How profit with purpose can drive the growth of Scotland’s financial services industry
By Paul Denton, Chief Executive Officer, Scottish Building Society – the world’s oldest and Scotland’s only building society.
In our 172-year history the Scottish Building Society has navigated world wars, financial turmoil and yes, two pandemics. What is striking is how stoic and resilient our predecessors were in the face of adversity. Our records from 1929 do not make a single reference to the Great Depression.
It looked as if it was business as usual.
I have worked in financial services for 30 years, including the crash of 2008. However, in our lifetimes, the challenge of Covid-19 is unprecedented in terms of the multi-faceted impact on our lives; touching our businesses, our personal finances, our health, our relationships with friends and family.
Our records from 2020 will certainly mention Covid-19. But I think they will also show that as a mutual we stayed true to founding principles; to put the interests of our members - who are also our customers and our owners – at the heart of everything we did and, that by doing so, we continued to grow our business.
While the Scottish financial services industry represents a diverse range of business models, there are lessons we can all learn from each other as we go from reorientation to reignition. From my experience, working in PLCs and now a mutual, Covid-19 has reinforced my belief that profits and purpose need not be mutually exclusive; that corporate social responsibility is key to driving growth no matter what the new norm brings.
A YouGov survey conducted in July showed that consumers do want businesses to be good citizens. 85% agreed that they would prefer to buy from businesses that had a strong record for good conduct, up from 78% in 2017.
As a mutual, our profits are reinvested for the benefit of our members. That also comes with a duty that we provide a safe haven for them in the current storm and commit to investing in the communities in which they live and work. On that level, we continued our sponsorship for the Scottish Women’s Premier League through lockdown, supported a virtual Player of the Month for grassroots girls and boys’ football and recently extended our sponsorship for Edinburgh Rugby.
Our own members voted to adopt Alzheimer’s Scotland as our official charity for 2020/21, with staff giving up their time to provide financial advice to hard-pressed families on their 24-hour hotline.
As an essential infrastructure, we still had colleagues in our branches who were able to support our customers, firstly through guaranteeing access to cash. Within a week of lockdown we launched the mortgage deferral scheme which has helped some 17% of our mortgage base.
With a relatively mature membership, a large proportion of whom were classed as vulnerable, we had to make sure they had access to funds and institute more interaction over the telephone.
It also accelerated our plans for new digital savings capability so that people have continued access to their funds. One of the legacies of Covid-19 is the increased uptake of digital by previously reticent demographics, although we have no plans to stop issuing passbooks. In the age of digital acceleration, we can leave no-one behind.
As Scotland’s only independent building society, we are pleased to represent both Scotland and mutuals on the mortgages board of UK Finance and were part of the discussions to extend the mortgage deferral scheme to six months. Back in March, we also led the calls for measures to support the recovery of the market, including a Land and Buildings Transactions Tax holiday.
So purpose is not a ‘nice to have’ or a tick-the-box exercise. It is essential for business growth and long-term sustainability. In 2008 we witnessed an inevitable race to the bottom and a disproportionately negative impact on businesses who focussed on profit alone, without a recognisable and purposeful position.
Companies who follow their north star to provide emotional and practical support to customers at their time of need, will stand out from the crowd
The Scottish financial industry can tap into the power of customer reciprocity by asking: What is it that we can do to help you now?
It isn’t about self-interest. If you do something positive now, the idea of reciprocity is that it will be repaid at a later date – a payback that supports growth and drives profits. Good for customers, good for businesses and good for the Scottish economy.
Published 15 October 2020