Good morning all,

Welcome to my first digest of January 2021!

You'll notice that we've updated the look and feel of the digest to make it easier to read and navigate. We hope you like it! You can let us know by clicking one of the faces at the bottom of the email.

It still contains the usual topics – there’s some good news in the savings update, a mortgage market summary, network updates and a short update on both Covid & Brexit (it’s like the News at Ten!).

I hope you find it useful.

Don't forget that all previous Growth Series blogs are available here.

Savings

By the time you read this message, we’ll have increased the minimum rates we currently pay on our savings accounts.  1.34 million YBS members will be positively affected!

More on savings rates

Unrestricted access variable rate accounts are increasing to 0.30%, and restricted access variable rate accounts are increasing to 0.35%.

Tina Hughes, Director of Savings explains, “We have very long standing relationships with many of our members and the interest rate increases will benefit a significant number of members who hold our oldest accounts.  The rate increases represent an investment of c. £20m in 2021 and we expect that over 80% of the members benefitting from the improved rates will have a relationship of over ten years with The Society.

Recent research has shown that savings rates fell significantly in 2020 due to the economic environment and with an unpredictable economic outlook and record low Bank of England base rate further rate cuts may happen in the market.  Despite this we're able to increase our rates on a significant proportion of our savings accounts.  As a mutual business with no shareholders we are able to share the financial success of The Society with our valued members by investing in them and rewarding their loyalty. Your hard work during a very challenging 2020 has allowed The Society to make this investment in member loyalty”.

I’m sure you’ll agree that this is a great opportunity for agencies and your teams to celebrate and talk to our members about this change. It will enable you to focus on savings from both a retain and attract perspective – which is the core activity we are looking for from our agency network.

Mike Regnier said, “I'm so proud that we're able to start 2021 with this initiative, rewarding over a million of our most loyal members though better value -- there's not much that's more Purposeful than that. Only a building society would consider doing this, and it's brilliant that it's YBS taking the lead”

Our on sale rates will remain competitive to continue to attract new members, but rates available for instant access accounts in the market are at an all-time low, especially at the banks, where a lot of people keep their savings. So it’s exciting (and unusual) to be able to undertake a stand-alone/ non BBR driven rate increase for our existing customers to bring more funds from elsewhere. It’s a great story to tell during any engagement you have with customers about the benefits of a mutual Building Society. This interaction may be limited, or on the phone at present, but however they deposit these additional funds into their existing accounts, it can help grow your balances.

This month’s Growth Series blog talks about planning your growth (and I know you have all started this process in your recent discussions with your DM). It also talks about focusing on existing customers. This initiative will clearly help with this, and it is just the start. We are planning on a number of loyalty products in 2021. The next one will be a Regular Saver launched in February, followed by an ISA launched in March. You’ll be pleased to hear that both will only be available in branch and agency.

My last update came just before the year end and reflected on 2020, so to bring us up to date, YBS group savings balances increased to £33.6Bn in 2020. Due to the pandemic the majority of new money contributing to this growth came from our online channel. Agency balances did still grow, but at a lower rate than usual. However, Agencies definitely played their part by retaining 89% of maturing balances. Our plan for 2021 includes maintaining this focus on retention, but also for branches and agencies to be the dominant contributor in attracting funds. You will recall this was part of our ongoing commitment to face to face from our Strategic Blueprint. This plan has been impacted by the current lockdown, but we hope there is light at the end of the tunnel with the vaccine roll-out leading to reduced restrictions, allowing customers to venture out sooner rather than later and take advantage of our new propositions.

Mortgages

We’re seeing lots of activity and competition in the FTB market. It seems very crowded!! Many lenders are maintaining their position in the high LTV range, and there is a lot of rate slashing.

More on Mortgages

Interestingly as the market gets more competitive, lenders are pushing what’s acceptable from a rate perspective, with the difference between an average 2 year and 5 year fixed rate at around 0.17% - the lowest since 2013.

We saw a dip in housing transactions in December, but these are still much higher than December 2019.  A lot now will hinge on any decisions on stamp duty and whether the Government decide to extend their temporary holding position of waiving it on transactions under £500k.  This uncertainty could mean the market slows rapidly as any new buying offers will probably not go through in time for the current deadline of the end of March.

YBS

A positive start to the year for YBS, with some price tweaks over the last couple of weeks to bring us in line with forecast.  We’re focussing on the 90% LTV market with some potential flex if needed in the 80% range.

Our Direct Mortgage Team are still facing resource challenges, and high call volumes makes this even harder, so whatever pricing/commercial decisions we make need to factor this in, and probably will have to for some time yet.  But we are busy, which is encouraging.

For the mortgage brokers amongst you, I hope you are taking advantage of this busy period. For the majority who refer mortgage business to us, please continue to utilise the branch to book your customers in.

Network Updates & News

Covid

Due to the current lockdown, I asked you recently to reduce the hours we are open to customers. We feel this is appropriate, responsible and in keeping with our aim to protect both colleagues and customers.

More network updates

We will continue to monitor government advice, and provide you with an update when one is required. We hope that the next update will be positive so things can start to move in the right direction, but until then we ask for you to continue to take this approach.

