Kerry Latter is chief executive of Pioneer Permanent Building Society, a financial institution that has serviced regional Queensland for 30 years. He has held senior roles in finance and service industries and has been a part-time lecturer in management and marketing. He is also a director of the Queensland Association of Permanent Building Societies.
AIM: What are the biggest management challenges facing the finance sector?
Latter: Managing the margin squeeze, and people management. IT systems are also a big challenge, particularly for small institutions that do not enjoy the benefit of economy of scale in purchasing more and more complex systems. Striking the balance between shareholders and customers is important too. We look for sustainable profit rather than profit maximisation.
AIM: Are there particular management challenges to running a building society?
Latter: A building society needs to maintain the personal touch while delivering up-to-the-minute, high-tech solutions for customers. It is about a balance between customers who want to have access to across-the-counter banking services and do not want to be penalised for it, and those who want internet and telephone banking services. We have to have solid risk-management controls. We meet the same prudential standards as the banks. We must be careful of our pricing policy, operational issues and processes. And, of course, all the time, you are focused on competitors, regulations and customers perceptions of value.
AIM: How, then, are building societies different from banks?
Latter: The key difference is a focus on service, and you need to go for sustainable profit rather than profit maximisation.
AIM: With the trend in the sector towards global consolidation, what role do building societies and credit unions have?
Latter: There are three things. One is that a place exists in Australia’s financial system for small and medium-size financial institutions. Two, Pioneer needs to have a regional rural niche reinforced by core values of service, innovation and reasonableness. And three, Pioneer is broadening into a more diverse-based, community financial institution, offering a full range of personalised regional banking services to personal customers, small business and rural clients in regional communities. With globalisation, you are seeing the larger institutions focusing on global business and domestic medium and large businesses. That leaves a vacuum to be filled by small and medium-size institutions such as ourselves.
AIM: How successful will the banks be in using customer relationship management to boost links with customers?
Latter: I think it is a very good theory. The challenge is for them to empower the staff to do it and make the practice reflect the theory. I think that will require some attitudinal shifts.
AIM: How does the ALP idea of a social charter for banks fit in with a system in which banks are also required to serve shareholders and meet capital adequacy requirements?
Latter: The challenge in a social charter for banks is whether, with globalisation, it would be attempting to force a sector of the market into doing something that the sector is no longer focused on. Second-tier banks and institutions like ourselves can fill the gap that the ALP and others are so concerned about.
AIM: How will the finance sector look 10 years from now?
Latter: There will be definite markets for small and medium-size institutions and a greater global focus by the Big Four.