An organisation whose members reject the chance to award themselves windfalls of thousands of pounds apiece by jettisoning the status quo must be doing something right. For Nationwide Building Society, the conversion of other building societies presented an opportunity to champion the advantages of mutuality. The results have been singularly impressive: while competitors struggled, Nationwide has built its market share in both savings and mortgages, achieving outstanding levels of customer satisfaction. Its refusal to charge customers for using cash machines earned media accolades as a consumer champion.
Nationwide emerged as the winner in the Financial Services category against two ideologically distinct rivals: Halifax, which converted from building society to bank, and VirginOne, a greenfield operation. What impressed most about Nationwide was the way it had retained and grown its customer base in the face of rapid change. Nationwide's renaissance began in the mid-1990s, when it made a strategic decision to focus on customers. According to marketing and commercial director Stuart Bernau, management was top-down, staff were demotivated and resistant to change, and many of the society's products were uncompetitive.
Nationwide responded by investing in training and development - recognising employees as well as simply rewarding them - improving communication, redesigning processes and revamping its products. With no shareholders, it could offer superior rates on savings and mortgages.
Along the way, Nationwide came up with some key innovations: it introduced a TalkBack roadshow, where members around the country have the opportunity to meet directors and quiz them. 'We have changed some of our products as a result,' says Bernau. 'For example, we have introduced more products that reward members' loyalty.'
And it introduced a 'reverse cascade' to communicate the company's corporate plan. 'We realised that employees didn't entirely understand the plan, because it was largely in management jargon,' says Bernau. 'So we brought in some customer-facing staff and had them cascade it to their colleagues. The understanding has improved immeasurably.'
Staff have been incentivised by the introduction of a Service Heroes recognition scheme, as well as bonuses based on team performance. In addition, employees are rewarded for their 'electronic competency', encouraging them to become adept in new technology. Employee satisfaction has risen accordingly, measured not just internally, but via Viewpoint, the independent benchmarking group.
Tim Hughes, controller of CRM at Nationwide, says scores on 19 questions have significantly increased in the past year. 'When we ask employees if they are proud to work for Nationwide, the response is overwhelming, thanks in part to the stance we have taken on cash machines.'
Nationwide has many examples of best practice for the financial services sector. It automatically gives customers in obsolete accounts the terms offered on newer products; it offers existing customers the same mortgage deals that are available to those remortgaging; it gives all customers automatic internet registration on their existing account, and internet terminals are currently being introduced to branches.
In the past two years, the barriers to entering financial services have fallen dramatically, but Nationwide has demonstrated that an established player with a sound strategy, providing genuine benefits to customers, can hold its own. Perhaps mutuality might even come back into fashion.