Guest blog: The modern mutual challenge

Guest article by Debbie Crosbie, Chief Executive, Nationwide Building Society

Debbie CrosbieBy Debbie Crosbie, Chief Executive, Nationwide Building Society. 

This article was first published in the summer edition of Society Matters

In a world that's changing as quickly as social media posts and influenced as much by AI as it is by world leaders, many of us are wondering about the role of a mutual in the modern world.

At the Building Societies Conference I spoke about how the values of mutuality are more relevant than ever, but that we needed to modernise if we were to continue to serve a strong social purpose. Without change, our long-term survival is not assured.

The challenge facing the modern mutual is to look beyond the daily headlines to the fundamental change needed if we are to have the scale of impact today that we did when our movement started.

For me it’s refreshing to lead a mutual where social purpose is as important as business performance. Where you can invest in branches because you know their value and worry less about their cost. And where your people are just as passionate about their communities and customers as they are about their careers.

However, it’s no longer enough to simply look better than a bank. Mutuals need to do more than just deliver a change from banking. They need to inspire a change to banking. Banking can, and should, be fairer. As mutuals we should hold a mirror up to the banks to secure change for society.

The case for change

For many, life has never been so volatile or uncertain and society is more divided than ever. 42% of workers on the lowest incomes are trying to cut back a lot on spending, compared to 18% of those with the highest incomes  and while the top 20% of earners account for 37% of all disposable income, 62% of households with the lowest earners were going without essentials including meals, showers and adequate clothing.

While government and all of business has a responsibility to address inequality and exclusion, for building  societies there’s also an opportunity to resonate again in the way we did when our movement first formed.

More than half of consumers are attracted, after price and quality, to companies that put purpose before profit  and more than three quarters of us buy from brands that align with our values. Research that Nationwide is carrying out shows that 53% of people agreed that mutuals are good for the economy.

So, how do we capitalise on this connection?

First and foremost, building societies need to remain purpose driven. At Nationwide we’ve just concluded a  process to define our purpose, strategic drivers and behaviours and I know many other societies have done the  same.

While many businesses, including banks, believe they are purpose driven, they’re ultimately shareholder controlled. And the shareholder’s ultimate interest is the value of the shares they hold.

Beyond purpose we need to create a recognisable day-to-day building society experience to demonstrate that we are working more effectively for our customers and delivering a better experience than the banks can.

A key part of this must be brilliant customer experience and maintaining a physical presence where people live, work and do their shopping. A mutual has to serve all of its customers and branches will always be part of that.

And to build on these differentiators we need to be bold in rewarding customers in ways that the banks can’t or won’t. At the moment, this is mostly through better rates and incentives for members. Now we need to explore other ways to make membership truly meaningful.

This is why we launched the Nationwide Fairer Share payment and Fairer Share Bond. The payment will reward  members with the deepest relationships with a share of £340 million in addition to the £1 billion plus that Nationwide returned to customers over the last year through better rates and incentives.

Members who hold both a qualifying current account and a qualifying savings or mortgages product should have received a £100 one off Nationwide Fairer Share payment. All members were also able to access a two year fixed rate bond offering 4.75% interest.

The Nationwide Fairer Share is a tangible benefit of membership more akin to those that shareholders are familiar with, and we hope as many members as possible become eligible for the reward in future years. We intend to make the payment annually, provided it would not be detrimental to the Society’s financial strength.

Championing the modern mutual

To be modern, mutuals will need to stay true to their roots and core values, while also adapting with the times and learning what we can from others, including banks. The question for our sector is how to do that at pace, with passion, and with purpose.

My career has been in high street banking, but I’m now delighted to be part of the building society movement. I intend to be one of the loudest cheerleaders for mutuality, after all there’s little as powerful as the passion of a convert. I look forward to working with you all on our modern mutual journey.

Next steps:

Find out more about Nationwide’s Fairer Share at www.nationwide.co.uk/about-us/fairer-share