Darina Armstrong, financial director Progressive Building Society, on the benefits of being a local building society. And on why she never says ‘can’t.’
What difference does Progressive’s standing as a Northern Ireland home-grown building society make to the business and its customers?
One of the main differences between us and the other large institutions is that we are not listed on the stock market and this means that we do not have to pay a dividend to investors who may not even be customers. This means that we can distribute more of our operating income to our members in the form of consistently competitive interest rates.
Does Progressive have ‘values’ which differ from those of more mainstream building societies and banks?
Yes, we do have values and we list these on our website and in our annual report. The most important of these is “fairness in our dealings with members”. Some savings providers only offer “best buy” rates to new customers but, in line with our fairness value, if we launch a “best buy” product, we offer it to our existing members as well as taking funds from new savers. We think it is unfair to prevent existing loyal customers from gaining access to the best rates — that’s an example of our values in practice.
How effective has the advertising tie-in with UTV Weather been in increasing familiarity with Progressive?
Very effective, judging by the number of companies that we talk to who would like to take over the sponsorship. We don’t have the budgets that the big names in the market have and it has been a great way of reinforcing our brand and, also, our permanence — there’s nothing more permanent than the weather.
What has been the highlight for Progressive to date?
If you had asked me that a couple of years ago I would have been talking about Progressive’s emergence as a “Top 20” building society in the UK. After two years of the banking crisis it has to be the confidence that our members showed in the society when the banks appeared to be going to the wall. And also the strength of Progressive’s reputation that encouraged many savers with other institutions in Northern Ireland and across the UK generally to bring their precious savings to us.
What has been the biggest challenge?
After eight reductions in the official Bank Rate by the Bank of England, down to 0.5%, the biggest challenge has been to explain to those who depend on savings income that we just can’t pay interest at the levels we did two years ago. We didn’t track the decline in official Bank Rate all the way down but this hasn’t prevented our saving members seeing their interest income fall to a relatively low level.
What are the long-term hopes for Progressive? Will it ever expand into the Republic or the rest of the UK?
In the good times it is always tempting to consider expanding into new territories or jumping on the bandwagon by offering products that provide a better return for a higher risk — some lenders got heavily involved in buy-to-let business, for example. Having seen what has happened to others in the financial sector we are very glad that we stuck to our traditional market — a market that we understand. We don’t see any reason to change our business model that has stood us in good stead, particularly through recent turbulence in our market.
What technology are you using to improve business?
There has been much talk recently about sharing resources in the building society movement and we have been doing that for quite some time on the IT front. We share the cost of developing our key systems with a number of other societies and this provides genuine economies. The most recent development that our members will have noticed is an e-savings facility available through our website that allows them to review their account balances and transactions. We are also evaluating the introduction of a mortgage application portal on our website.
Recession is a challenge for businesses but it can also help companies emerge stronger when the economy returns to growth. What positives have you identified?
The key positive for us is that we took a decision early on in the recession that we wanted to retain all of our staff even though we expected our business volumes to fall. As we emerge into a period of growth we will be able to build on their loyalty and experience to expand our business without having to draw heavily on recruitment and training resources.
Have you noticed that customers have begun to save more since the recession began?
There have been reports in the media about the growth in the savings ratio during the recession. This is a little misleading since these figures include households using spare cash to reduce consumer debt. Actual savings figures reported by banks and building societies nationally show net payouts as consumers struggle to make ends meet. We, on the other hand, have been able to report a significant net inflow of savings funds during 2009 but this has come about more as a result of us increasing our membership rather than our existing members saving more.
Have you any new projects coming up?
The recent crisis brought calls for tighter regulation for banks and, even though we are a building society, some of this will impact on Progressive in 2010. The legislation has yet to be finalised but my finance team and I are working hard to prepare for the changes when they come.
Have you seen any upturn in business or signs of ‘green shoots in the economy'?
We have seen several false dawns as mortgage business has picked up only to ease back again. It now seems that many houses on the market have had their selling prices reduced close to 2005 levels indicating that realism has begun to sink home — this may be the trigger we need to get housing transactions moving in the first part of this year.
What is the best bit of advice you have ever been given?
One of my teachers told me “There’s no such word as can’t” — I’ve always thought that to be a great maxim.