When he was growing up in the US, it is highly unlikely any of David Tweedy’s contemporaries would have ever predicted he would end up working for a company in Leek, Derbyshire – or whether they had even heard of Leek.
More likely they would have expected to see him sitting in his glass-walled corner office, high above London’s Canary Wharf, with the easy, urbane manner of those who have been successful in their field. However, his presence is also required in the Midlands on a regular basis, as he is the managing director of Platform, the subsidiary lender of the UK’s second largest building society in terms of asset size, whose head office is in rural Derbyshire.
Britannia Building Society is broken up into two parts – member business and non-member business – through
Britannia Capital Investment Group (BCIG). His role at Platform means he participates as a board member of the non-member business, but he is also a leader within the Britannia Group.
Explaining this Tweedy says:”The member business needs advice and support from us in various aspects of its business and vice-versa. There is quite a lot of cultural development, which you would expect in any large corporate. So I spend a great deal of my time on the BCIG board, working with my colleagues to set the direction for the future of the non-member side of the
business. In addition, there is also a residential mortgage business board, which includes our treasury and service functions, and therefore the three of us need to get together on a regular basis to plan our future as a mortgage business.”
Despite this, or perhaps because of it, he refuses point blank to be drawn on the recent speculation linking Britannia with Yorkshire Building Society, in the wake of the Nationwide-Portman merger. The two mutual giants already have a reciprocal link through their branch network but he is clearly uncomfortable on the subject and points out his focus is firmly on the intermediary arm, as opposed to the mutual and there is clear separation of the two. “Britannia will always act in the best interests of its members, and I think that is the general ethos and view of most, if not all, involved in the building society movement. I could not begin to speculate on whether a merger would be good or not,” he adds.
Well known in the industry as an affable character, he is clearly ill at ease talking about matters out of his control but is much more relaxed talking about his own part of the business. Having just received a commendation for its intermediary business at the Your Mortgage Awards earlier in November, Tweedy is only too happy to talk about where he thinks things have gone right for Platform this year, and also its growth targets for next year. With a market share of around 1.25%, Platform, by his own admission, is a minnow compared to some, but he believes it more than stacks up against its key competitors. “Our plans for next year are for steady growth. We believe the market will be flat to up a little bit, and therefore our growth ambitions are to be able to take a little bit of market share. One of the opportunities for lenders at the moment is the provision of service as improving the quality at the same time as reducing the cost base is a challenge for everyone. In a commoditised market it is very important to keep your cost base down, but it is a complicated marketplace and people are going to approach it in different ways.”
Platform has always had strong links with packagers, and currently maintains a rough 55% to 45% packaged-direct split. When talking about the changing stance of some competitors Tweedy becomes more animated and he is adamant a multi-channel distribution strategy is essential for continued growth. “We believe in giving customers the choice. Packagers quite often drive a hard bargain in product negotiations but if you provide good products and good service then they can be incredibly loyal. That said, the market is changing and packagers – like lenders – are starting to shift their focus and alter their strategies in order to compete in a different marketplace.”
Tweedy accepts he has been around too long to retain any naivety that doing favours for business partners will secure long-term goodwill. It is the quality of the products that determine whether a lender will survive or fall, so how is heplanning to move forward in a market where the products are fast becoming commodities themselves?
“We would consider any niche where we can generate a profit – that is a combination of the actual product itself, the value inherent in the product, the cost of entering the business, the competitive landscape, and the distribution. We did look at equity release but our modelling told us we would be lucky to make money on it, and given the amount of investment, we decided the risk-return was not justified – but that is not forever. We are currently looking at a number of other markets -not just residential mortgages.
“There are other opportunities such as commercial mortgages, second charges, and lending overseas,” he adds.
As one of the old-stagers in the UK market, he can claim to have seen it all before, but few could boast of having worked for so many key competitors. When he first came over to the UK in 1986 it was with Bear Stearns, which now owns Rooftop. Since then he has had spells working for Morgan Stanley, Solomon Brothers (Citibank, now Future), and Lehman Brothers.
Unlike a few of these though, he has stayed the course, even when the market witnessed a downturn. But even though he agrees US interest in the UK mortgage market is cyclical, he does not believe the recent influx of new lenders have ‘missed the boat’ in terms of arriving at the peak of the cycle. Tweedy believes the market is now so well developed that there will always be opportunities in the UK mortgage market.
It is no surprise to Tweedy that their strategic objectives are being met by acquiring staff from existing lenders. Many of the top business development managers (BDMs) working in the specialist markets have been courted by these new lenders in the last 18 months, and it has driven up salaries as a consequence. However, Tweedy is sanguine about losing staff, and refers back to his views on keeping control of the cost base. He says: “They have to build sales forces from scratch, and in order to attract sales people to a start-up, they have to pay more because they are leaving secure positions where, assuming the company is a great place to work and develop, why would you leave? I think at the existing players, such as GMAC RFC, Kensington and Platform, we have not had to increase our salaries. What we try to do is to offer a balanced package which includes everything from money, to training, support, work-life balance, bonus incentives. It is important to keep costs under control and to keep things in perspective.”
Nevertheless, losing productive staff, such as key account manager Sara Green who won BDM of the Year at the British Mortgage Awards in July, and was reportedly responsible for around 25% of business before she left to rival Advantage, must have hurt. The answer is typically controlled: “We were sorry to see Sara go. A good BDM is important but no one BDM has a monopoly on relationship management. The BDM is working with the broker to make sure all the pieces that are necessary are in place to have a good relationship with them.”
His response to seeing Guy Batchelor, the current chair of IMLA and a colleague of his for some seven years, leave to go to Lehman Brothers in the new year is equally considered, and while expressing sadness on a personal level, Tweedy knows that any successful business is bigger than sum of its parts, and he remains committed to following the path he sees as being the most adaptable.
Having been successfully been around financial services since 1986, one would not bet against him. Something his old contemporaries may remember.
