Building societies

A future fair for all

With building society mergers making headlines does the traditional regional building society have a future?

by

David Webster,

chief

executive, The Hanley Economic & BSA Chair

This year the city of Stoke-on-Trent

is celebrating the centenary of the federation of its six towns which created the city in March 1910. As a contemporary city, Stoke is in the early stages of transformational regeneration of its infrastructure and its image. In many ways the challenges faced by the city of Stoke-on-Trent in remoulding itself to be fit for purpose in the future mirror the challenges of your local mutual building society. In my eight years at The Hanley our goal has been to winningly combine the virtues and values of a traditional locally-based mutual with the zest and vigour of a contemporary customer- focused business. Along the way we have tried to puncture the clichéd image of a small building society as some sort of relic of a sepia-tinted era, captured in Hovis adverts and quaintly remembered, but rarely taken seriously in the age of Google, Apple and Tesco.

Relevance

Warren Buffet once remarked that “if you think change is tough, wait till you try irrelevance”.

Remaining highly relevant to our mutual members and to potential new customers, has been a critical factor in The Hanley’s success over the past few years. Of course events since Autumn 2008, where the global banking markets stared over a precipice, have reminded many of our customers, commentators and industry practitioners that being a “traditional” building society has a lot to commend it. In an era where customer

36 mortgAge introducer MAY 2010

trust is the most elusive commodity in financial services, delivering reliable but flexible service on a range of transparent but competitively-priced products, seems a very favourable proposition. Curiously our ability to stick to what

we are good at is now a prized virtue, but it is also true that we cannot allow ourselves to become a best-kept secret. We have to search for new opportunities amidst the new order in our core markets so that our relevance is strengthened.

MaRgin coMpRession

Clearly the current low-interest rate environment presents all lenders, including building societies, with challenges centred on margin compression. However, a small mutual building society can still carve a niche in the mortgage market based on our ability to consistently rely on and utilise our flow of retail funds – The Hanley is 95% retail-funded – and on the speed we can react to customer and introducer requirements. Tailoring our service to the needs of our customers is nothing new to us, but at a time when mortgage commoditisation was the norm and headline price the key determinant of a buying decision, then perhaps the virtue of being able to speak to a knowledgeable and helpful mortgage underwriter may have been undervalued. These days having a mortgage helpline where a customer or a broker can chat to the same person each time they call, get a quick answer to the inevitable nuances of a specific case and leave the conversation feeling that they are important to our business, can be seen as a service-delivery edge that many big lenders simply can’t match.

Of course, our product range has

to be competitively priced, but small building societies are no strangers to ‘best buy’ tables, nor do we want to exaggerate the importance of our “warm and friendly” franchise. We have a contemporary approach to the acquisition of new lending but we never forget that we are primarily a relationship business rather than a transaction- based business. Relationships with intermediaries are critical to us, simply because every single new mortgage matters to us as much as it does to the intermediary; and that makes us nurse through new applications to satisfactory completion in the hope that the borrower becomes an advocate of the society and so too the intermediary. Vast slices of marketing budget are spent by UK banks persuading the public that expertise, friendliness and customer-care are part of the banks’ DNA. In common with so much of our personal experience in the modern retail marketplace the reality rarely matches the marketing spin, but I genuinely believe that building societies can more legitimately stake a claim to have much stronger traces of those customer- focused attributes in our DNA. Rather like the City of Stoke-on-Trent in its 100th year, all regional building societies including The Hanley should aim to adopt a forward-thinking regenerative and optimistic view of our future, but we also want to retain and make maximum use of the inherent strengths we’ve had for a long time and which in 2010 are difficult to mimic and costly to fabricate.

The mutual sector undoubtedly has a bright future; however it must remain true to its core values and be prepared to mould the business to today’s challenges with innovation and a positive attitude towards change. Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48