Gail Maltby, chief executive of Paycare, and Neil Armitage, marketing director at Foresters Friendly Society, explain the reasons behind the growing trend of mutual societies working together.
Gail Maltby, chief executive of Paycare.
Nothing has become clearer than the need for mutual and not-for-profit organisations in the industry to communicate their offerings better to one another and seize opportunities to cross-fertilise the benefits they are able to offer to members.
Multiple driving forces are shaping this need. Larger ‘non-bank' market players are already well-accustomed to pooling back office and technological functions.
Consolidation among building societies is also a continuing trend, as shown by Yorkshire's recent acquisition of Norwich & Peterborough.
This trend increases the incentives for small providers, who wish to retain their independence, to combine informally as a means of delivering more rounded offerings.
Paycare is a small organisation whose policyholders benefit from surpluses that are reinvested into the business to improve the services they receive.
As is the case with many mutuals, providers such as us are simply not in a position to justify exorbitant above the line advertising campaigns in order to compete with larger industry players.
It is clear that there is a need to co-operate with other similar organisations, but the biggest challenge of all is finding a complimentary partner.
As any relationship counsellor would no doubt remind us, ‘chemistry' is the key to a successful link-up in this context and alignment of the core values, vision and operating cultures of the organisations involved is a key requirement.
This is why we've chosen to connect with Foresters Friendly Society. Both organisations date back to the nineteenth century, have their roots in supporting their home communities and both adhere to similar principles of ‘giving back' to their members or policy holders.
The organisations have also connected via the forum offered by the Association of Financial Mutuals (AFM) an organisation which has a key role to play in terms of providing mutuals with a consistent and coherent voice in the UK.
On a practical level, the relationship with Foresters has enabled us to offer details of our Cash Benefit Plans to Foresters' members via a direct marketing campaign and in return, Foresters has told our 39,000 policyholders nationwide about its Tax Exempt Savings Plan (TESP).
The opportunity is about more than the immediate sell however as we have been able to access an additional audience of over 70,000 people nationwide and provide ourselves with a platform to tell them directly who we are and what we do.
This ‘affinity' approach is still in its infancy, but in an organisation unaccustomed to proactive marketing where tight budgets mean we cannot be bound into complex and potentially costly commercial partnership deals, this represents both an innovative and cost-effective route to securing steady organic growth.
Neil Armitage, marketing director at Foresters Friendly Society.
Friendly societies take responsibility to inform the public how mutuality works and explain the material and social benefits they can provide.
Foresters Friendly Society aims also to build awareness of the opportunities for members to socialise and exchange information, advice and practical support particularly if they fall upon hard times via our nationwide network of branches.
Promoting the Society's message directly through marketing activity is an essential part of this but it is not the whole picture.
For the impact of our message to be maximised mutuals also need to identify areas where they can work together to share ideas and give members a wider choice without compromising on their traditional values of community and membership.
This is just one of the reasons why the Society has forged a link with Paycare. The move illustrates the kind of creative vision and lateral thinking which mutuals need to demonstrate in a highly competitive environment.
Imagination is the only limit to the range of forms these alliances can take.
Our arrangement has focused on marketing communications, but there's no reason why more product focused alliances could not be formed with organisations now and in the future. From a friendly society perspective, the obvious example here would be the white label offering of Tax Exempt Savings Plan (TESP) programmes to members of building societies and other non-banking financial providers.
There is also weight to the suggestion that financial and non-financial mutuals need to align more closely. The organisation Mutuo exists to aid this, as does the AFM.
All of this needs to be achieved in the context of meeting the demands imposed by the wider regulatory environment.
The opportunity and the challenge for mutuals is therefore clear.
The age of austerity creates an opportunity for organisations to demonstrate how they can help present and future members navigate tricky financial and economic waters.
The challenge in terms of response is to ensure that creative vision and lateral thinking are applied as the basis of solutions which allow mutuals to flourish in the Big Society.
