Building Societies Conference round-up: Day 2, Part 2

The final in the series of blogs from this year's conference continues with sessions from day 2, including green finance and climate change post COP 26; the UK housing market post-Covid; the power of purposeful business; cybersecurity, and many more.  A thought-provoking end to our time in Liverpool!

The final in the series of blogs from this year's conference continues with sessions from day 2, including green finance and climate change post COP 26; the UK housing market post-Covid; the power of purposeful business; cybersecurity, and many more.  A thought-provoking end to our time in Liverpool!

Green Finance and Climate Change post-COP 26

Colin Fyfe, Chief Executive Officer, Hinckley and Rugby Building Society; Alison Vipond, Sustainability Policy and Innovation Lead, Ecology Building Society; Andrew Sutton, Co-Founder & Chief Innovation Officer, Sero; Graeme McRitchie, Head of Prudential and Enterprise Risk, Risk Division, Leeds Building Society

Following on from Sarah Breeden's session on Day 1, our panel provided an informative session on practical steps lenders can take to promote green finance following COP-26. Colin Fyfe, CEO of Hinckley and Rugby Building Society and Chair of the BSA Green Finance Taskforce introduced the topic by talking about the need to ensure that customers are informed about the different types of energy efficiency improvements possible. One way Hinckley and Rugby has sought to do this is by setting up a demo home in the town for customers to inspect and learn. Colin also talked through projects the BSA and individual lenders have been involved in since the Green Finance Institute launched the Coalition for the Energy Efficiency of Buildings, particularly the eight societies with mortgage products aligned to their Green Home Finance Principles.

Alison Vipond, Sustainability and Innovation Lead at Ecology Building Society spoke about the need to have a clear purpose for the organisation and understanding where one can make the biggest difference. Despite being grounded in sustainability since its formation in 1981 the Ecology are still on a learning journey and embracing new initiatives such as the Partnership for Carbon Accounting Financials and UNEP FI Principles on Responsible Banking. Alison encouraged delegates to research these initiatives and consider joining as a way to engage people, members and networks.

The conversation then moved onto measuring climate risk within lenders. Graeme McRitchie, Head of Prudential and Enterprise Risk at Leeds Building Society discussed the programme of work to implement the PRA's SS3/19 supervisory statement on managing climate financial risk. While the supervisory framework came into force at the start of the year, work is ongoing to embed capabilities across the business. Graeme also stressed the power of disclosure in line with initiatives such as TCFD and the need to be comfortable with explaining any limitations.

Finally Andy Sutton from Sero, a net zero builder who have worked with a number of societies, spoke about focussing on measuring carbon emissions rather than energy usage and pointed towards a need to reform Energy Performance Certificates. Andy also spoke about organisations needing to pull in the same direction to decarbonise housing in prompt but not panicked timescales. Achieving the net zero target will be the least painful pathway as other options will lead to more disorderly transitions.

A great session full of useful takeaways for delegates.

For more information:

Hinckley and Rugby Building Society
Ecology Building Society
Leeds Building Society

The UK housing market post-Covid

Andrew Wishart, Senior Property Economist, Capital Economics

Andrew began the session with an economic overview, focusing on the challenge of inflation - currently at a 30 year high of 7% and the challenge the Bank faces to manage this.  He predicted that inflation will likely reach 10% by the end of the year. Strong wage growth and high prices for goods can make high inflation more persistent.  Andrew also informed delegates that real household disposable income is expected to drop 3.3% this year, the biggest drop since data began in 1955.

Andrew explained that when the unemployment rate is low, households usually spend more of their income and save less, therefore household savings rates are predicted to drop quite sharply.  One relative bright spot is that the jobs market is extremely tight - demand for labour is outstripping available workers.  There is a clear relationship between this and pay growth, which has risen and is likely to rise further still. From a Bank of England perspective this is another risk to manage.

Andrew went on to say that he thinks it is likely the MPC will need to raise the Bank Rate by more than forecasters expect and that we should expect to see further 25bp rises at each meeting this year and possibly into 2023.

Has the housing market already lost some momentum?

Andrew believes that the housing market will cool down but by nothing quite as dramatic as in 2008.  House price inflation is running at double figures and is the strongest it’s been at any point in the pandemic and continued adjustment from WFH is likely to continue driving demand.

Transactions were still rising in March 2022 and limited stock means this is likely to continue to push up prices. There are however signs that demand is beginning to wane – two major headwinds, rising rates and costs of living crisis, both of which are going to get worse before getting better.

If predictions on rates are correct, Andrew expects to see house prices fall 3% in 2023 and 1.8% in 2024, dropping by 5% overall. The risk to lenders is not a huge worry however, with a lot less high LTV lending than in 2008 and considerable house price growth in recent years, homeowners have more equity in their homes and therefore more incentive to keep paying their mortgages.

For more information:

Capital Economics

Digital Mutual: Can open banking and open finance transform mortgage lending?
Garry Larner, Chief Commercial Officer, ieDigital (Chair); Harry Weber-Brown, Chief Executive, TISA Digital; Pradeep Raman, Director of Digital, Finova; Karina Hutchins, Head of Mortgages, Open Money; Ben Leonard, Co-Founder, Life Moments

In the second session of the Digital Mutual stream at the Conference, the focus was on Open Banking and how it could start to transform mortgage lending.  

