When you think of Cambridge, it’s the beautiful architecture, fascinating history and famous university you perhaps think of first, although all seem oddly absent on my taxi ride from the railway station to Cambridge Building Society’s headquarters on Newmarket Road.
A Subway sandwich shop, Sainsbury’s Local branch and a Polish supermarket are all that I can see from the car windows.
“Yeah, the taxi driver drove you around the a**e end of Cambridge,” jokes Stephen Mitcham, chief executive of the society, when I tell him about my journey.
Mitcham has helped revolutionise the society since his arrival in 2007, expanding its lending reach from just Cambridge to much of the East of England.
At a time where building societies across the country are taking an increasing slice of the mortgage market Mitcham suggests that the key to the success of both the 164-year-old society, and the wider mutual market, has been their simple business model and ability to think long-term.
“We take in money from savings and we lend it out on mortgages. I was always told you should be able to write your business model on a side of A4, I could write it on a post it note. Our business is as simple as that.
“We’re also able to take a long-term view, there are times when we don’t have to play because we’re not looking at quarter-end figures all the time. All I have to justify is that the society has a sustainable future.”
The Cambridge’s head office contains around 160 members of staff and, despite me visiting on a cold February afternoon, is buzzing with activity. Underwriters, product teams, admin staff and executives are all housed in the same building, something Mitcham says is a big strength.
“Someone from downstairs can walk into my office and say there has been a shift in the market and we can then talk to the product team and do something about it.
“Last year when banks stopped lending and building societies piled in it was because we were all flexible enough to do that. We retained customer faith and we had still been taking in deposits so had enough money ready to lend out.”
But that increase in lending also had its downside for the Cambridge. Last year the mutual found itself stranded at the top of the best buy tables and was forced to leave the intermediary market midway through the year.
Tracy Simpson, intermediary sales manager, tells me that call volumes increased five-fold during this period and the society was left with more cases than it could handle.
“We tried to do it in a gentle way, rather than simply closing our doors,” she says of the temporary withdrawal from the market.
“We made brokers aware of what we were doing and allowed them to talk to us. Some of the larger lenders just shut the door on them and say ‘that’s it’.
“We just felt totally overwhelmed. We couldn’t even get to a point where we could re-price loans as everyone else was pulling out.
“The trouble wasn’t doing that level of business, it was managing it. Our team were talking to brokers about cases that we’d had for five days and hadn’t been able to look at, which is something we never do.”
Simpson says that her phone team were vital in keeping brokers aware of the situation. Housed in the corner of the office, they’re located right underneath a monitor showing current call volumes and weekly figures.
The aim is to answer all calls within 12 seconds. The current waiting time when I take a glance at the board? 11 seconds. Although the team joke is that brokers tend to enjoy a Friday afternoon on the golf course.
“We used to visit brokers’ offices, but we’ve found that brokers increasingly don’t want that,” says Mitcham.
“They want someone they can talk to, somebody who rings them up and is short, sharp and concise and they can ring if they ever need anything. That has been a definite change in the broker market, it is much more business-like.”
The society operates 18 branches and runs a phone operation, all offering fully advised sales, but Mitcham says that brokers are playing an increasing role in the Cambridge’s business plan.
“Branches were traditionally important but over time that has diminished as the broker market has grown, where we used to take maybe around 40% of our mortgages from brokers, it’s now nearer 70%.
“We’re confident that we need branches to service people, but we have customers who have never set foot in a branch.”
I ask Andy Lucas, commercial director, whether restricting lending to the East of England has been a help or a hindrance for the building society.
“We’re one of the few lenders left that still has a controlled lending area,” he says.
“But we don’t think it’s a constraint that we lend in just eight counties across England. In fact there’s plenty of business out there for us and we’ve had a massive amount of growth.”
Simpson adds: “The Cambridge Building Society will mean something to everyone in our geographical area and if you start spreading that further you simply become a product rather than a service and you start diluting what we offer.
“When we look at an application, whether from Norfolk or Bedfordsire, we still know those places. If we were looking at an application from the other side of the country it could change how we view cases.
“We’ve had this debate for the last two years about whether to expand, and we have networks who would love us to expand, but what we don’t want to be is an unknown brand.”
While the general outlook for the sector is positive some mutuals appear to be struggling with the demands of modern banking. This year has already seen the loss of Century Building Society, with the Shepshed set to disappear from the market in the coming months. Is there more of this to come?
“I think you will see, whether full mergers or link-ups between mutuals, movement in terms of partnerships and shared infrastructure,” answers Lucas.
“You look at Yorkshire, they’ve had a lot of mergers but have retained other brands like Barnsley, Chelsea and Norwich & Peterborough so they can manage brands in local areas, but run a joint infrastructure.
“In a way, part of our rationale about growing the intermediary side of our business is around asking whether we have to do everything ourselves. It would be nice to distribute everything ourselves but there are skilled professionals out there, so why not use them?”
After spending the day with the team at the Cambridge it is clear that they are a close knit bunch. The building society sector’s dismissal of short-term thinking in favour of long-term stability plays right into the hands of brokers who want good lender relationships rather than cheap headline rates followed up with poor service.
I hop in a taxi to head back to the station, asking the driver to take me on the scenic route this time.