CHAIRMANS LUNCH

Yesterday I had the pleasure of hosting a lunch for the Chairmen of 10 different societies. One of the benefits of being Chairman of the BSA this year is that I get to meet the leadership of other building societies and hear about the successes and challenges that are occupying boardroom time.I am always struck by the energy and insight that exists across the sector and by the optimism that is expressed about the relevance and importance of mutuality in a diversified marketplace. The chairmen are always keen to know more about what the BSA is doing and how we can demonstrate resilience across the sector, despite the clear fractures in our core markets of savings and mortgages. Yesterday I was particularly struck by the appetite for change amongst the group of chairmen;there was no sense of yearning for a "golden era" of the past but rather a desire to get on and thrive in a new world, whatever that world may look like. I don't know if my words to them were at all motivational, but as a group they certainly motivated me!

THE SOFTER STUFF

This week I spent 2 days in Bournemouth with the Chief Execs of 5 other building societies and 14 of our staff on the final session of our Achievers Academy, which was set up to help develop our own business leaders of the future. Over the past 12 months this group has undertaken a range of tasks and heard from various guest speakers on topics which can be broadly grouped under a leadership-development heading. It's been hugely enjoyable spending time with ambitious and dedicated people, so keen to learn more about how our mutual businesses can continue to thrive .The logic behind the Achievers Academy is that small, local building societies are distinguished by the quality of our people and the service they deliver.
Tomorrow I have the privilege of presenting the prizes to the winning runners in the Potters Arf Marathon which the Hanley is sponsoring this year, for the 3rd consecutive year. Some of our staff will be amongst the 1500 runners and several more will be around the course encouraging all the participants. The logic behind this sponsorship is that we want to demonstrate our commitment to our local community and be associated with such a successful, local event.
I guess, at a time when liquidity, capital , regulation, funding and low mortgage demand are the dominant features of everyday business life, these 2 events could be viewed as softer priorities . But they're really important to the Hanley and to our determination to carve a distinctive niche in an overcrowded financial services marketplace. They're also great fun.

INTEREST RATES ON SAVINGS ACCOUNTS

Following my last blog a member reminded me that " a smiling face still needs to be backed up by competitive rates" and pointed to our ISA rates as being currently adrift of the keenest on the market. I'm always grateful for feedback, even when its not entirely complimentary, and of course this topic is invariably a hot one whenever I speak to members at our Forums or in our branches. The truth is that we are in uncharted waters with a bank base rate of 0.5% and a lending market which is at best lukewarm. This means savings rates are under pressure across all banks and building societies. Of course at any given time a firm can offer a market-leading deal as a hook to attract new savers, sometimes with gimmicky "bonuses" or simply because they need to bring in funds virtually at any cost to remodel their balance sheet. But the Hanley in common with many other building societies chooses to strive for competitive interest rates over the longer term and to retain a true balance in our business so that the society is not jeopardised by paying interest rates that are unsustainable. We keep our savings rates under constant review and we will always strive to deliver the very best we can for our members. We aim to be around for many years to come, unlike some banks which offered eye-catching rates in the recent past and who have since folded.

THE MAGIC KINGDOM

I've just returned from a family holiday in Florida and our first exposure to the whole "Disney experience". We stayed at one of the Disney hotels and spent most of our days at one of the theme parks , and although my personal favourite was a park that Disney doesn't own ( Universal Studios) I was really blown away by the customer service excellence that prevails right across this amazing business. The courtesy, humour, and pride in their business shown by every Disney employee we met really added extra zest to our holiday. Critics may question the sincerity of the service - offering, but I never found it fake at all. On the contrary it made me reflect on how crucial it is for our customers to believe WE trust and believe in our building society, before we ask them to do likewise. A culture of service excellence is still elusive in many UK businesses and thats one reason why building societies have a fantastic opportunity to outshine competitor banks. I wont be asking my branch teams to wear Goofy hats but they'll get plenty encouragement to give every customer a warm welcome, a smiling face and a genuine interest in how we can help them.

THE ART OF ENGAGEMENT

Earlier this week it was my privilege to collect The Hanleys award from Britains Best Companies , an accreditation for our overall comitment to staff engagement in our business. This is our 2nd consecutive year of being given a First Class rating and we are very proud to be amongst this elite.
However the customary photo-opportunity was not set up in the usual venue of a London hotel but was instead held at a special day of experiencing The Art of Engagement at a purpose-built centre in Milton Keynes where myself and 3 colleagues were able to participate in a series of development exercises on the 8 factors of workplace engagement; Leadership, Fair Deal, My Manager, My Company, My Team, Wellbeing, Persoanl Growth, and Giving Something Back. The huge warehouse space was split into zones and each had a focus on the very best practices associated with these key topics.
It was a refreshing start to the working week, and a slightly surreal experience. More crucially for me , the chance to be around other business people from different sectors of the economy is always an opportunity to re-establish my perspective on how The Hanley is doing.Too often we get a bit insular and compare ourselves to other building societies or other financial services firms. We should work hard to bear comparison with great customer-service providers in other markets, as that is how we really want to be judged.
The Art of Engagement declares that " Success is determined by the strength of relationships within your organisation. Quality conversations create quality relationships,and great relationships drive effective organisations that deliver results". Sounds very compelling to me.

FUNDING CHALLENGE

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!

BANKING BANANA SKINS

I was intrigued to read a recent survey by the Centre for the Study of Financial Innovation that "political interference" is regarded by bankers as the No 1 risk facing banking worldwide.The report describes the risk outlook for the banking industry in 2010, and samples the opinions of 400 bankers and regulators across 49 countries. The prevailing view is that whilst government efforts to rescue banks from the financial crisis may have staved off systemic collapse, the industry is now deeply politicised and this "banana skin" is seen as more risky than others such as credit risk, liquidity, and capital strength. As a risk "political interference" has several angles, including the distortion of commercial judgement,the creation of moral hazard, and uncertainty about how financial support will be removed.
Clearly the key factor shaping perceptions is the state of the global economy and most macro-economic trends were viewed pessimistically, with recent signs of recovery regarded as fragile and vulnerable to after-shocks. But implicit within the surveys No 1 banana skin is a fear of regulatory over-reaction ,which could impede an already tentative recovery.However to be fair to the regulatory authorities only 9% of respondents felt that the industry was "well prepared" to handle the risks identified and 11% thought the finance sector was "poorly" prepared to do so. My own No1 banana skin would be the pace of recovery and the absence of any momentum toward a post-recession strategy.In short, a governmental reality-check would be welcome. All businesses, not just in the financial sector, are wrestling with the new recipes for success in an emerging, post-credit crunch environment. What is clear to me is that reinvigourating the financial services sector needs to start with rebuilding the trust of customers and I take great heart from the fact that building societies have retained some powerful credentials to excel in doing just that.