Following on from the previous day’s presentation from Charlotte Crosswell, chair and trustee of the Open Banking Implementation Entity, who revealed that there were now 5.5 million active users of Open Banking, the discussion started looking at why Open Banking in Mortgages had yet to take off as a concept. 

Speakers pointed out that the big market for Open Banking to date has been in SMEs and with Open Banking increasingly not being used as a phrase by merchants, there was also a question whether consumers actually knew that they had used it. 

The panel thought the opportunity with Open Banking was greater personalisation of customer service and that there was an opportunity to leverage the trust consumers have within building societies to better leverage the technology. 

In terms of barriers to adoption, legacy technology, terminology around opening accounts running counter to advice on fraud and low adoption among lenders had all been a factor. But the panel were positive about the next evolution of Open Banking with Open Finance, and the possibilities this could provide.

For more information:

TISA Digital
Open Money
Life Moments

The power of purposeful business

Alex Edmans, Professor of Finance, London Business School & Mercers' School Memorial Professor of Business, Gresham College

Alex Edmans, Professor of Finance at London Business School, spoke about the purpose of business. He shared the story of Vodafone’s M-PESA mobile money service and their Fair Tax Statement. The first was not designed to make a profit, though it later did, and it lifted 200,000 households out of poverty. The second was designed to protect its reputation by stopping protests outside its shops. He asked which created most value for society.

He then defined purpose as: ‘why a company exists, who it serves, its reason for being and the role it plays in the world’ and challenged BSA members to consider what they have at hand – local knowledge, workplace savings, manual underwriting and soft information – to then use this to build social capital. This, in turn, will return to the business in the form of profit and grow the pie, allowing the business to deliver more benefits to all its stakeholders.

For more information:

Alex Edmans

Digital Mutual: Customer experience at the heart of digital transformation
Julian Wells, Director, Whitecap Consulting; Lorraine Breese-Price, Head of Operations, Dudley Building Society; Marlene Shiels OBE, CEO, Capital Credit Union

How customer experience as a concept was helping to shape digital transformation at building societies and credit unions was the main point of discussion for the third session of the Digital Mutual stream on Day 2.

The session was chaired by Julian Wells, director at Whitecap Consulting, with Lorraine Breece-Price, head of operations at Dudley Building Society and Marlene Shiels OBE, CEO of Capital Credit Union, talking through their recent experiences of updating how they engage with their respective members.

Breece-Price talking through the digital services Dudley Building Society has introduced to help members manage their money online and Shiels the development and launch of Capital Credit Union’s mobile app. Both talked through how they identified what processes to digitise, working with technology partners and how digital transformation had impacted their respective organisations from a skills and recruitment point of view.

They also talked about the positive response from new and old members and how they continued to support and engage with customers who still wanted to engage face to face in branch.

For more information:

Whitecap Consulting
Dudley Building Society
Capital Credit Union


Digital Mutual: Board governance and RegData: What needs to happen to improve the quality and reduce the industry burden of reporting?
Brendan Gilmore, Managing Director, BPG Strategy; Sarah Sinclair, Founder and CEO, Change Gap; Angus Moir, Head of Data Collection Transformation, Bank of England; Mark Bowden, Director, Colbalt Beach Ltd

The challenge of reporting was the focus of this panel discussion, chaired by Brendan Gilmore from BPG Strategy. Angus Moir (Head of Data Collection Transformation at the Bank of England) spoke about the challenges of siloed data and of taking a tactical approach, rather than a strategic approach. He also talked about how digitalisation can unlock value for the business and how different systems will interact to improve delivery.

Sarah Sinclair, Founder and CEO, Change Gap, spokes about the lack of standards and differing interpretations of terms. Mark Bowden, Director, Colbalt Beach Ltd, spoke about how large IT projects are controlled by deadlines and cost, rather than usability.

For more information:

BPG Strategy
Change Gap
Bank of England
Colbalt Beach Ltd


Digital Mutual: Cybersecurity landscape review: key threats and how to combat them
Josh Davies, Product Manager, Alert Logic

In one of the final sessions of the Conference, Josh Davies provided delegates with an overview of the current cybersecurity threat landscape and provided some very useful key tips and guidance on how we can all better protect ourselves against cyber-attacks.

Josh mainly focused on threats and potential threats from Russia and China, but interestingly noted that the National Cyber Security Centre (NCSC) is not aware of any current specific threats to UK organisations in relation to the events in and around Ukraine.  He did highlight a number of specific ransomware groups and the efforts the UK and US governments have made to combat them.  The deterioration of relations between the US and Russia will clearly have an effect on the ability to shut such groups down.

In terms of the motivation behind attacks, financial continue to be the strongest driver to breaches.  As Russia’s economy is increasingly impacted, the monetary incentive for attacks becomes greater.

Josh provided some general guidance for all organisations:

  • Reduce the likelihood of a damaging cyber intrusion
  • Take steps to quickly detect a potential intrusion
  • Ensure that the organisation is prepared to respond if an intrusion occurs
  • Maximise the organisation’s resilience to a destructive cyber incident

For more information:

Alert Logic

Once again, a huge thank you to this year’s four Headline Sponsors: DXC TechnologyFinastraMutual Vision and Target Group and Sponsors: BDOieDigitalRSASalesforce and Sopra as well as all the exhibitors without whom the conference could not happen.

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