Quill pens, ledgers, passbooks and Dickensian decoration. Is this the picture people have about these institutions which have been a part of our high streets for nearly two centuries?
With so much attention being given to challenger banks and new lenders, I thought it was appropriate to look at the role which small building societies still play in a modern market. I think that building societies are probably more relevant now than they ever have been.
Societies such as ours have to work very hard to create the right balance between our depositing and borrowing members. This is no mean feat in a near zero rate economy.
As a society which took the decision to only market our mortgages through intermediaries, we have placed a great deal of trust in our partners and if ever there was a need to work together as a ‘supply chain’, this is a real life example. We firmly believe in the benefits that brokers with access to the whole of market bring in providing borrowers with the assurance they are receiving the right product. It has had a very positive effect on our volumes.
We all understand the place of large banks in serving the residential lending sector but their very size makes them appear more remote and their use of credit scoring in decision making has made them less responsive to a large section of the community. What we are seeing is plenty of evidence in the shape of new banks and lenders, to suggest that there is a strong market for smaller financial institutions to provide a truly personal service.
What is interesting to me is that building societies, particularly the smaller ones, are often where better interest rates can be found and also inclusive mortgage offerings.
There will always be a desire to spotlight attention on the new at the expense of the tried and trusted – just look at the world of cars. However, while the rise of new lenders provides greater choice for consumers and their advisers, in actuality it is building societies which have carried the flag as an alternative to the ‘one size fits all’ underwriting attitude that is the staple of larger lenders.
Not only have we innovated in terms of product offering by championing the self employed and other minorities such as older borrowers, by removing maximum age criteria, but have rejected computer controlled underwriting in favour of the human touch of skilled underwriters. We look at cases in a holistic manner, rather than as a series of hoops through which customers need to jump.
I want to appeal to intermediaries in general not to forget regional building societies and the important role they play in the UK economy.