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Roots and branches

Building societies’ place on the high street has been established for over 100 years. But how do organisations with their roots in the Victorian era, adapt to the ever-changing needs of their consumers, whilst retaining the traditional values that set them aside from their competitors in the first place? 

The BSA spoke to a cross-section of building society Chief Executives to find out.

 


Monmouthshire Building Society 
Andrew Lewis | Chief Executive 



Can you sum up the building society USP in a couple of sentences?

Monmouthshire Building Society’s uniqueness lies in its focus on personable, face-to-face business practices, with branches and agencies in the heart of town centres and local communities across South Wales and the West. We strive to treat all customers fairly, balancing the interests of investing and borrowing customers as equitably as possible within the framework of market forces. 

We listen to our customers and ensure that, in a fast changing world, our products and services continue to match their requirements. We recognise, also, the benefits of actively supporting the local communities in which we operate, and back this up with a Charitable Foundation and a whole host of ongoing community sponsorship programmes. 

This simple, unique model of using savings funds to help first time buyers and other home movers on to the property ladder is as necessary today as it was some 146 years ago when our Newport-based building society first came into being.

Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations? 

Firstly, I would stress that the strength of building societies is tied up in their history. Building societies in general weathered the economic crisis extremely well thanks to their solid foundations and their relatively ‘simple’ business model. This business model, which involves face-to-face transactions in our extensive branch and agency network, and friendly mortgage advisers who offer a good ‘old-fashioned’ personable experience, underpins the savings accounts and mortgage products offered, ensuring we can weather any storm. That’s not to say that we don’t need to move with the times and appeal to younger generations though, which is why our savings accounts can be opened and operated online, and why we’ve launched Twitter and Facebook feeds to communicate with our customers how and when they want. It’s this mix of the tried and tested with the best and most secure innovations that really sets building societies apart and why I’m so passionate about the mutual model as an essential component of the wider financial industry.
 


Tipton & Coseley Building Society
Richard Newton | Chief Executive 





If you could request one thing of the new Government what would it be?

Require regulators to clearly demonstrate a proportionate approach when finalising rules. What might be appropriate for a large bank is not always appropriate or proportionate for a local building society.
Can you sum up the building society USP in a couple of sentences?

We strive to offer long term value for our members and are not driven by the need to satisfy equity shareholders in the short term. We do not credit score mortgage applications preferring a more flexible and personal approach by assessing each application on an individual basis. We are committed to our local community and believe that high levels of personal customer service do make a difference and set us apart from the big banks.
 


Teachers Building Society
James Bawa | Chief Executive





Can you sum up the building society USP in a couple of sentences? 

Building Societies can offer a much more personal service than larger financial institutions. It’s much more about the community; serving and supporting the local community and putting customers at the centre of everything they do. As a mutual, building societies don’t have shareholders to keep happy, so it becomes less about profits, and more about making sure the members are happy and the local community is supported. At Teachers for example we have developed a range of specialist products for teachers - to cater for their individual needs and support them whatever stage of life they are in.


We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead? 

It’s currently a competitive market for a small mutual, rates are low and it can be tricky to compete with the giants on the rates which can be a real challenge. However, there are always opportunities to help people get on the property ladder –especially the underserved - those who the big banks can’t help, but that building societies may be able to - because they look at their individual circumstances and needs and don’t just type the information into a computer to come up with a decision. 

Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations? 

The model that building societies operate on is traditional, but this can be seen as a strength as it means that they continue to be run on more of a personal level. That being said, it’s important to make sure that we stay up-to-date with technology and consumer behaviour. We need to move with the times, but keep our heart with the traditional people-focus.

If you could request one thing of the new Government what would it be? 

The provision of housing is key, especially affordable and social housing. This has to be a primary concern. It’s great to introduce new schemes to help people buy their own home, and we support them, but ensure that there is enough housing stock to sustain the housing market and meet demand into the future.
 


Principality Building Society
Graeme Yorston | Chief Executive



Can you sum up the building society USP in a couple of sentences?

I would say that Principality’s ability to take long-term decisions to plan for the future and invest in the business rather than maximise profits would be one of our unique selling points. Our strong customer service and ability to make people feel at home would also be something that I think our employees do unlike any other organisation.

We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

The main challenge for us over the next year is the highly competitive mortgage market, which is driving down prices. This clearly presents challenges on our margins and therefore our funding model, which is largely based on our savers.

For me, the main opportunity is the investment in our business in areas such as distribution and technology. This will allow us to grow further and help us to try and meet our Members’ needs both now and in the future. 

Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations? 

I understand how people may come to that conclusion but if you look at the full product range that building societies have to offer I think we can equally appeal to younger generations with our products.
We do however, recognise the need to continue to make our business relevant for different generations and hence the need to continue to invest in areas such as products and services as well as technology that appeals to younger generations.

If you could request one thing of the new Government what would it be?

As the CEO of a building society I have two main parts to my balance sheet; my savers and my borrowers, so I would need to ask for two things. On the mortgage side, I believe in efficient market models of which the housing market is one. Short-term initiatives are not necessarily good for markets and so sustainable actions are key.

On the savings side, I think that continuing to support and encourage a savings culture in the UK will be essential to the long-term prosperity of the country. 

 


Nationwide Building Society
Graham Beale | Chief Executive




Can you sum up the building society USP in a couple of sentences?

As mutual organisations, building societies are owned by and exist to serve our members.  Without shareholders, this leaves us free to focus purely on doing the right thing for our customers. 


We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

We mustn’t be complacent.  Competition remains fierce across the board, from the big banks to new entrants, and consumers’ demands are evolving rapidly.  We have to respond to this, particularly through continuing to integrate effectively our branch and digital channels and through building scale in the current account market to deepen our customer relationships.  Of course, this is not just a 12 month-long task and these trends have been clear for some time.  As a sector, the closeness to our members is one of our greatest strengths and we must use this to ensure we remain well-placed to continue to offer them excellent value and service, however they want to engage with us.    

Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations?

Some of the most pioneering thinking and action is taking place in building societies.  For instance, to create a truly digital Society, our NationwideNow service connects customers to expert advice via a high definition video link.  We’re spearheading wearable technology; we launched the UK’s first smartwatch banking app last year.  Importantly, these innovations are valuable to our members of all ages in accessing our products and advice. 

For younger customers specifically, last year we launched FlexOne, a current account designed for the youth market.  The take-up has been tremendous, illustrating that young customers also appreciate the values of mutuality. 

If you could request one thing of the new Government what would it be?

I would encourage the new Conservative Government to continue to support diversity in the financial services sector.  They should require regulators to consider the effect on non-plcs at an early stage of any new initiative and ensure that there is no disproportionate impact. 



Hinckley & Rugby Building Society
Chris White | Chief Executive




Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations?

Building societies, with their USP of mutuality, are as relevant and required today as they have ever been. We blend modernity in our products with tradition in our service levels. 

To appeal to the younger generations we need to communicate with them and operate in ways that they want us to. That means increasingly online as well as in person. And it means reaching them through social media and by showing the world that our organisations are populated by young people, whose career development we nurture and celebrate. We also reach out into schools, through volunteering and financial education. 

Young people are our future savers and borrowers, and our products need to be designed with that in mind. So mortgages achievable for first time buyers are crucial, as are savings products that work with the evolving nature of young people’s work and home lives.

If you could request one thing of the new Governmentwhat would it be?

I would ask the new Government to make sure that more houses are built to ensure that supply more closely matches demand – if not, simple economics will mean that house prices will continue to rise, benefiting past generations at the expense of new generations.



Hanley Economic Building Society
David Webster | Chief Executive



 

Can you sum up the building society USP in a couple of sentences? 

Our USP centres on the calibre of our people. Specifically, the way they all care about delivering outstanding service to our members. The banks talk a lot about being “customer focused” but we just get on with making our members feel important, by treating them as individuals, by demonstrating that we can be trusted to look after their savings and by ensuring we provide professional, tailored mortgage advice.

We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

Challenges

Coping with the blizzard of regulatory changes in the post-recession era is a key challenge, as is the emergence of challengers seeking to mould themselves as a “brand you can trust” .However, we are nimble and resilient enough to contend with such challenges, as evidenced by the recent financial results across the sector and the strengthening of our local franchise, just as long as we balance the need to innovate with the desire to adhere to regulation. 

Opportunities

Combining the roots and traditions of a 160 year old mutual with the zest and relevance of a contemporary business is at the heart of our strategy. The last few years have reminded financial services customers that a high media-profile and a range of marketing gimmicks to acquire younger customers won’t cut it, unless there is substance behind the bluster. We prefer to rely on the potency of our service and the competitiveness of our products, alongside the reputational enhancement we can gain from standing out from a crowd by being a firm that is easy to do business with. 

If you could request one thing of the new Government what would it be?

I would like our new government to commit to a robust, coherent, long term strategy on the supply of housing in the UK.



