Good morning all, 

Welcome to July’s Digest, I hope you are all well? I have managed to have a 2 week break (In the UK!). I hope you have managed to do the same or have one planned.

This month’s update comes hot on the heels of our interim results, so I will make reference to this with an additional agency lens.

It's the usual format of savings, mortgage, network and other updates. I hope you find it useful.

We’d love to hear what you think of these emails. There are some smiley faces at the bottom of the email you can click on to tell us what you think.

 Savings

Since we’ve just published our interim results, let’s look at the savings picture over the first half of the year.

First of all, I need to pass on a thank you from the Trading team for continuing to support the business in very challenging circumstances. As you will see below, despite these unprecedented times, you and your teams have contributed to some great results.

On the retention front, we’ve matured £3.8Bn this year of fixed rate maturities (all channels) and retained £3.3Bn (85%), which is 5% and £225M better than we expected.  The Branch & Agency network handles over 90% of this – so thank you again.

More on savings and retention 

The lockdown has seen a material change in the market with competitor rates falling and our overall retention levels improving.  In this low rate environment during lockdown we’re seeing more than 45% of customers stay in the default product, c. 15% more than pre lockdown, pre base rate cuts.

For the second half of the year we’ve got just under £4Bn of fixed rate maturities to manage:

• Interest rates look set to stay low for the foreseeable future
• How the economy recovers is still an unanswered question, but it will undoubtedly have an impact on mortgage lending and competitors’ appetite for savings flows in the market (and therefore the rates on offer)
• We’ll continue to aim to offer an on-sale fixed rate range in a competitive but sustainable position
• The default maturity rates are likely to continue at a similar level to the current ones
• As lockdown eases we might see a shift back towards more normal retention behaviours with customers more often than not either taking a new product or moving to another provider.

New business

In the first quarter (before Covid arrived) we had a new business mix of F2F 65% and Online 35%, which was pretty much in line with plans. We aimed for, and achieved an average of just above £20M p/d of new money during Q1.

Overall new business volumes declined sharply during lockdown with F2F obviously being hit the hardest. Combined volumes fell to c £10M p/d at the low point.

From early May we’ve seen a growth in online business and we’ve been able to recover our daily new money flows to pre-Covid levels (above £20M p/d) but with the notable change in the F2F and online mix, which has reversed.

We’re seeing some positive recovery in the F2F new money volumes as lockdown eases which has allowed us to slow the online volumes from their peak. In an agency context, the network was opening an average of 860 new accounts per week pre Covid. This fell to just 165 per week on average in April and May. June & early July has seen this increase up to 300 per week, still under 50% of 2019 levels.

We’re currently expecting F2F new money volumes to recover in the near term to about 2/3 of the Q1 level as opening hours return to normal again, and customers return to high streets.

As I’m sure you’re aware, this trend impacted your own balances too. Whilst outflow was ‘normal’, it wasn’t being replaced by normal inflows, therefore clearly impacting your net balances. The strong maturity performance helped, and as the trends improve as noted above, network balances are on the increase again – up for the past 3 weeks. Despite the pandemic, and it’s well documented impact on both the economy and the savings market, over 50% of agencies are still showing an increase for 2020 so far, a further 30% of agencies with a reduction of < 3%.

What we need to help achieve our targets (which will also help you achieve yours)

The mortgage team believe they can lend more than we expected 3 months ago (an extra £450M), so the delivery of new money volumes and the retention of both fixed rate and variable maturities is essential to allow us to deliver on that stretched target. 

To support the push for additional growth, it would be great if we could use every opportunity to find out if our customers hold accounts elsewhere. There are lots of examples of our competitors continuing to cut their rates over the past couple of weeks. This provides opportunity for us to attract some additional balances if we have the right conversations.

Please discuss your own specific growth performance/plans for the remainder of 2020 with your DM. Would any local marketing help with this to let your communities know you are open for business?

Take a look at the resources on the Agency Hub which could help you with this.

Mortgages

Homebuyer and First Time Buyer numbers have continued to increase. Numbers are looking almost ‘normal’ for the first time since the start of the pandemic.

Experts seem to think that first time buyers are in a slightly stronger position, as money they’ve saved over the past few months on things like commuting means they have more for their deposit. They’ve also been helped by the government's decision to temporarily remove stamp duty for purchases up to £500K. Lenders continue to come in and out of the higher LTV market as they try to balance their risk exposure with attractive margins - as well as the demand from customers.

We also need to consider operational pressures, because this demand means significant application levels –as we’ve seen with YBS and Accord.

More on the mortgage market 

It’s also been interesting to see some lenders return to niche markets. For example, Leeds BS have relaunched their Holiday Let mortgages, as they expect an increase in the number of people wanting to holiday in the UK over the coming months and possibly even years, instead of going abroad.

A word of caution though - Leicester has shown that a return to lockdown can have an immediate impact on the market.

What does this mean for YBS?

Phone lines and enquiries are still keeping us busy, especially with large upcoming Accord maturities.

Direct Mortgages are ahead of reforecast targets so we’ve made the decision to pull out of aggregator business to bring us back to targeted levels. This is a deliberate move to slow the business, and it’ll help us with service levels as we try to move back to normal processes, especially in telephony.

We still have 24 colleagues supporting Mortgage Collections & Recoveries (the team who deal with payment holidays) and 10 off through vulnerability. So the Direct Mortgage Team are still under resourced, and branch MA’s are supporting them. We are confident we have actions in place to help support customer demand.

