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Avon Mutual Newsletter

Welcome to our first update of 2020


It’s been a hugely exciting and busy quarter since my last update, with great progress right across the build.


Jules Peck, Founder, Avon Mutual

Great news on fund raising


We are delighted to be able to announce that we are now very close to having raised our first £1m towards our estimated £2.5m start-up requirements to take us through to launching.


We have just been awarded an investment readiness grant of £200,000 from the Economic Justice Program, part of the Open Society Foundations. Open Society is active in more than 120 countries around the world, awarding grants to promote inclusive and vibrant democracies.


The Economic Justice Program was launched in 2019 and works globally to create economic opportunities for those who face systemic discrimination or exclusion, with the purpose of supporting Open Society’s core mission of promoting open, inclusive, and democratic societies across the world. In pursuit of this mission, the program makes grants to civil society organizations and movements and invests in businesses that have a positive social impact.


The investment readiness grant is made with the intention of considering a further investment in shares provided we meet certain conditions. One milestone tied to the grant is that we raise an additional £200,000 of share capital. Assuming we raise this additional £200,000 and are successful in crowding in subsequent investment, this will take us very close to the finances required for us to launch the bank.


In addition Bristol City Council continues to lead on a consortium of our region's councils undertaking due diligence for multi-million pound investment for our final £18m post-licensing reserves requirements. BCC are also leading on discussions with local authorities across England about due diligence for their funding the initiation of founder teams for our sister banks, in particular in the NW and NE.


So in order to take advantage of this great opportunity to leverage private investment into the region, and to reach this match-funding target, we are extending the terms of the Founder Share Offer for any new investment prior to 30th June 2020.


The restrictions on the type of investors who are permitted to buy shares continue to apply (institutions, high net worth and sophisticated investors). If you would like to discuss this opportunity or have any other questions please do not hesitate to get in touch.


Progress on market research and customer proposition


We are, as ever, enormously grateful to our partners in the region's local government,universities, LEPs, community groups, NGOs and elsewhere who continue to support us in our efforts to better understand the market and opportunities for our proposition with practical help, insight and some great introductions to subject matter experts.


I’d like to make special mention of Bristol University Professor Martin Parker, head of the Inclusive Economy Initiative, who has led us to some invaluable insights through his extensive and well-informed network. And of course to our three Bristol University interns – Emily, Tom and Evy – who are delivering some terrific work and deepening their understanding of our sector.


Work on developing our product and customer service proposition is progressing well, and the team has thoroughly analysed and refined the top down assumptions we made in our outline business case with a well-grounded approach based on existing, publicly available data and desk research, and insights from our own market research undertaken by Opinium Research last spring.


The team has set itself the challenge of opening with our most complex and iconic product – the current account – on Day 1. I share their view that the current account is absolutely fundamental to our offer, and in particular is a key way of supporting vulnerable and underbanked people.


Rich data and insights into the domestic market are far more plentiful than in the small business sector, and this is proving to be an ongoing challenge which we have discussed with partners in the LEP and the small business community in the region. We plan to address this and deepen our understanding of our proposition with domestic consumers with an extensive further round of Opinium market research later this month. Good quality original research is never cheap, but we believe it’s an investment well worth making.


We have also made great strides in our thinking about our branch network, and how it integrates with our remote and digital offering. Planning to open new branches against an almost daily backdrop of branch, ATM and Post Office closures may appear counterintuitive, but it is fundamental to our role in supporting less well-served communities and individuals. Our challenge of course will be making it work for customers, colleagues, the communities we serve and other stakeholders. We get that this will not be an easy path, but we fervently believe that a modern blend of technology, personal relationships, consumer insight and brand humility will lead to a sustainable way ahead.


We have made a good start on our customer segmentation, personas and on customer journeys, pulling on the deep sector knowledge across the team. This will provide a sound foundation for our technology, systems and process infrastructure, and is invaluable in supporting the customer experience and development of our suite of customer communications.


We will soon start work on our detailed brand and maklreting and commubnications work and will report back on progress on that soon.


Progress on our operations and bank licence journey


All of the work the team has been doing for the last year or so is now coming together into our detailed financial plan and draft Regulatory Business Plan (RBP).


The next major milestone on our journey is fast approaching as we plan to send the PRA and FCA our RBP in April. It is this plan which the regulators will review to take us to the next major stage in which we will develop and send to the regulators what is known as our ICAAP and ILAAP which will detail our planned approach to capital, liquidity and stress testing.


Once the regulators have rigorously tested and challenged our assumptions and are satisfied with these we will be invited to formally apply for a bank license and move towards opening.


Alongside the work on our market research, proposition development and financial planning we have drafted our ethical framework which has been out for consultation and is currently being reviewed by Bristol University. The ethical policy will be at the heart of what we do and will we feel be a key part of our market differentiation.


Fintech will be key to our success, and we are aim to take advantage of the very latest technology to set ourselves apart from the big banks which have huge outdated legacy tech systems. We have issued a request for proposals for a partner to help scope our technology requirements and I’ll report back on this in my next update.


Public events


Following on from our previous successful public events in Bristol, Gloucester, Stroud and Bath we are pleased to announce our next event will take place in Salisbury on the 15th April, in partnership with RSA, with Salisbury MP John Glen on the subject of ‘Regional mutual banks: reinventing relationship banking in a digital age.’


We are pleased that Tony Greenham, Founder of our sister bank South West Mutual will be speaking at the event along with John Glenn and Avon Mutual's Founder Jules Peck. You can book a place at this event here.


We will announce further public events soon.


That's all for now


We hope you've enjoyed the update - as always we like to hear what you think, so please feel free to make contact with us if you want to know more. Our next update will be in May.


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