The first day of the BSA virtual Conference focussed on 'Returning to growth' with keynote speeches from John Glen MP and Economist Linda Yueh, a panel session on overcoming housing and mortgage market challenges after the pandemic and finally a session on strengthening member relationships in 2021. Highlights of these sessions are below.
Working to build back better
John Glen MP, Economic Secretary, HM Treasury
John Glen MP, highlighted a number of examples of creativity during Covid: the Bath setting up a cash delivery service, a lifeline for vulnerable customers; the Monmouthshire phoning isolated members; the Leeds suspending arrears fees until December 2021 and Principality staff celebrating a lonely customer's 70th birthday.
He also spoke about the Government's vision for a more open, more technologically advanced and greener financial services system and the role the sector can play in helping create a new age of responsible capitalism. He was strongly supportive of the Bank’s work programme on strong and simple and managing risk and capital as being some of the key areas for focus.
The Minister said that the issue of mortgage prisoners was one of the most challenging areas to grapple with and that he was committed to finding solutions for these people. He called on the sector to help struggling people and welcomed the West Brom’s work in this area.
The Minister congratulated the sector on the 40% of senior management that is female - 8% higher than the average in financial services – and highlighted that board diversity brings a range of advantages with it.
He spoke on how to decarbonise housing and the need to incentivise owner-occupiers, whilst also tackling fuel poverty. He also touched on the corporation tax surcharge and said that the sector would be consulted as it was reviewed over the summer.
How can we overcome the housing and mortgage market challenges as we emerge from the pandemic?
Sarah Howe, Chief Executive, Harpenden BS; Robert Sinclair, Chief Executive, AMI and AFB, Kate Faulkner, Property Market Analyst & Commentator & Managing Director, Propertychecklists.co.uk; Daniel Broadhurst, Regional Vice President of Sales, nCino EMEA
In today’s session the panelists considered what lenders, brokers and technology can do to support borrowers as we rebuild from the pandemic. Whilst recognising the many government interventions which have supported the homeowners in financial difficulty and created buoyancy in the home mover market, it was clear that longer-term solutions to a number of challenges are required.
The panelists discussed the need for more creativity to help support first-time buyers get their foot on the property ladder, the need to increase demand for new homes and whether lenders should be doing more when lending to lenders to eradicate rental properties considered unsafe.
Ideas from our panelists spanned a privately funded Help-to-Buy scheme; a challenge on whether deposits are outdated and could be replaced with some form of insurance; a review of a 3% stress test which is no longer fit for purpose; the need for homes for older people to free up family homes and the use of Open Banking to streamline mortgage processing.
What was clear from today’s discussion is that there are many examples of the mortgage market emerging well from the Covid-19 pandemic, but just as in any other time in our history there continue to be opportunities and challenges that the whole industry could and should be considering.
The UK's economic outlook: growth prospects in a changed world
Linda Yueh, Economist, Writer and Broadcaster
Now is the time for a great re-set for the UK economy, according to economist Linda Yueh.
Drawing on her study of the great economists, Linda looked at how the UK economy might emerge from the Covid pandemic.
In coming months we are going to see some eye-catching figures for growth rates, but what matters is when the economy recovers to its 2019 level of output. This will depend greatly on the extent to which people have left the labour market, and how quickly they can return to work.
The outlook for inflation remains uncertain due to the path for the labour market and the potential for new variants of the virus. But increases in inflation are not expected to be sustained, and central banks are expected to “look through” price increases caused by higher global commodity prices or energy price changes.
As a result, Central Bank interest rates are expected to remain low until economies are on a sounder footing, having recovered lost output from the pandemic and near to full employment, when wages will then start to rise.
Linda suggested various opportunities for the future. Firstly, public sector investment could boost growth and employment, especially investment in green projects. By doing so, debt to GDP ratios could start to stabilise.
There are also opportunities to boost productivity by capturing some of the benefits of structural changes in lockdown – working from home being a key example. This requires investing in infrastructure, supporting employers to change ways of working and up-skilling workers where required.
There was also an opportunity for the UK to build on its history as a major exporter of services, to expand this to the growing middle class across the world.
Having underinvested for many years, Linda stressed there is a huge potential to grow out of where we are now. The UK can reorientate to faster growth, which is more equal and greener. Now is the time for a great reset.
Reinventing the 'member first' philosophy for the Next Normal: Strategies for retaining trust and strengthening member relationships in 2021
Carole Layzell, Customer Transformation Senior Director - Banking, Salesforce; David Marlow, Chief Executive, Nottingham Building Society
Carole Layzell identified the new normal that the sector was in following Covid-19 and the rise in younger members joining the sector.
David Marlow, Chief Executive at the Nottingham Building Society, said that demand from younger members was increasing and that societies need to be ready today as digital expectations have increased enormously. A number of trends were identified; savers are getting younger "at long last"; younger savers have a different financial view of the world; the emergence of the FIRE* generation; and the membership growth amongst the younger demographic. The Nottingham has been reviewing points of friction and highlighted that understanding customers is vital. Helping younger members to be homebuyer ready means extending the digital journey and personalising it, ensuring it’s frictionless, tailored to individuals and create savings goals.
David also identified that Purpose is key to younger members and that there is a window of opportunity opening up for mutuals. ESG is vital. Community based and clear purpose are almost as important as price for younger demographic when choosing a business. This year was the first time he’s had thank you emails from members after the AGM. Both digital and branches have a role to play for members, but digital is becoming increasingly important. Excelling in both is key.
*Financial Independence, Retire Early
Day 2 begins tomorrow at 9.30am with a welcome from Mike Regnier, BSA Chair and CEO of Yorkshire BS, followed by a keynote session with Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive of the Prudential Regulation Authority, Bank of England. The full programme can be found here. We look forward to you joining us then!
Thanks to our headline sponsors DXC Technology and Temenos; nCino; Salesforce and Target Group and our other sponsors Sopra Banking; TCS BaNCS and all of our exhibitors.