MARKETING MUTUALITY

Julieann Thurlow President & CEOReading Cooperative Bank

Sarah Howe Chief Customer OfficerSaffron Building Society

&

Agenda

1. RCB market research around mutuality

2. What our Customers want

3. Competition & Disruption

4. Mutual Strategies

Trying to Figure Out Our One Simple Thing

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Is it true?

Is it relevant?

Is it motivating?

Is it distinct?

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Information Gathering from Stakeholders

• Board members

• Employees

• Customers

• Community

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StrengthsStrengths

“We’re not beholden

to shareholders.”

“We’re our customers’ allies…

we sit on the same side of the

table as them.”

“We make our

communities better.”

“Live people answer the phones…

we know our customers on a first

name basis.”

“We’re simple, no strings attached.

Customers don’t have to dig deep to

understand.”

“We’re not in it for ourselves.”

“We’re about long-term

relationships, not individual

transactions.”

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Not Owned By Stockholders – Aware?

Yes, 58%

No, 42%

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Mutual Status – Important?

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Extremely important

Somewhat important

Not important

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}85%

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Appeal of a Mutual Bank

86.9%

Does Learning This Change Things?

Yes, 59%

No, 41%

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“More trustworthy.”

In What Way Does It Change Your Perceptions?In What Way Does It

Change Your Perceptions?

I may be depositing all my money at this one bank.”

“I like it. Makes it stand out from big banks.”

“I feel cared for… important… RCB is accountable.”

“It means RCB has a longer-term focus rather than a quarter-to-quarter profit motive.”

“Makes me want to support it as a smaller business than national banks.”

“Makes me feel there is actual opportunity for improvement.”

“I feel more invested in its success.”

“It validates the impression of trust I have had for many years.”

“They are on the customer’s side.”

“It makes me like you more.”

“Instead of being run by stuffy men in suits making millions, RCB is being

run by people like me ☺”

What People Think About Banks - US

• They’re all the same

• They all talk about themselves (“We’re global,” “We’re strong,” “We’re leaders”)

• They set the rules (“the house always wins”)

• They make things confusing – and maybe on purpose

• They’re overwhelmed with options that all look the same

• They want a partner – a bank that understands what they want and is willing to work with them

• Since no bank is really listening to them, they settle

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Connection CitizenshipPeople

Customer ServiceLocal Business Community Bank

Community

Customers and Community

People solving problems

for people

Customer ServiceListeningRealizing dreams

Bank HumanCommunity

SEA OF SAMENESS

UK Perceptions – The Customer View

What We Are All Saying To Consumers…

Brand Avoidance

State of the Industry

“Consumer confidence in the banking industry is on the rise, as is trust in individual institutions, and customers are broadly satisfied… However, the primacy of the bank’s relationship with its customers is under threat as never before. Demands and expectations continue to evolve, often fueled by experiences outside of financial services…

Emerging technology, and the increasing use of mobile devices for both banking and payments, is making it easier for new entrants to challenge the status quo and exploit areas of dissatisfaction and underinvestment.”

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DISRUPTION

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DISRUPTION

UK Competition

Millennials will make up 50% of the retail banking

population by 2020.

Two years ago, they surpassed Gen X as largest share of US workforce.

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And then the Millennials…

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• Authenticity (communication, transparency, relevant and caring)

• Personal (not big box)

• Experiences and causes

• Education & content

• Instant gratification – (Uber, Amazon)

• Want things that make my life easier

• Self service, algorithmic decisioning, crowdsourced options

• Technology must be reliable, secure and social

Millennials are Much Maligned – they are values driven

Millennials are Co-operative by Nature

“Millennials are significantly more likely than Gen X’ers and boomers to say they are more productive working in teamsthan on their own… the gains that come from teamwork have been learned from the collaborative nature of their childhood activities, which included social networks, crowd-sourcing and even video games like World of Warcraft that emphasize cooperative rather than individual competition.”

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We think there is opportunity for Cooperatives/Societies

• 38% of Millennials will switch brands if a company is found to have bad business practices (#1 reason up there with recommendations from friends)

• 69% consider a company’s social and environmental commitment

• 66% will recommend products if a company is socially responsible

• 74% are more likely to pay attention to a company’s message if the company has a deep commitment to a cause

• Millennials do not think that business success should be defined just by profit

� It’s how we treat our employees

� It’s how we treat our community

� It’s how we treat the environment

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SJ SP

NJ NP

ENTP

INFPINTP

ENFP

GUARDIANS Duty, Security

Status Quo

PLAYERS Now, Fun, Adventure

STRATEGISTS Long-term, Analysis,

Planning

EXPLORERS Possibility

Opportunity

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%

42

%

8% 7%

ENTJ

INFJINTJ

ENFJ

ESTP

ISFPISTP

ESFPESTJ

ISFJISTJ

ESFJ

Myers Briggs Type Indicator % UK Population

RCB’s Brand seeks to build on:

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• Build Trust is job #1

• Our customers love (and trust) us

• There’s an appetite for “co-operative”

• We’re in a sea of sameness…with disruptors creeping in

• Appealing to Mutuals

• Must Energize our team.