The impact on referral agencies is that the structured MA support has been temporarily paused, but they are still there to support you with queries, and referrals

What we need from you and your teams to help achieve our lending targets

Don’t assume that customers don’t want to talk about mortgages right now. They still need our support, whether they are buying a house or trying to find a better deal to help them through this unprecedented period.

When the opportunity is right we should still be ready and motivated to start a conversation to see if we can help.

After an understandable hiatus in April & May, June agency referrals increased in June with 16, and 18 so far in July. Please encourage your teams to continue these conversations and hand off to an MA.

Those of you who introduce direct business will be familiar with the market conditions. Earlier in the week I shared a guide for you and your advisers to use when submitting business via YBS/Accord. I hope you found this useful.

Network Updates

As lockdown eases, customers gradually return to previous habits, and with this our aspiration returns to increase F2F business (as noted above). So we are asking you to revert to your normal contractual opening hours from 1^st August (I know that many of you have already done this). Please continue to discuss your ‘lockdown exit plans’ with your DM.  

More Network News 

Mobile App launch

You will know from previous updates that this is a crucial step towards offering customers what they simply expect from all service providers (financial services or otherwise). The app will be the topic of next week's retail briefing. I encourage you and your teams to familiarise yourself with this so you can promote to customers and assist with customer queries. This month’s growth series content also talks about how digital is crucial to complement our face to face service, not replace it.

Training & Competency

The Agency T&C Scheme has now been in operation for over 12 months, and in the main the activity has been completed. However I do feel that more can be made of the scheme if it is used in the spirit it is intended, which is to monitor and develop the competency of your team - effectively developing them to develop your business. Although some of you choose to delegate the activity to a senior colleague, you as proprietor are ultimately responsible for this (and earning the associated bonus commission). Your DM will be discussing this with you in more detail in Q3 and how this can be used effectively, and it will be the subject of a future edition of the growth series.

Net Promoter Score

Despite the well documented challenging conditions we are operating in, the Agency NPS actually increased to 84 in June (up from 81 in May). This is an absolutely fantastic achievement, and really illustrates the service you provide and the relationships you have with your customers. Please speak to your DM about your individual results, and look at the comments beneath the scores as well to see what you can learn from them and how these relationships can be further developed. As mentioned in this month's growth series – this really is your/our competitive advantage over both other competitors and channels so we should leverage this where possible.

WAN Upgrade

This is clearly taking longer than originally anticipated, firstly due to issues with our new provider Virgin, and then of course the current circumstances. That said, we are now approximately halfway through the rollout for Agencies, which during a global pandemic isn’t all that bad. Just a reminder that the WAN upgrade is the ‘enabler’ for further improvements – namely the desktop refresh which will see us introduce upgraded servers, new desktops, and the introduction of Office 365 & Windows 10. This project remains a key society-wide focus that will help the way we work not just for the now, but for the future too, so please bear with us.

Other updates

Thanks for those who provided feedback on the digest and blog (you won’t notice any changes yet as I have been on annual leave. We have collated the feedback for review in future issues). If anyone else has any feedback, please feel free to share.

We have now booked a virtual Agency Proprietor Council meeting which will take place on 9^th September. Following this we will share the outputs and plans for the future and how you can all input/benefit from this.

After a ‘pause’ due to Covid, the Branch to Agency conversions are back on the table. We are now working towards completing some more before the end of 2020 and more in 2021.

Finally

A ‘Social Purpose & Sustainability’ update: (This is what the team formerly known as Corporate Responsibility & Community are now called)

After 3.5 years, our partnership with EYH has come to an end – but you have done us so proud!

Together, through raffles, cake sales, runs, walks and much more we’ve raised over £1,085,000 with even more funds being finalised. It’s a staggering amount and I am hugely grateful for the time and effort you have all put into your fundraising events and plans. Please update your Community Boards and let customers know how, together, we have helped to transform the lives of over 455 young people and 92 dependent children, whilst also funding the EYH Housing Fund throughout 2021.

What a huge legacy!

More on social purpose and sustainability 

Money Minds Online

This month we also saw the release of two further Money Minds sessions online:

• Vacation Venture
• Project Party

Both are aimed at Key Stage 2. Why not use the new sessions as a way to introduce the wider Money Minds programme to other schools in your area? You can find all the details you need on the sessions through the Intranet or on the ‘Your Society’ section of the website.

Links here:

Vacation Venture – Key Stage 2 Financial Education:  https://youtu.be/iETY1CwZgL8

Project Party – Key Stage 2 Financial Education: https://youtu.be/Lptwv858lQE

Small Change Big Difference

Our current uptake rates for the Small Change Big Difference scheme are at 47% (this is slightly lower at 45% for agencies). At this time more than ever, the work of the Charitable Foundation is desperately needed. Let’s share with customers how their support, by opting in to the scheme can make a significant impact on their local community - through the charities they love, when they really need it most.

As yet we’re still not at the point of announcing the new charity partnership – but as soon as we are – we’ll be letting you know!

Growth Series content 

This month, we have some great new content on the importance of channels working together, and how you can help your customers to embrace the digital world. There’s also some information to help you help them to stay safe online.

Go to the blog

We'd love to hear your views

Please let us know how useful you find these emails by clicking one of the faces on the email.