Building societies often say they offer superior customer service, but how do they actually compare to other financial service providers, and how are they able to beat the banks and offer competitive products at the same time?
How do building societies compare?
The best way to answer this is to go directly and ask the customers of both banks and building societies themselves. The BSA commissioned independent research agency YouGov to ask people with mortgages and savings how they feel about their financial services provider.
The results speak for themselves. Building societies receive higher scores from their customers across all seven metrics compared to scores received by banks from their customers. The chart below shows the percentage point lead building societies have over banks.
Perhaps the holy grail of measuring customer satisfaction is if customers are willing to recommend a service to friends or family. 82% of building society customers said they would do this, compared to just 70% of bank customers. Therefore, it is no surprise that more than 9 in 10 (91%) building society customers say their society provides good customer service compared to 85% of bank customers.
But offering good service is not enough, especially in the highly competitive retail banking markets. It is now easier than ever to transfer a savings or mortgages to another provider, and so offering competitively priced products is imperative. Over three quarters (76%) of building society customers say their provider offers competitive rates compared to just 62% of bank customers. Figures from Savings Champion confirm that building societies offer higher savings rates. The data shows that a greater proportion of building society accounts (71%) pay a rate above Bank Rate (currently 0.5%), compared to banks (47%). This continues the trend that we have seen over the last six years and remained the case throughout 2017. It also found that during 2017 the average variable interest rate paid by building societies was over 25% higher than the banks.
And it is not just building society customers who believe they receive high levels of service, the staff do to. In a separate study carried out by YouGov together with a survey of building society staff carried out by the BSA, it found that 90% of building society staff believe their organisation puts customers first. This compares to just 57% of staff at publicly listed companies (banks and other shareholder owned organisations).
How do building societies beat the banks on both service and price?
The answer is the nature of a building society. Being a mutual means your customer are your owners, and with no external shareholders to pay dividends to (as many banks do) building societies reinvest their profits in the best way that benefits their owners, who are their customers. This may come in the form of more competitively priced products or investment in customer service and new technology.