INTERVIEW: Stockport mutual eyes expansion and growth in centenary year

Stockport-based mutual the Vernon Building Society is keen to open new branches as it turns 100 in March 2024, but also to modernise its digital offering to new customers.

Chief executive Steve Fletcher told TheBusinessDesk.com that the Vernon saw growth last year of 14.1% on customer deposits, now up to £400m, and a growth of 10.4% on its mortgage book, worth £390m, with a total of 31,000 customers.

He said: “I feel we’re a well kept secret, but I struggle with the fact that not everyone in Stockport has an account with us.”

As only the fifth chief executive, or president, in the Vernon’s history, he said he feels an awesome responsibility to get it right with such a landmark year ahead: “For 100 years, we’ve been delivering a personal service through our branch network, and we hope to do so for the next century.”

Vernon head office in Stockport

The Vernon has six branches, five in Stockport and one in Poynton, Cheshire, and employs 80 people, some on part time contracts and job shares, and is a real living wage employer, Fletcher says.

He says he has been supported by the board since he joined in 2017 and says he is determined to maintain the society’s compliance with everything expected of it by its regulator and supervisor, the Prudential Regulation Authority (PRA) which needs a mutual society to maintain a sustainable financial position and a balance between assets and risk.

There’s undeniable turbulence for any financial services emerging from a period of low interest rates and in a speech last year the PRAs David Bailey said managing credit risk was a key priority in the PRAs supervision of UK deposit takers in 2023; and expects regulated firms to be proactively managing credit risk within their portfolios.

For Fletcher it’s catalysed him to grow the Vernon, not hunker down. “I’ve worked for some of the UK’s biggest financial institutions, and I can genuinely say that working for a mutual building society, that is run for  the benefit of its members, has brought me the greatest job satisfaction,” he says.

Fletcher worked in financial services for more than 40 years, including for Barclays, Woolwich, Clydesdale and Yorkshire Bank.

“When I arrived we had £280m in assets and I thought we needed to get that to £500m, now it’s at £460m,” he says.

“Banks put shareholders first and must be leaner to keep costs down and  profits up. I understand their model as I’ve been part of it. But it went too  far for me when I realised the customer was no longer ‘king’ and  shareholders were. Contrast that with mutual building societies, who  plough their profit back into providing the best possible products and  services to their customers and who care about the communities they  serve, and who have a genuine interest in supporting colleagues. It feels  infinitely better to be operating this way,” he says.

But, he says, as a mutual, the Vernon also has a responsibility to play its part in the community. To mark its 100-year milestone, the Vernon Charitable Foundation has been set up with more than £100,000 in the fund, and Fletcher says it is a step change in the Vernon’s charitable giving which aims to support local enterprise and grass-roots charitable work based in Greater Manchester and Cheshire, including leading a programme of financial literacy in local schools, as just one example.

Vernon Building Society celebrate the refurbishment of their Hazel Grove branch

But also he recognises the role a branch office plays in a local high street.

“We’re absolutely committed to the high street. It’s why we’re bucking the trend by investing in our branches while others are closing them, and also by refusing to use automated answering services and overseas call centres.

“I can also reveal that we’re open to potential new branch locations, collaborations and banking hubs in the future,” he said.

Data from consumer rights group Which? reveals that banks and building societies have closed 5,818 branches since January 2015, which represents more than half the branches that were open at the start of 2015.

The Vernon has made a £1.1m investment into its high street branch network. This includes its refurbished St Petersgate HQ in the centre of Stockport, which includes an open space for customers to use as a drop in and meeting area, as well as exploring how they approach technology.

“Sure, lots of people prefer to ‘self-serve’, and I have no problem with that, but I firmly believe many customers are being shepherded down a route or channel they do not wish to travel, purely to appease shareholders. I believe people deserve a choice,” he says.

Fletcher also insists on the staff at the Vernon answering the phones and dealing with customers directly.

The personal touch extends to creating dedicated teams to support Members. In 2017, the Vernon established an Intermediaries Team to better support mortgage brokers and says Fletcher, each mortgage case is individually assessed.

“At the Vernon, we put our members front and centre. We’re able to get to know our members and take the time to look at applications based on individual circumstances, with humans rather than a portal making the decisions that will affect their futures. It means we can say yes to people with complex or unusual situations when many banks would say no.

“People’s lives are complicated and they don’t neatly fit through algorithms,” he says.

Vernon Building Society opened in March 1924 in Stockport

Fletcher said that as the Vernon is now the only remaining independent mutual in Greater Manchester, only the Chorley Building Society in Lancashire and the Barrow headquartered Furness come close to offering a similar service in the North West.

As part of its centenary celebrations, the Vernon is also teaming up with a respected historian to reveal some of its rich history. It hopes to uncover more about the Society’s founder, the pivotal role it had supporting returning WWII soldiers to buy their own home in 1945 and how it helped members financially survive the 2008 economic downturn.

But maybe, when someone comes to write the next chapter, the Vernon’s most exciting years are about to happen.