In a recent Banking Reinvented podcast, Backbase sat down with Simon Broadley (CEO of Furness Building Society), alongside Jouk Pleiter (Founder & CEO, Backbase) and Tim Rutten (CMO, Backbase), to explore what it takes for building societies to bridge their heritage with modern, member-centric digital transformation.

Building societies have long been pillars of their communities - trusted, member-owned institutions with deep local roots and a strong service ethos. Their mutual model, prioritising people over profits, has earned them loyalty across generations. But in today’s rapidly evolving financial landscape, tradition alone isn’t enough.

With digital challengers and fintech startups redefining speed, convenience, and personalisation, building societies are under pressure to evolve. The question isn’t whether to modernise - it’s how to do so without losing the identity that sets them apart.

Traditional values and modern challenges 
 

Below are the biggest challenges building societies face today and tips on how they can turn challenges into opportunities.

Balancing heritage and modernisation - Building societies’ deep-rooted heritage fosters trust - but also fuels the perception of being slow to adapt. As customer expectations shift toward seamless digital experiences, societies must overcome inertia, rethink branch-reliant models, and embrace omnichannel journeys without losing their personal touch or community identity.

Navigating the ‘Buy vs. Build’ dilemma - Maintaining in-house legacy systems is expensive, complex, and diverts focus from member value. But fully outsourcing limits control. Building societies face the challenge of finding the right balance between buying ready-made digital capabilities and building custom experiences that reflect their unique brand and values.

Responding to a changing regulatory landscape - Frequent changes in savings and lending regulations demand flexibility—but many societies still run on rigid systems. Staying compliant consumes significant resources, making it harder to invest in innovation. Societies must future-proof their compliance capabilities without falling behind in their digital journey.

Navigating physical presence with digital expectations - Branches remain vital for trust and advice - but members expect the convenience of digital. Societies must invest in hybrid models that allow seamless movement between physical and digital channels, modernise their in-branch tech, and deliver consistent, personalised service across every touchpoint.

Competing digital-first and large-scale banks - Digital challengers move fast. Large banks have deep pockets. Building societies must compete with fewer resources and limited tech talent, while still offering experiences on par with the best in the market - without losing their differentiating human focus or community-based ethos.

Maintaining frequent, meaningful engagement - With low-frequency products like mortgages and savings, building societies struggle to stay top of mind. Challenger banks win daily attention through spend, save, and manage features. Societies must find ways to drive regular engagement and become a more central part of members’ financial lives.

Turning challenges into opportunities
 

While these challenges are significant, they also present a powerful opportunity for building societies to reclaim their relevance and strengthen their market position.

The very constraints holding societies back—legacy systems, shifting expectations, and increasing competition—can become drivers of transformation when approached strategically. Digital transformation isn’t about abandoning tradition; it’s about scaling the personalised experiences that set building societies apart in the first place. Here’s how forward-looking societies are turning today’s challenges into opportunities.

Empowering employees and enhancing member experiences - By adopting AI-driven technologies, societies can deliver hyper-personalised financial advice and automate repetitive tasks. This allows employees to focus on meaningful, high-value interactions. Banks using AI have already seen measurable gains in both customer satisfaction and operational efficiency.

Reducing costs and increasing agility - Composable, modular architectures reduce technical debt and accelerate innovation. Societies can modernise progressively—launching new services faster and adapting to market shifts without incurring massive upfront costs. This approach can reduce time-to-market by as much as 80%.

Scaling with digital branches - Mobile apps can act as always-open, region-free branches, helping societies extend their reach nationwide. This expanded presence supports growth without compromising the personalised, community-first service that members expect.

Differentiating through personalisation - With data-driven insights, societies can tailor digital experiences to each member’s needs—boosting engagement and loyalty. Research shows that banks strong in personalisation outperform peers by up to 30% in revenue growth.

Future-proofing through strategic partnerships - Working with modern tech partners ensures access to the latest tools, capabilities, and expertise. A 'buy plus build' strategy enables societies to accelerate digital transformation, maintain control over the member experience, and reduce dependency on legacy vendors.

Time for tradition to evolve
 

Building societies have a unique advantage: deep community roots and a mission-driven ethos that sets them apart. But to remain relevant in a fast-moving, digital-first world, tradition must evolve.

Find out more about Backbase: www.backbase.com/solutions/building-societies 

Author Bio:

Jonathan Stallard is Regional Director, UK and Ireland, for Backbase, leading the UKI business for Backbase for both new and existing customers. He has 19 years of experience working in the Global Financial Services sector with senior management on digital transformation initiatives, and is currently working with financial institutions on their Digital Strategy to optimise their Digital Engagement Channels.