Guest blog by Dhritiman Mukherjee, Technology Strategy Consultant, Banking and Capital Markets at DXC Technology.

Will 2022 be there year for UK's building societies?

Given their mutual status, it can be quite challenging for building societies to diversify into higher margin activities that, for example, are present in retail banks and other parts of the Banking and Capital Markets (BCM) industry. The cost of funding may be expected to increase as the low-cost Term Funding Scheme (TFS) matures. On the other hand, the growth of multiple interactive interfaces has meant that customers expect to do their banking instantly and anywhere using multiple platforms. But for building societies to be able to provide a seamless customer experience, not only do they need access to data, but they also need to know what data needs leveraging.

Connecting to devices, ingesting, and storing sensor data is not easy, and is only the tip of the iceberg when it comes to collecting insights. The ultimate goal of gathering this vast amount of data is to extract actionable insights to allow the customer and the financial services provider to achieve results.

Because of the lack of true data management, some building societies may be experiencing challenges around an increase in expenses (to digitize their technology) while revenues are getting squeezed. These factors, along with the ones mentioned above indicate that building societies must diversify their products and/or services, enhance customer focus, and continue to evolve their technology, especially when it comes to the optimization of multi-cloud, hybrid-cloud, and true data-driven insights.

Key technology trends

While other sections of the BCM industry have continued to thrive in the digital space, there is a constant evolution that comes with building societies when related to adoption of technology. It is fair to say that different building societies are at different maturity stages when it comes to digital transformation.

Some of the reasons why some are ahead while others may not be is based on factors such as possible budgetary constraints, legacy infrastructure, and a belief that customers are satisfied with the status quo.

However, now there is a common agreement that modernisation of technology is mandatory to enable cost effectiveness and to ensure customer satisfaction. The key technology investments that building societies are considering include:

• Adopting modern, scalable, flexible cloud-first core banking systems
• Introducing Unified Customer Front Ends including Omnichannel / mobile capability
• Modern CRM solutions ensuring enhanced channels and customer engagement, and providing Single-View of the Customer (SCV)
• Future state architecture and solution enabling API gateways for Open Banking / finance
• Focusing on data and analytics capabilities
• Making use of AI and ML to improve customer facing (e.g., cross selling) as well as back-end processes (e.g., AML)

Benefits from CRM

BCM customer behaviour has been continually evolving since the onset of the digital era. However, the COVID-19 disruptions upended customer expectations radically, leading to a decade’s worth of digital adoption in months. While building societies have a percentage of customers who may accept their current channel offering, emerging consumers demand much more. This has brought topics like customer centricity, customer lifecycle, UI/UX and omnichannel capability at the forefront of their strategy and in turn is seeing increasing demand for CRM systems to deepen existing relationships and acquiring new ones. CRM can assist building societies address several key challenges, including:

• Creating a SCV across products and channels, enabling better understanding of their behaviour and needs
• Cross selling products and services in alignment with customer’s lifecycle demands
• Efficient communication and prospect management, referrals across channels, loyalty programmes, and so on
• Connecting disparate data sources, systems, and processes across the organization

Implementing a modern CRM system opens many other opportunities, some of which are highlighted here:

• Enhancing brand awareness through initiatives and campaigns
• Increasing customer loyalty through focused offers like loyalty bonuses, better rates
• Providing single-view data to front line staff, enhancing customer engagement and cross sell decisioning
• Better customer retention through proactive offerings and triggers; lifecycle view of customer relationships; more personalised services
• Improved cost effectiveness of communication through multiple channels as per customer preferences
• Improved profitability analyses of relationships and what-if analyses
• Reduced processing error rates of requests – CRM systems have inbuilt workflows that reduce hand-offs and can trigger reminders
• Enables staff, as well as intermediaries, to better target and prospect customers, helping them maximise their relationship and income

Why MS Dynamics?

Microsoft Dynamics 365 CRM offers growing and mid-sized BCM firms a powerful solution to manage their business relationships and transform their sales, marketing, and customer engagement processes. Selecting this solution for a building society will provide state-of-the-art processes to drive customer interactions and manage relationships proactively. It has the power to deploy membership groups across multiple channels and the flexibility to change them easily.

Its capabilities enable users to be more productive and informed, by providing deeper insights into performance, opportunities, and relationships. The sales and marketing functionalities streamline the way businesses communicate with customers, prospects, and staff.

DXC is a trusted partner in banking transformations, working with more than 100 BCM organisations in the EMEA region to help them succeed. Our teams of experts understand the full spectrum of the banking ecosystem and can help to accelerate your product launch in this digital-first age.

Join us at the Building Societies Annual Conference 2022, which DXC’s Microsoft Business Applications team is delighted to sponsor. We will showcase the Microsoft Dynamics 365 solution, which delivers comprehensive sales and marketing activities, and more, for banks and building societies. This includes Single View of the Customer (SCV), relationship building, lead generation, and activities to create better customer satisfaction, personalization, and enhanced product development. Visit us at stand 37 in the exhibition hall.

The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.