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cooperative, dammit!

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We aren’t like other banks. We’re a co-operative. And proud of it. This means we don’t answer to stockholders. We answer to you. The people who trust us with their money. Here, your voice matters. Everyone gets a vote and decisions are based on what’s best for all of us. Together, we’re fiercely independent and we’re going places. Wherever we want.

Our Manifesto

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proud, unpretentious, collaborative, honest, fair and a bit rebellious

We’re a co-operative bank – which means our customers literally own the bank – and we’re proud of it! Everyone gets a say, and people are always more important than profits.”

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Brand Archetypes

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BelongingDiscovery

Stability

Achievement

RegularGuy/Gal

lots of banks

lots of banks

“Regular Guy/Gal” Qualities

• Want to be part of the crew

• Solid, middle-working class citizens who work hard and make life work

• Root for the underdog

• Orders a “beer” not an “Absolut on the rocks”

• Prefer hockey to tennis

• Like self-deprecating humor

• Don’t take themselves too seriously (down to earth)

• Appreciate “real” – no desire for glamour, hype, luxury

• Frugal, reliable and grounded in common sense

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vs.

New Logo

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Shape inspired by the Parker Tavern,

Reading one of the oldest colonial saltbox homes in

the State

Tied to the origins of the bank – every man owning a

home

Drop of the hyphen is about unifying and

simplifyingDynamic, Diverse, Vibrant,

Community, and Collaboration

Color red is about being bold, but not abandoning our roots

“Cooperative” is the part of our name that’s

highlighted

Contains the shape of the spire of Old South Meeting House where our Bank’s first 1886 meeting was held

For you. By you.For you. By you.

“The bank works for you not for themselves.”

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“A bank that is for you and by you is one that understands you and doesn’t; try to trick you or hike up interest rates for loans like other banks do.”

“Customers are the lifeblood of the bank.”

“The customer is the priority rather than profits.”

“Of the people by the people.”

“A bank created by everyday, honest, hardworking people.”

“I am a shareholder.”

“I have a say in my banking.”

Makes me feel wanted, included and counted.”

First Strategies: Doubling Down on Mutuality

Voted mutual by-law protections to ensure independent, co-operativestructure remains in perpetuity

� Super-majority required to convert

� Removed Directors’ ability to profit from a conversion vote

� No Director can own stock for 5 years post conversion

� By-law amendments to revoke blocks ownership by voting members

• The RCB Foundation was created and is funded in perpetuity to support the needs of the community

� Customers vote for recipients

• Loyalty Rewards – 5 yr, 10 yr & special dividends

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A Voice for Mutuality

• Speak out on mutual conversions

• Advocate for mutuals

• Ensure we have a seat at the table Legislatively & Regulatorily

• Shame is a tool:

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Successful Saffron Strategies

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Shared Values are Mutual Bank Values

• 2011 HBR: Shared Values - Michael Porter & Mark Kramer

• “The solution lies in the principle of shared value…creating economic value in a way that alsocreates value for society by addressing its needs and challenges.”

• Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success.

• Businesses must reconnect company success with social progress.

https://hbr.org/2011/01/the-big-idea-creating-shared-value

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Application of the Mutual Shared Values Strategy

• FRB: Color of Wealth in Boston

� Without financial education – change will not occur

• What are the Financial Needs of our Markets?

• City of Lawrence

� 60% native Spanish Speakers

• Unbanked and Underbanked

� Working to build trust with unbanked community

• Students & Elderly

Changing our Relationship with Customers

• Creating new customers

� Unbanked and underbanked in our “Gateway City”

� Youth savings programs to onboard early and retain with mobile

• Engaging Millennials through financial forums and learning events

• Sharing what we do for our communities & why

• Asking for feedback often

• Making people want to be in our “club”

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New Cheeky Ads – Fresh Look, Mutual Messaging

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Thank you for listening

Questions?

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Thank you!

Sarah Howesarah.howe@saffronbs.co.uk

linkedin.com/in/sarah-howe-82634711

Julieann Thurlowjthurlow@readingcoop.com

linkedin.com/in/julieann-thurlow-0a994ba