.
When I first started investing in the stock market I thought following others was a sure recipe for success. But as the article points out you are just as likely to be following others mistakes and prejudices. To make money you have to be somewhat contrarian.
I suggest such services need regulation because they encourage herd behaviour which can suck the inexperienced into trading manias rather than investing based on fundamentals.
Roger Lawson (Twitter https://twitter.com/RogerWLawson )
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