Outbound calls 

As well as responding to reactive telephone queries, or arranging call backs and telephone meetings post 2.30pm, we will soon be providing some more outbound calling leads for your teams to pursue and give you further opportunity to engage with customers. This is perfect during the current restrictions, but will continue beyond this period. This will enable your teams to be proactive and provide information to existing customers about our savings range and how we can help them.  We have provided manual call lists for forthcoming maturities (fixed and variable products) in 2020 and this will continue, but we can now do this more securely using our work events system, protecting customer data and facilitating the accurate logging of any contact. The system amends have been made, and your teams received a training pack this month.. As the year goes on, we will broaden the call categories beyond maturities and provide targeted leads to meet certain customer needs. One thing your teams can do to help is to ensure they are obtaining customer contact details and permissions, as this will increase the number of calls we can provide.

Server Upgrade

This is now underway and will run until the end of March. The work is taking place earlier in the day to take advantage of the agency being closed to customers earlier, and therefore reduce the time required out of hours. Computacentre will be in touch directly to provide any further instructions. Please note that the kit will be delivered shortly prior to your swap over date.

Branch to agency conversions 

We completed the first conversion of 2021 when St Neots branch became an agency in January. This became our 107^th agency and the 4^th for our existing partners AIA Cambridge. I’m sure they will be a success here, as they have in their 3 other locations. We are continuing to work through the pipeline of sites which had to be moved back from 2020 and they will be implemented throughout H1. We are continuing with this activity and are now looking to build a further pipeline. If a new agency is of interest to you, please let me know. For those who have already registered your interest, i have not forgotten. I will be setting up further discussions with you in February.

Finally

Brexit

Sharing the news agenda over the past few months, is the biggest thing likely to affect the UK economy before Covid-19 appeared - Brexit. Oliver Heath who leads our Public Affairs activity has shared his thoughts on how this impacts YBS:

More on Brexit

“By the end of 2020 I felt worn out by Brexit. Since the referendum campaign began in early 2016, week-in, week-out the topic sat squarely at the top of the news agenda (at least until the current coronavirus pandemic took precedence early last year).

It seemed like we were heading towards a no-deal outcome, leaving our relationship with the EU to continue on World Trade Organisation (WTO) terms. But on Christmas Eve, perhaps at the last opportunity, the UK and EU negotiating teams found agreement on the terms of our future relationship. Back in June 2016, when the UK voted to leave the European Union, very few people would have forecast that we’d be signing a deal four-and-a-half years later with only hours to spare. For some, the signing of the deal introduced a welcome degree of certainty – for them, their business, their colleagues and their customers. However for others, in part due to the late nature of the agreement, the uncertainty has not yet dissipated.

How about our business? As a financially-stable, UK-based business YBS was well-positioned for any Brexit outcome. Whilst the deal agreed contains very little for financial services institutions such as our own, the greater degree of security it introduced was welcome. We’ve sought to protect our members’ interests throughout the Brexit process. Where we do operate across international borders, such as the small number of Irish Save As You Earn schemes operated by our Share Plans business, or where members are resident in the European Economic Area (EEA); we’ve taken action to ensure we’ve limited the impact of the UK leaving the EU.

And what about colleagues? As we’ve said before, our EU-national colleagues can remain within the UK and continue working for YBS. Colleagues who are an EU, EEA or Swiss citizen will need to apply to the EU Settlement Scheme to continue living and working in the UK after 30 June 2021.

Is anything else happening? There’s plenty of to-ing and fro-ing taking place across many sectors of the economy, reports of which I’m sure you’ve seen in the news. Because the deal reached includes only limited provisions for financial services, negotiations will need to continue to determine a new framework for our sector’s relationship with the EU. Conversations involving our industry and officials on both sides of the Channel have already begun, with the hope that an agreement can be struck by the coming Spring.

Tell us this is the last we’ll hear of Brexit? Afraid not – there’s still so much to be worked out domestically and between the UK and EU. Brexit undoubtedly marks the beginning of a new period for the British economy and our financial services sector. So going forward, we will continue to work alongside other building societies to prioritise the continued sustainability of the mutual model in financial services; protecting the interests of our members as the UK authorities determine the future regulatory framework that governs our activities."

Community update

Age UK

We’ve made a cracking start to our fundraising with over £30,000 already on the books of which £3,782 was raised through our agencies. Thank you for your support! We have also proudly launched our partnership externally (press release here) and have a brand new webpage here dedicated to the Building Better Lives project. And we’ll be sharing soon about our brand new matched giving programme, as a part of the business investment to building financial resilience in over 40,000 people.

Charitable Foundation

As we enter the new year it means Q4 nominations have now closed and the Q1 nominations are now open until 31st March. You should expect to hear the outcome of your nomination by the end of the month. We will continue to publish successful nominations along with the MI every quarter, your DM will be able to share the details next month to show all the donations granted in Q4.

The Charitable Foundation will also be receiving additional investment for a new strategic fund which will support researched and invited charities that are building programmes which link to our 2021 focus areas. More details to be provided next month.

NPS Score

Finally, at the end of the year I confirmed the agency NPS at 85. I’m pleased to report that December was another very strong month, meaning the year ended on 87.

This really is a phenomenal score and one you should all be very proud that your teams have delivered in such challenging circumstances. The whole principle of this measure is that your customers want to tell others all about you, great for your growth plans!

The Agency Growth Series

We've started off our Growth Series content for this year by putting together a list of our 5 key considerations for planning to grow your business in 2021. We hope you find it useful.

5 ways to grow your business in 2021

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