Can lender's top exec truly understand first-time buyers' home ownership challenges?
With around 15 years’ experience working in investment banking, Graham McClelland (pictured) might not have seemed an obvious fit with Gen H, the up and coming fintech lender and innovative player in the mortgage market, whose business is shaped around a mission of ‘unlocking home ownership for everyone’. But now, four years into his time there, he finds himself as its new CEO.
In McClelland’s own words, his career is ‘a happy accident’, and he was ‘relatively successful’ in investment banking. This is probably a modest description, given that his time in the sector included managing director roles at both Goldman Sachs and Morgan Stanley, supporting its high end clientele, be it releasing capital to purchase a yacht, for example, or to buy a £40m property in London’s Belgravia. Earning well, he obviously didn’t struggle to get onto the property ladder, so to what extent can he relate now to the challenges faced by Gen H’s clients, 60-70% of whom are first-time buyers, and many of whom are likely on lower salaries than he was?
“That's a really good question,” McClelland replied, thoughtfully. “I had a good career that made it easier than it may otherwise have been, but also because of my age, early 40s, me and my peers could just get on the housing ladder, before it got materially more challenging. There’s no doubt in my mind that it's harder now than it was 15 years ago, when I bought my first place. I bought just after the financial crisis - I got quite lucky. I was ready when nobody else was buying. Places now are a lot more expensive, there’s not a lot of liquidity.”
He continued: “I see what it's like for my peers and my colleagues, other families. It doesn't take a lot to see you live in a society where more people own their homes outright than own homes with a mortgage. Now, clearly there's an ageing population in this country, but put all that to one side, that just doesn't feel right. There is clearly a problem with home ownership - we have a huge problem coming up if we don't fix this. I remember, renting a flat in a big block where you're living on top of each other and you don't really know your neighbours, you don't really get involved, there's not really that community - whereas you buy your house, you know your neighbours, you're invested in the community, you know what's going on around you. So, I can see all of those things. I can see the intrinsic value of home ownership - I appreciate it. There’s lots we can do about this as an industry.”
Read more: 'BoE policy denies hundreds of thousands of first-time buyers their own homes'
How the pandemic prompted a career change
Now it’s McClelland’s task to lead Gen H, having taken over from its founder Will Rice, who sought a reset and has stepped down to become a non-executive director. None of it might have happened, but for COVID - and a time of reflection for McClelland, away from the energy of the City work environment he knew. “It’s one of those careers that requires a lot of you,” he explained. “I'd always promised myself, if the next two years looked like the last two years it was time for change. Maybe I'd reached my ceiling, maybe I just wasn't going to go any further up the tree. Investment banking is quite a social pursuit, so when you're all remote, working from home, maybe it’s ‘the Emperor's got no clothes’ type of moment. I just wasn't enjoying it anymore, and that left me with a window to decide what I wanted to do with my life. I wanted to do something that was with an early stage, growth tech business, focused around the consumer and ideally doing something that I thought of as a good thing - something I could get pumped up about. It was a very conscious decision.”
A meeting with Rice, where they clicked straight away, led to McClelland effectively taking a pay cut and joining Gen H as its chief commercial officer, to run the funding side of the business, then latterly as chief financial officer, paving the way for his recent promotion to top position. When he joined, the lender, based in London’s Old Street, had around 30 people in its team – now it’s closer to 75. “Will had got the first piece of funding in place but that was it,” McClelland said. “There wasn’t revenue in the business, it wasn’t really fit for purpose, so I came in to do that. What attracted me was the people - we've got some fantastic people who are all a contrast from investment banking. They are driven by the purpose of how do you create incremental homeowners or, I guess to put it better, when a house is for sale, how do we ensure that that a house goes to someone who wants to own the home, live in the home, be part of the community rather than an overseas landlord, second properties, buy-to-let, holiday let, all that sort of stuff? So, what do we do to empower that marginal buyer? We exist to give people a better chance of owning the home that they want to own, and we do a lot around responsible affordability.
“What we do really well, is helping those who don't have that vanilla income profile. Quite often it's people who have two jobs, some employed income, some self-employed income and the big high street lenders don't really want that business. There is a growing, sizeable minority that have a more complicated set of circumstances and I think we do a really good job of capturing those type of customers and being able to lend to them, probably more than they could get elsewhere, but doing it responsibly.”
Taking the business from strength to strength
Gen H has, McClelland points out, created thousands of new homeowners, through the several billion pounds of funding it has secured. It’s also made available its propositions – such as its recent headline innovation, New Build Boost - to more than 22,000 mortgage advisers. Under McClelland’s stewardship, the lender plans to work with additional funding partners, expand its product offering to help more people into home ownership, and continue its focus on helping the broker community provide the best advice it can to their clients. “I think we can do a better job of that,” he said. “We need to turn our attention to who is serving the customers that we want to reach. Primarily, it is about communication and targeting, making sure we're speaking to the right people, at the right times, in the right way.”
The CEO role at Gen H was not something McClelland coveted. “I remember I said to Will when I joined that I was not in a part of my career where I was chasing a title,” he shared. “I did that and it was important to me, but I said, ‘I don't really care anymore, as long I am rewarded appropriately and the stuff that I'm involved in is interesting and I feel I can add value, I'm making a difference, you can call me the janitor or whatever you want to call me. I don't really care - it has to be interesting, and I have to feel like I'm the right person to do it.’ “
Since leaving investment banking, McClelland has faced questions from former colleagues, some reluctant to make such a break themselves, about what life is like away from the career he once knew. But he has, as he puts it, zero intentions of becoming an investment banker again. McClelland is happier doing what he’s doing now – and as he summed up: “It is a much more fulfilling way to spend your time.”
