The chief executive officer of a family-owned Belgian company believes that business models need to be changed every three to five years if companies are to survive – and Caroline Van Marcke knows what she is talking about.
She belongs to the third generation of a business started in 1929 which now has an annual turnover of €400 million, part of which comes from a little bank with a big heart tucked away in East Street, Valletta.
The odds are against the survival of family businesses beyond the second generation, but Ms Van Marcke thinks this is a great shame.
“I think there will be a revival of family businesses. If you see the turmoil that we are encountering now – both economically and politically – you realise that other business models are under stress. I believe that every business model needs to change every three to five years. You need to be flexible and you have to have a long-term vision. That is very complicated for non-family businesses,” she said.
She is a firm believer in the fact that the success of a family business depends on its values – and that these have to be accepted by all the family members.
“The family has to understand the business and most importantly that the business is not at the service of the family but that the family is at the service of the business. There is a big difference.
The business is not at the service of the family but ... family is at the service of the business
“And for the business to survive, it must have a long-term vision; it has to have a soul,” she said with passion.
“You do not do it for yourself. It is a long-term project. It is about the people you employ, the community you work in. And each generation must communicate that to the next: the children know that if they do not want to stay in the business or if they do not embrace the same philosophy, there is a mechanism for them to move out. But those that stay know that they have to follow that philosophy.”
The Van Marcke Group sells sanitary ware, heating systems and kitchens via 142 outlets in Europe and the US – but these are products linked to resources with important sustainability impacts: water, electricity, oil and gas.
In 2000, when she was working in the marketing and merchandising division of the group, she came across a study conducted in the north of Belgium which found that residences were the biggest polluters with regards to carbon dioxide emissions, beating not only the transport sector but also industry.
“And what are the major factors? Air conditioning, heating and warm water – all products that are part of our business.
“The study had a real impact on me so I went to my father and we decided that we had to make changes to make our company a sustainable one.”
Apart from sourcing innovative, eco-friendly ranges for their portfolio of 26,000 products, they created a centre in Brussels to showcase the technology and explain to customers why some are better than others. They also set about ensuring that installers were properly trained in these new technologies by developing courses offered by the group’s own learning centre, the Van Marcke college, which now trains an average of 77 students on a daily basis.
“Sometimes the investment being made in these new technologies costs the equivalent of a new car so the client needs to understand why it is important to make such a financial commitment to get long-term rewards,” she said.
Indeed, one of the products provided by Izola Bank is an eco-loan, helping Van Marcke clients to purchase environmentally-friendly products.
“By allowing people to pay over a few years, it becomes much more feasible for them,” she said.
The roots of the bank go back much further – and wider – though. Since 1979, her father had had a manufacturing plant in Malta, making office furniture. He loved the country and when changes were made to the Banking Act in 1994, he thought it was the perfect time to set up the bank he had been dreaming of. The group wanted a bank to handle the internal treasury and transaction requirements of its 54 companies. Within a decade, it started offering factoring and then internet banking and a credit card to its group customers.
In 2009, it decided to offer services to Maltese customers, starting with a term deposit and it then launched a five-year €9 million bond locally. Last year it started lending to targeted Belgian consumers and the time was ripe this year for it to launch an online savings account for Malta – Izola Saver – with plans to also offer it to Belgian and French customers in a few months’ time.
The bank, located in an elegant townhouse in Valletta, is a far cry from the minimalist feel of many retail banks.
Its CEO, Andrew Mifsud, is the sort of banker who comes across as serious and dependable, in the best sense of the word. But he acknowledged that things have changed considerably since 1994, and that the time had come to reposition the bank and to communicate its new outlook.
“We started out as a very different type of bank in the sense that we were servicing the group companies. Over the last 10 years, we started venturing much more to the public: to the customers of the group in Belgium and France and also to the public in Malta. The vision of the group is that we will carry on building on that.
“We started an exercise a couple of years ago to understand the current image and brand and got some very valuable feedback. There were obviously positive elements but there was room for further development and improvement of the actual brand,” he said.
They commissioned Visual Trends to rebrand the bank but the soft-spoken Ms Van Marcke was quick to reassure its stakeholders that while this exercise is part of the evolution of the bank, it would not be a revolution.
“Our group vision is to be a global challenger. But we are different; we have a different perspective of things. We are a family-held bank as part of a family-held group so for us it is the long-term vision that matters most. We will never take the short-term view; we are cautious, although this does not mean conservative. That is not what we are at all.”
What does she mean by a “global challenger”? When asked whether she wanted to have a branch on every high street, she joked “Never say never!” but the family has clearly its feet on the ground. In fact, the slogan of the current branding campaign is based on being the “preferred second choice”, knowing that the range of products they currently offer is too narrow to be a primary bank. And while the bank is proud of the eco-loans it offers to promote Van Marcke’s green agenda, it does not intend to go into retail loans like mortgages and car loans.
“Internationally, the investment vehicles some banks use are sometimes very speculative. We would never do that. For the bank’s board of directors, it is all about knowing exactly where we invest our customers’ and our own money and understanding the risks involved. That is what we mean by caution,” she said.
Unlike many of the smaller banks, Izola, which has just reported a profit before tax of €3.5 million with assets of €148 million, is not targeted at high-net-worth individuals. While its initial term deposits had a minimum investment of €10,000, its Izola Savers platform will have a savings entry level of €25. Once clients open their savings account online, they can open a term deposit online using the funds in the savings account, with a minimum investment of just €500.
“We have always been there to deliver products and services to everybody. We have more than 20,000 clients, and while some of our clients employ thousands, many are just sole operators. “What is important is that all our clients, whether large or small operators, are satisfied with our service. This has always been part of our philosophy and I do not see it changing any time soon,” she added.