People's lives, incomes and circumstances are not formulaic, says CEO
People’s circumstances increasingly require personal underwriting rather than formulaic algorithms, according to a lending executive.
Steve Fletcher (pictured), CEO of Vernon Building Society, says a personal service is “front, centre and back” to its offering.
In business for 100 years, The Vernon is an independent, mutual building society, that works closely with mortgage intermediaries, offering bespoke solutions to first-time buyers, homemovers, those remortgaging, retired borrowers, buy-to-let landlords and self-build clients.
Fletcher is clear about what sets it apart from others in the market.
“Genuinely personal underwriting,” he explained, “where a highly skilled ‘real’ person takes time to fully consider the individuality of each customer and how we can best support their enquiry. We understand that more and more, people’s lives, their incomes, their circumstances, are not formulaic, and are therefore best served by personal solutions, rather than algorithms.
“We provide savings and mortgage products, but so do lots of other providers, so high quality, caring, personal service is our one true differentiator.”
The building society has previously declared its ‘unwavering commitment’ to the high street.
“I don’t think we’re on our own in this respect,” Fletcher told Mortgage Introducer. “Most building societies have a similar outlook and so I think the answer therefore lies in our purpose and the value of being ‘mutual’.
“Having worked for banks I understand why they don’t see it, because - despite their platitudes - they are totally driven by shareholder returns. We are not. We have two key drivers, what’s best for our members and the long term sustainability of the society.”
He continued: “Our members have grown up with branches around them and they like it. They like to see us on their local high street, and making a contribution to their communities, so if they value this and we’re here to serve members, why would we take them away?
“On top of this, there is a genuine business case, including the fact that we are almost 100% funded by retail deposits which come through our branch network, our branches are effectively ‘always-on marketing’ - better than any digital billboards - and branches are invariably the place for first savings accounts for a host of new young savers who ultimately become members.”
What, then, is the reaction from its customers?
“We get great feedback from customers on a daily basis, most of it goes unrecorded but all of it means so much to our people,” Fletcher noted. “Smart Money People (the review site) provide industry wide comparisons on customer service and our score for 2023 was 4.95/5 or expressed another way 99% overall customer satisfaction.
How important is a lender’s relationship with brokers?
The Vernon’s relationship with the intermediary community is evidently key.
“Over the last five years brokers have become our primary source of new business, and so they are very important to us,” Fletcher confirmed. “Critically, all our people understand the importance of brokers, especially our underwriting team, and that’s not always been the case in previous organisations.
“Brokers used to get a ‘bad rap’ from lenders 20 years ago, but I think the quality of brokers now is extremely high. We have a panel of key brokers who we work particularly closely with and I know their goals are similar to ours in delivering high quality, personal service.”
Acknowledging challenging external factors, he reasoned: “It would be good to get a ‘normal’ year if anyone can remember what they looked like! There’s a lot of competition and we expect deposits to be very challenging this year especially as there are lots of government repayments required from many organisations - we didn’t require that type of support.
“The biggest challenges in the mortgage market are likely to be for borrowers coming off lower rate mortgages and finding their new deals more costly. And there’s a lot of big lenders who need to do large volumes of lending, and I suspect the market won’t be large enough to support all of them. I’m glad I’m not in charge of one of the larger lenders right now and I’m content that we will be able to find more than enough ‘quirky’ lending opportunities to deliver on our objectives. The more challenging and unusual circumstances the market and external conditions create, the more our personal approach can thrive.”
Read more: Why exodus of banks from the high street will continue
How do you become successful in the financial services industry?
Fletcher’s worked in the financial services industry for over 30 years, but the career he has enjoyed wasn’t planned.
“Definitely not,” he shared. “My mum worked part time at Leeds General Infirmary and my dad was a postman and so my main focus on leaving school at 18 was to get a job. I started in a bank and since then have always worked within the financial services industry, without a specific career plan, and I’ve simply taken opportunities and risks where they felt the right thing to do.
“Only latterly have I considered how and why my career has gone the way it has. I think it’s largely down to the fact that I like dealing with people, I care about people, I believe I’m fair with people, but I don’t waste time with people who don’t care.
“Always surround yourself with ‘good’ people and invariably this doesn’t mean people ‘the same’ as you, although they are likely to have similar core values. This isn’t just a business lesson that I’ve learned, it’s a life lesson too.”
Looking ahead, Fletcher is cautious about anticipating what shape the market will be in 12 months’ time.
“It would take a brave - or stupid - person to predict this with any confidence, with so many global challenges which have a large impact on the UK - a general election, and stubborn inflation keeping the base rate under pressure,” he considered. “That said, I err on the optimistic side and providing the major challenges over the next 12 months are the ones we are already aware of, I don’t see why this time next year, the industry shouldn’t be looking forward to a year of relative normality.”
