Glasgow, UK -- (SBWIRE) -- 07/24/2012 -- With the Euro Crisis in full swing and news of job cuts and austerity measures making the headlines daily, it’s easy to romanticise the ‘Good Old Days’. Yet 150 years ago, they were anything but good for the ordinary working man. So when John Stewart founded what would become Scottish Friendly in 1862, his intention was to provide a “safe and sound means of investment for the working classes.” Under his guidance, it became established as a mutual insurance society with the aim of paying funeral expenses so policyholders avoided a pauper’s grave.
Today Scottish Friendly is the largest mutual life office in Scotland, with over 450,000 members and more than a million policyholders. Providing financial products and services such as Junior ISAs, tax-free investments and life cover, the society looks after assets worth more than £800million.
The City of Glasgow Friendly Society, as it was known back in 1862, started as a breakaway movement from the Royal Liver Society. Seven men formed the original committee yet without John Stewart, it would probably have never got going. As well as guaranteeing a £1,500 fund for the start up – a small fortune back then – he set the tone of the organisation, one that prevails to this day.
One of his great principles was that a friendly society should be truly democratic and he was insistent that members should have a voice in the Society’s affairs. He also made it his business that all claims were met promptly. The Scots have always been their own greatest critics and there were many who predicted failure for the City of Glasgow Friendly Society. Yet during the first nine months of its existence, branches were opened in Aberdeen, Edinburgh, Bathgate and Perth. Five years later and the society had spread its wings, with branches appearing in cities including Belfast, Sunderland, Manchester and Leeds.
This early success was in a large part due to John Stewart’s dedication to his role as managing treasurer. He worked tirelessly for the society he founded and in November 1888, received a ‘timepiece’ and a silver tea service in recognition of his long and faithful service. Four years later, in ailing health, he handed over the reins to a younger man – his son, James Stewart. The minutes of a Board Meeting from that year give a fascinating insight into office life in the late Victorian period: “The next business,” records the Minute, “was to consider the propriety of having a Telephone. After due deliberation…it was agreed to make a trial of it for one year.”
The century that followed would bring advances in technology that John Stewart could never have imagined. The City of Glasgow Friendly Society kept pace. On May 16th, 1900, the Society obtained its first typewriter on a week’s trial. That led to another first as the Board also appointed a female member of staff – a typist who was paid 10s a week.
Almost 70 years later, in 1968, the Society became one of the first amongst its contemporaries to install a Honeywell mainframe computer. The size of a small living room, it could store 256 kilobytes of data. Now, in these times of pocket hard drives that can store tetrabytes of information, this may sound unimpressive. But back in the day, the system was considered state-of-the-art. Initially, the computer was set up to perform one single task – preparing the annual valuation. Before the computer arrived the valuation work was complex and very labour-intensive. Now, the mainframe could do the work of as many as 20 to 30 employees. As a result of its installation, an entire department disappeared; a move which resulted in a significant decrease in overhead costs.
In more recent years too, IT has played a major part in the success of Scottish Friendly. As financial institutions across the globe have vanished in the credit crunch, John’s Stewart’s friendly society has weathered the storm.
In 1998, Scottish Friendly launched its own website and although the organisation’s e-business was still very much in its infancy, the management team was acutely aware of how important it would be in the future. Advances in information technology were being made at breakneck speed - and Scottish Friendly could not afford to be left behind.
It was around this time Fiona McBain, who became Chief Executive in 2006, was brought in to help launch an ISA and the OEIC (Open Ended Investment Company) that underpins that. At the time, Scottish Friendly had an in-house IT team who were asked by Fiona and the actuary Jim Galbraith (now Deputy Chief Executive) to launch the new products. They explained that it was vital to feed off the UK government’s flagship campaign and take advantage of all the free generic ISA marketing. The IT team shook their heads, saying it would take them 18 months to build a platform for a new product. Not only would Scottish Friendly miss out on the free marketing – they would miss a whole year’s business.
This was simply not good enough. Fiona and Jim made the decision to buy an external software solutions package to get moving and the ISA was launched in good time. This event triggered Fiona’s determination to transform IT from a business blocker to a business enabler. In 2000, with a new Head of IT in place, Scottish Friendly embarked upon an in-depth assessment of its existing systems.
Two years later, the management team made the decision to purchase a software package from a little-known New Zealand company called Tacit. Tacit’s software was not well known in the UK, but was cleverly adapted for Scottish Friendly’s Child Trust Fund, gaining quick approval from the Inland Revenue.
The strategy proved to have an unexpected upside – Scottish Friendly won a contract to administer the wrap business of Nucleus, an Edinburgh group of independent financial advisers. This opened the gates to more outsourcing work.
The wrap platform made significant progress, attracting industry admiration and business from the likes of Norwich Union. It also meant expansion for Scottish Friendly, who opened two new Glasgow offices.
Around the same time, Scottish Friendly was also able to consolidate a number of smaller societies; including its nearby Glasgow rival, Scottish Legal Life. Overnight, Scottish Friendly grew by a third.
Then, in 2011, a year before it celebrated its 150th anniversary, the government announced the introduction of the Junior ISA, a new, tax-free way of investing for children. Tax treatment depends on your circumstances and is subject to change. Now backed with a modern, engaged IT department, Scottish Friendly was quick to move, adding a Junior ISA product to their portfolio of investments where as with all stock market investments, the money you invest can go down as well as up and your original investment is not guaranteed.
More developments were to come later in the year when Scottish Friendly began negotiations with Citi, part of the US-based financial giant Citigroup, with a view to selling the wrap administration business, which was by now handling around £4bn of funds. A deal was struck and on 1 January 2012, 134 Scottish Friendly employees were transferred, together with two of its offices, to the American bank.
As Scottish Friendly celebrates 150 years, its remarkable tale is one of just a few financial services success stories. A mixture of organic growth, mergers, a strong IT system, new products and outsourcing have all contributed to the success. Whilst staying true to its founder’s principles, Scottish Friendly has well and truly embraced the digital age. Today, John Stewart’s society even has its own Twitter page, tweeting followers a mix of news, blog posts and opinion on everything from Junior ISAs to reaction to the Chancellor’s Budget.
To mark the 150 years, Scottish Friendly is offering two customers the chance to win an iPad3. The competition is currently running on the Scottish Friendly website and there’s just one simple question to answer to take part: Who founded City of Glasgow Friendly Society in 1862. Now, if you’ve been paying attention, there’s a pretty good chance you’ll know the answer.
No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting http://www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.
About Scottish Friendly
Scottish Friendly is a progressive and modern financial services group. The group provides investors and their families with a wide range of investment products.