The Thing About Mutuals

Forum members were asked the question: ‘Can mutuality still deliver a truly differentiated customer experience, or is virtually every financial services brand now competing on customer-friendly “mutual” values?’ Their responses highlight a number of clear messages for the financial services industry.
To view the full article and all the members comments, please download the PDF version.
 
Strive for a great internal culture
Stuart Harper, Managing Director, Electrum
The answer to the question is yes and no. Yes, mutuality can deliver a truly differentiated customer experience; and no, not every plc is competing on customer friendly ‘mutual’ values, although some are. But don’t get me wrong, I don’t think mutuality is the answer to our woes, as there is no silver bullet. I think the current problems in the financial sector have more to do with internal culture and controls than the distribution of surpluses and profits to shareholders.
Most highly successful companies don’t make money by exploiting customers, staff and suppliers for the benefit of their shareholders – they make money by having great internal cultures and controls that encourage every individual to listen to, and work with, customers, staff and suppliers to deliver great products and services that meet the needs of their customers.
 
Need for a client-first culture
Andrew Skeen, Senior Investment Writer, Europe, Vanguard Asset Management
The answer is ‘yes’, as long as the organisation strongly reinforces a client-first culture to its people. Assuming the culture is strong and every member of the organisation truly understands and believes that the interests of client/owners, managers and staff are exactly the same, mutuality can result in a customer experience that no other ownership structure could ever match.
Expressing ‘customer friendly values’ and actually being fully aligned with client interests are two entirely different things.
Organisations will always tend to operate in the interests of their owners. If the owners are not also their clients – if the owners are say, shareholders – then the ultimate interests of managers and staff rest with the owners, not the clients. There are good companies out there that succeed in delivering excellent customer service and value for money, but the mutual ownership structure is the only way to fully align client and company interests. Structure is the only way to fully align client and company interests.
 
A clear point of differentiation
Toby Clark, Head of UK Financial Services Research, Mintel
There’s absolutely no reason why banks can’t outperform the mutuals on customer service. First Direct has – as always – come out well in our latest brand research, as has Metro Bank. But beyond those two firms, our research suggests that it’s Nationwide and the Co-operative Bank who tend to have the most committed customers and the best reputation for service. The Co-operative even managed a positive net promoter score – a small miracle for a high street financial services firm. But I’m not sure how much of that difference comes from genuinely superior service, and how much is perception. I bank with the Co-operative, and the service is fine but, if I’m honest, it’s not noticeably better than my previous bank. Instead, I think that the great advantage to mutuality is that in a market where pretty much every brand claims that ‘we’re different from the rest’, the mutuals do have a clear point of differentiation, and can show that they stand for something other than just profit maximisation.
 
A deeper relationship
Alastair Pegg, Head of Brands & Marketing, Nationwide
At Nationwide, we explicitly target the provision of a significantly better customer experience than our high street competitors. And we still believe our mutuality gives us an irreducible advantage with that. For all the service improvements the banks have made, mutual values are not hard-wired into the way they operate. Their commitment to great service is essentially a means to an end – the maximisation of profits for the benefit of their shareholders. For us, a better customer experience is the end, the point of our existence. And it is something that drives all of us in Nationwide, informing every line of code, every product feature, every process and every contact with our customers. So, yes, in my view, mutuality can still deliver and, perhaps more importantly, sustain a truly differentiated customer experience – to cement the deeper, lifelong relationships we want with our customers.
 
The strength of mutual values
Kevin Purvey, Head of Intermediary Sales, Coventry Intermediaries
The building society model has one principal aim: the long-term protection of members’ interests. In contrast, a bank exists to protect shareholders’ interests. This stark difference sets mutual organisations apart and ensures that their values go much deeper than simply providing the service customers expect.
Mutuals can provide real value for money for their members because they are not compromised by maximising returns for shareholders. There is a responsibility to treat all members equally and fairly – a point that banks may regard as a constraint. Members have a say in how the mutual they own is run, which customers of a bank can’t do. A member’s complaint, because even mutuals get things wrong, may be looked at differently to one from a customer. So even though banks may have customer charters which promise to deliver high standards of service, they can’t compete with the strength of genuinely applied, mutual values.
 
To view the full article and all the members comments, please download the PDF version.