Yorkshire Building Society
Chris Pilling | Chief Executive




Can you sum up the building society USP in a couple of sentences?

Owned by our customers so we only think of them

We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

Challenges

Regulation that doesn't balance for diversity.

Opportunities

We're not like banks, so can focus on our members better if we embrace change and move fast.

Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations?

We could be the oldest challenger FS businesses in our communities....but we must adapt fast

If you could request one thing of the new Government what would it be?

Diversity needs actions more than words - level the playing field. 



Ipswich Building Society
Paul Winter | Chief Executive



Can you sum up the building society USP in a couple of sentences?

A Building Society’s only focus is to provide value to its members and as such it doesn’t have to worry about the competing priorities of customers and shareholders. In addition most Societies were formed to address specific social needs. That history enables them to take a very different view of their purpose from one which is totally focussed on profit maximisation. 


We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

The lending environment is becoming increasingly competitive with many lenders using rate to acquire business. It cannot be denied competition is high at a point where mortgage volumes seem to have softened. However, our focus is on meeting the needs of mortgage misfits, those credit worthy borrowers who now find it harder to find a lender who can understand their situation and needs. 
We continue to juggle the various requirements of regulation and the rising costs (both financial and opportunity costs) associated with these.


Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations? 

Old fashioned, no. Traditional, yes but that doesn’t mean we are technology adverse. We were the first building society on Twitter, long before other financial services providers entered this space and with over 3000 followers this is now an important channel for talking with our local community and brand engagement. 18 months ago we launched an App – a game for children to help improve money and maths skills, we have now achieved 6000 downloads. We are now developing our online capability, and if it were not for our major IT project we would have implemented this many years ago. 

Technology needs to enable us to be easy to do business with. If we do that along with personal service and great products we will continue to be attractive to members for many years to come.

If you could request one thing of the new Government what would it be?

Ensure that all new and current regulation takes account of both the size of firms and also the unique nature of mutuals. So much regulation ignores the impact on smaller firms and assumes that there is no difference between mutual and plc businesses. Whilst all parties say the right things no one really turns it into action



Nottingham Building Society
David Marlow | Chief Executive

 

Can you sum up the building society USP in a couple of sentences?

We have a unique once in a century opportunity, following the fallout from the financial crisis to demonstrate what good looks like in terms of running a financial services business. Our distinct USP is that we are owned by our members and run our Society’s in the best interests of our past, present and future members – our ownership model is what sets us apart and ensures we are driven by the needs of our members not to provide a return for capital holders.

We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

The last two years have been almost ideal market conditions for our sector; following 5 of the hardest years we have ever had. Our key challenge for the next 2 years will be continuing to thrive in more normal market conditions, where funding prices are set by the market, not a reference point to state provided subsidised funding, which we have seen in recent times.

If you could request one thing of the new Government what would it be?

Do all you can to stimulate a massive increase in private sector house building – we need at least 300,000 new homes every year for the duration of this parliament – Building Societies can play their full part in supporting this.



The Melton Building Society
Martin Reason | Chief Executive




Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations?

I can understand why "old fashioned" would be used as a descriptor for some Building Societies and we certainly want to retain consumer perception that we are committed to maintaining traditional values and a personal level of service.

The challenge we face is combining a traditional service ethos with modern thinking and contemporary ways of doing business. At the Melton this means investing in moderns systems but also in modern training techniques which emphasise the value of personal service but also demonstrate that great consumer outcomes can be delivered using digital technologies alongside the human touch. This approach will naturally appeal to younger generations but we also have to work hard to demonstrate that we are relevant to them - we can do this by demonstrating the value of adopting a savings habit early in life (with innovative young saver solutions) and also by rewarding loyal savers through better deals when they come to buy their first home.

In many ways, this idea has been picked up by politicians with their recent introduction of the Help to Buy ISA scheme.



Bath Building Society
Dick Jenkins | Chief Executive



 

Can you sum up the building society USP in a couple of sentences?

Although commercially run, we are not here to maximise this year's profits for shareholders and the city. This means we're not here for the quick buck, like so many large banks have been. We don't imagine selling our Societies with any "exit plan". We're here for the long run. We think longer term and in doing so strive for a different, longer term relationship with our customers than other Financial Services providers

We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

Mortgage sales volumes in the context of fierce and predatory competition, getting the word out to people that we are a genuinely different type of financial services organisation  with distinct values and a managing a huge raft of regulation.

Attentive service and behaving with integrity are timeless. Older people expect these qualities, younger people seem to find them unexpectedly refreshing.

