Tuesday, 16 March 2010


I was stunned to read in the weekend press that the BBC is taking 125 staff to cover the World Cup in South Africa in June. This is 5 times the number in Fabio Capello's squad and they're actually trying to win the tournament not just film it! Now I realise the BBC is not reknowned for being frugal but surely even by it's own standards of ostentation this is over the top. The BBC has a source of funding (the licence fee) which is a throwback to the early days of TV where a distinctive public-service channel was pioneering , but in a 21st century media where customer choice prevails it is bizarre that a tax (the licence fee) is paid automatically to the BBC while other channels must seek competitive sources of funding.(eg. subscriptions or advertising revenue).
Having read the article I started to think about sources of funding in our business and our reliance on savers.We see this as a real strength because it means that we fund our mortgages solely from money we attract from savers rather than money we borrow on the wholesale market.This enables us to plan better and to minimise our exposure to external risks. However the way that savers do business with us as a building society hasn't changed in decades. Passbook accounts and fixed term bonds remain very popular because they are simple and tangible, but I can't help but admit that some aspects of our savings offering merit updating. I am not contemplating current accounts or ATM- based banking as that's not where we choose to do business but I do believe that a 21st century mutual has to be alert to the needs and behaviours of emerging markets in our core areas of savings and mortgages. It seems to me that for instance a first time buyer loan linked to a web-based savings plan is a progressive way to attract retail funding in an era of customer choice,but we would want to retain the beneficial characteristics of our passbook acounts,namely simplicity and transparency. Watch this space!

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