A couple of months ago, the darling of the high street, John Lewis and Partners, announced their plans to build 10,000 new homes for rent on land it owns across the UK. John Lewis is becoming a landlord. You can doubtless imagine the beautifully kitted out apartments to rent, groceries from the Waitrose on the ground floor etc. You get the picture.
John Lewis isn’t the only company taking an interest in this kind of investment. Just a few weeks before their announcement, Lloyds Banking Group, revealed its plans to launch a new business called Citra Living, with the intention of becoming a corporate landlord. Its first development to complete will be Fletton Quays in Peterborough, where 45 apartments will be available for renters over the summer months, with the company aiming to acquire around 400 properties by the end of the year,
The point is that all businesses are evolving and financial services business are no exception. Understanding the value financial services organisations offer in the new post pandemic world is a challenge that needs to be met if any of them are to remain relevant. What is the point of financial services and how is it adding value? What is its purpose in the new world?
These questions acknowledge that the decisions financial services companies make have very real social and environmental impact. It is possible and logical that the model will evolve to not only embrace financial risks but broader societal and environmental ones. Might a financial services provider eventually help its customers understand how their consumption impacts the environment and then offer schemes to reduce their carbon footprint? Might a building society incentivise greener new builds?
This is an extension of an ethos building societies have long understood. The clue is in the name after all. ‘Building societies’ should be helping communities do exactly that. Lockdown may have challenged the physicality of their model. Branches may have lain redundant. But for some in the community who value the personal touch, they will continue to be a sanctuary. We have already seen some deliver an innovative use of space in the sector with branches in libraries and other public spaces. This is important because town centres will need our support as we regenerate. Being digital and physical and therefore relevant in this environment is challenging but as John Lewis have shown, it is important to understand how to employ both in a way that works for people.
The time is right for financial services organisations of all sizes to play a bigger part in our lives. We have woken up to the fact that we quite like being ‘looked after’. Big government exists now in a way that was unthinkable in the 1980s. People are more willing to permit the use of data (NHS records for COVID passports for example). Furlough, the vaccine programme, 95%LTV lending even, have changed the public’s expectations of big government and the firms that help to deliver the infrastructure of our daily lives.
It’s a work in progress. It won’t be plain sailing, but it will deliver massive competitive advantage to those that achieve it. Technology and physicality will be a key part of this but how societies think about the broader application of their work will drive the value they offer to communities. Some of the lenders and providers with whom I work are grasping the challenge of this proposition. It is relevant to organisations of all sizes but it will be those with an acute understanding of their broader purpose who will take advantage of the opportunity.
Tim Hague is managing partner at Sagis