If you could request one thing of the new Government what would it be?

Keep the economy on the straight and narrow, stay in Europe but fight to bring it back to a common market and not "ever closer union", stop trying to bash the Financial Services sector with mountains of regulation which doesn't really solve problems. Start to address the appalling lack of provision of suitable retirement homes and care. Tax breaks for all forms of Country and Western music!


Capital Credit Union
Marlene Shiels | Chief Executive

Can you sum up the credit union USP in a couple of sentences?

Credit Unions are pretty unique on the FS landscape in the UK. Despite having some products and services similar to banks and building societies (and many of the principles of co-ops), credit unions adhere to a set of 9 international operating standards which puts our members at the heart of everything we do and every decision taken by the Board of Directors. 

What are your challenges and opportunities for the year ahead?


The biggest challenge facing credit unions, particularly the larger ones, is increased regulation. Credit Unions are still relatively unknown on the high street, and it will be a while before this changes. However, as it should be, we are firmly on the radar of both regulators and compliance is fast becoming the growth area in credit unions at an operational level. 

Some people describe building societies/credit unions as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations? 

As the “new kids” Credit Unions have an opportunity to develop products, services and infrastructure in a way that meets the needs of the younger generation. Indeed many credit unions have significant numbers of junior members and if we don’t work hard to keep our juniors who become young adults and meet their needs we could become irrelevant. 

If you could request one thing of the new Government what would it be?

Give credit unions and building societies the ability to compete in an open market, but also recognise our difference to banks and treat us proportionately.



Cambridge Building Society
Stephen Mitcham | Chief Executive




Can you sum up the building society USP in a couple of sentences?

Driven by the guiding principle that long term sustainability is more important than short term gain

A genuine, cultural commitment to putting customers’ needs to the forefront of the decision making process 

We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

Challenges
  • Attracting and retaining the required calibre of people in a highly competitive job market 
  • Capital planning when the future level of required capital is difficult to accurately forecast
  • Managing a reducing interest margin due to a highly competitive mortgage market at a time that societies cost base is increasing due to the increasing focus on regulatory compliance 

Opportunities
  • Continue to see that customers value face to face advice, especially when selecting a mortgage
  • Increasingly customers are making choices where they balance price and the desire for a high level of customer service from an organisation they trust
  • Simplify and speed up basic transactions with the use of technology to make more staff time available to talk to customers about their financial needs

Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations? 

We are old fashioned in that we have old fashioned values re being trusted organisations that treat their customers fairly and remember that we have a responsibility to the communities within which we operate. BUT that does not mean we are old fashioned in how we deliver to these values. Building societies have thrived over the last 160 + years by maintaining relevance to current and future members. Great examples are how much we and other societies are using social media to highlight that we truly live to our core values and as such are a true alternative to the banks. 

If you could request one thing of the new Government what would it be?

Be careful that your commitment to deliver consumer choice and alternative business models in the financial service sector is not undermined by the overzealous and inflexible interpretation of regulation such that you end up with a small homogenous 



Leeds Building Society
Peter Hill | Chief Executive





Can you sum up the building society USP in a couple of sentences?

We support the aspirations of a wide range of borrowers and savers, in particular those who are not well-served by the wider market, by providing a safe place for savers to put their money and help people to buy the homes they want.

We have seen a strong set of building society results this year across the board. What are your challenges and opportunities for the year ahead?

To continue to work hard to provide competitive returns to our savers in this historically low interest rate environment.

The mortgage market looks set to remain broadly the same size as in 2014 and we need to continue to innovate to deliver our growth aspirations.

Some people describe building societies as 'old-fashioned' or 'behind the times'. What would you say to them? How do you appeal to younger generations? 

We still do what we’ve been doing successfully for 140 years, which means our business model has stood the test of time.

In 1875, it was a pretty radical idea for working people to band together and empower themselves to take control of their finances to be able to shape their own futures – that desire is exactly the same now.
What is changing is technology, at an ever-increasing rate, and our members tell us we need to respond.
We have developed our brand proposition, following extensive member research, to a more contemporary image and plan further improvements to our digital proposition to make it easier for members to access the information and services they want, as and when they need them.

If you could request one thing of the new Government what would it be?

We need cross-party support for long-term and sustainable measures to tackle the housing shortage and increase the supply of new homes in line with current demand and future demographic changes.
 

This feature originally appeared in the summer edition of Society Matters. Take a look here.

Posted by Katie Wise on 23 June 2015