Newcastle Building Society is
the largest prepaid card issuer in the UK and one of the top five
issuers in the world. However, it has seen many changes in
management line-up this year. Louise Naughton talks to NBS’ newly
appointed John Warden and Chris Reddish about the perceived
conflict preceding their appointments.

Photograph of newly appointed NBS operations director John Warden, and NBS head of cards Chris Reddish

Despite its seemingly stable
foothold in the industry, Newcastle Building Society (NBS) has
recently seen its fair share of changes in its management team.

Jim Willens succeeded Colin
Seccombe as CEO in March and NBS veteran Colin Greaves announced
his resignation shortly after, with claims the building society
“lacked ambition and innovation”, after 20 years as its operations

John Warden (JW) was drafted in as
Greaves’ replacement in May and within two weeks of his appointment
he partnered with Chris Reddish (CR), previously group head of
prepaid cards at MasterCard Europe, as NBS’ new head of cards.

CI reporter Louise
Naughton (LN) finds out why Warden and Reddish decided to join NBS,
and asks them to shed some light on the perceived conflict that
preceded their appointments.

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LN: What made you decide to
take up your respective positions at NBS?

JW: I started at
NBS four and a half months ago and was brought in by the new CEO
Jim Willens. Colin Greaves was moving on to Transact and I was
brought in as his successor.

My background is mainly in building
societies as a finance director in a variety of entrepreneurial
businesses and it was a combination of those two things that
interested Jim.

It was acknowledged in the
beginning that I do not have a background in cards so I would need
to bring someone into the team with great in-depth knowledge of the
cards business, and that led to a conversation with Chris.

What was interesting about NBS is
that it has the traditional, solid building society activity, such
as savings and mortgages, but it also has alongside that some more
entrepreneurial, progressive businesses, such as the cards
business, and that is what attracted me.

It is a very dynamic and exciting
marketplace, one that is still going through very rapid growth and
lots of change. It is that dynamism that interested me.

CR: I have got a
long history with NBS during my time with MasterCard, and I knew a
lot of the team very well.

As we go into a new compliance
environment, from a regulatory perspective, then what you have got
with NBS is a great strength and depth of financial services which
is a great foundation for further growth.

It has been pioneering many parts
of the market and it is a really exciting opportunity to build on
what is already a successful foundation.

There is enough of a diverse
portfolio of opportunities, and there is certainly plenty to keep
us busy.


LN: It is thought the
society’s new CEO Jim Willens is more risk adverse than his
predecessor Colin Seccombe. Do you agree and will this impact
growth and innovation at NBS?

JW: I think the
important thing about having a building society associated with a
cards business is there is stability and strength in the building

Any business has to ensure it has
the right expertise on the team to handle all the different issues
and that is the reason Chris is on the team. He brings to our
partnership a depth of knowledge and expertise of cards that I
don’t have.

It is also increasingly important
as we see the FSA paying more attention to what is going on in the
world of cards than it was a year ago.

I prefer really not to comment on
those reports because they sound very speculative to me. What you
need to do in every business is make sure the risks that you face
are controlled and mitigated. In the cards area, there is a
different dynamic, and different risks to be controlled. I feel
fully supported by Jim in what we are doing in the cards

CR: It takes a
degree of understanding, whether it is people’s mortgages or
savings or the value on their prepaid card; it is very important to
absolutely get it right.

The regulatory environment is
migrating into a more conservative and stronger compliance

That environment is playing more to
NBS’ strength.


LN: Colin Greaves announced
his resignation shortly after Jim Willen’s appointment and told
CI he left his position at NBS because he felt the
organisation lacked ambition and innovation. How do you react to
those comments?

JW: That is for
Colin to express his own opinions. We recognise that in taking this
business forward it fundamentally depends on strong partnerships
between card issuers and the programme managers.

CR: There are
different business models between Transact and NBS. A lot of the
innovation in prepaid from NBS’ perspective comes from the
programme managers.

They are the people that are
finding the solutions for cardholders and customers. NBS provides a
solid foundation platform for the programme managers who are
developing that innovation in their various specific sectors.

JW: I think that
is very important to understand, because we as the issuer are there
to support the programme managers. They are close to and understand
the marketplace and products they are designing better than anyone
else can.

I think it is important that we do
not try to second guess what programme managers should be doing, or
get involved in their markets.

CR: There is a
whole array of project services available in the marketplace, such
as mobile and contactless.

It is up to the project managers to
use those projects as they require. We are working on a contactless
initiative with one of our programme managers and others are
working in the mobile space.

We act as that chassis programme
managers build innovation on and take that forward.


LN: Various consultancies have
recently overshot their estimations for prepaid growth. How
valuable is this research to NBS?

CR: Yes it did
overshoot to an extent but the whole of the financial market has
dramatically changed in the last two years.

We are seeing a significant shift
and increase in the whole debit area which obviously impacts on
prepaid. In terms of growth, our figures were 30 percent per
annum and that’s a good growth level to have. I think the market
research has to be used in context.

The research helps make an informed
choice but again it goes back to the programme managers; they know
their niche markets and they can reveal what countries have got a
niche that is growing particularly well.

Our programme managers are seeing
increased transactions and increased volumes for cards going out
there in the marketplace. You have to look at the bigger picture of
the research – headline numbers are very dangerous.


LN: The challenge for prepaid
card issuers is to garner the same level of interest currently seen
in the Italian market. Is it possible and how would you achieve

CR: It was an
ideal environment for prepaid cards. It’s about the right product
in the right market.

It’s all a balance. You can go to
some countries and see the card penetration is really low but have
they got the acceptance infrastructure and POS terminals, or ATMs?
Are people in a cash culture or are they happy to use a traditional
card account?

You don’t change people’s habits
overnight. That level of interest in prepaid cards is very

Initiatives such as SEPA and the
Eurozone helps, but the prepaid business is not always as scalable
as we would like it to be – but it is getting there.


LN: What are your views on an
ever increasing trend of mobile technology bypassing prepaid

Pull quote by Chris Reddish, NBS' new head of cardsCR: I
think that is an exciting thought. The over the air technology will
come in and make those transactions more secure.

Different payment form factors will
do different things, but they can also work in combination.

People won’t just use one form
factor, in the same way people have more than one card in their

I think there is still a lot of
mileage left in cards – it is a key to a set of financial services
and that key can be a mobile or a card. People are very security
conscious, particularly due to the education that has gone around
about EMV – chip and PIN.

Smaller value payments will come
through in the mobile space, but we have to remember the lack of
acceptance infrastructure.

Over recent years, retailers have
spent an absolute fortune on EMV compliance, now PCI compliance,
and there is currently a lot of investment in contactless. It must
be a partnership together with the retailers if we are to roll
mobile out.


LN: What do you plan to do
differently in your respective roles and what challenges lie

CR: The key
message is about partnerships with our programme managers and
building what is a mutual business. We are not successful if our
programme managers are not successful, and we are not competing
with our programme managers.

I wouldn’t say there will be any
change in direction; it is just about focusing on building and
resolving the challenges of new legislation and providing that
support for programme managers.

The vast scale of the operation and
the complexity of the large team that we have got is phenomenally

We have got lots of initiatives
supporting lots of programme managers who are developing products.
It is great fun as well as hard work.

JW: I would expect
it to continue to be hard work, busy and hectic. It is an exciting
market and it is in an exciting phase.

It is my job to make sure this
business drives forward successfully, in a way that is solid,
reliable and dependable.

I have to ensure we deliver a sound
platform that enables the programme managers we work with to be as
successful as they can be in the various market areas that they are
working in.

I am learning a huge amount by being involved in this