The world of savings is changing and UK building societies are at a crossroads. Through recent discussions with our customers, partners, and building societies, it has become evident that while some are racing ahead, many societies are yet to fully embrace the potential of automation in origination and servicing.

What’s holding them back? The ongoing challenges of tight budgets, limited resources, and outdated legacy systems are ever-present. While automation may seem like a daunting prospect at first, it could very well be the solution needed to stay ahead of the curve. It’s not just about keeping up with the competition and slashing costs. It's about servicing their communities by offering personalised service with streamlined operations giving members the fast, seamless service they expect. 

A recent Sandstone Technology market scan found over 75%* of UK Financial Institutions (FIs) including building societies, lack digital origination capabilities, relying on outdated manual processes. Challenges like technological debt, slow onboarding times, and poor customer experiences persist, driven by cost pressures and competing prioritisations.

Full end-to-end automation can be complex, with associated risks such as drawn out implementation timelines, high costs, and ongoing maintenance and updates, all while keeping up with changes to regulations, and emerging technologies. 

The solution… a phased approach. Starting with semi-automation, building societies can start to  offer benefits sooner, such as improved customer service, reduced costs, and less staff rework - while building a solid foundation for future advancements and improving the overall customer experience.

Addressing budget and skill gaps in automation
 

Most Building Societies have finite budgets and smaller teams compared to their larger competitors. Executives remain concerned about the skills gaps in their businesses, and how they affect their capacity and capability to implement automation. There is an ongoing issue around the cost of acquiring new technology, and the idea of engaging a scaled-up resource pool for an extended period is a pipe dream for many. Increasing numbers of Building Societies are relying on the expertise of independent consultants and technology partners to help deliver critical improvements. 

Overcoming the core banking challenge with digital origination
 

One of the biggest bottlenecks delaying automation is the technical debt some building societies hold within their existing infrastructure. It can be difficult to change their core banking platforms to offer the desired functionality or handle the required integration. To uplift their core banking platforms would take a huge investment in both time and capital.

But there may still be ways forward. A good starting point for a building society is to identify its greatest need. Given there are still many institutions in the UK using outdated processes like mail-in, paper-based savings applications which can take at best, a week to onboard customers, a society’s most significant challenge may lie in delivering a consistently positive customer experience. An automated digital origination process substantially reduces time to onboard and can be made available to the customer 24/7 allowing instant funding of accounts through mobile banking and online banking. In this scenario, onboarding becomes almost instant, and the customer can immediately log on and transact on the opened account.

Speeding up funding for lending operations
 

Another casualty of a building society’s failure to automate can be their ability to raise funding efficiently. 

The savings market is a competitive sector. building societies not only compete with one another but with other FIs. They often do this by offering better savings interest rates to attract both new and existing customers to raise funds and hit a pre-set tranche level. An FI that has an automated origination journey, taking minutes to complete, can acquire these deposits faster and reach its desired tranche levels in a shorter period. 

Rethinking the ‘all-or-nothing’ approach to automation
 

In many cases, small, measured steps toward automation are more effective than committing to a large, multi-year programmes. Building a focused agile team to manage changes quickly and iteratively delivers faster, tangible results.

For example, starting with a three-to-six-month project to automate key operational areas will allow Building Societies to test and refine the solution. Once live, the benefits are immediate - cost pressures ease, margin compression improves, and the next phase of automation builds on this momentum.

In contrast, large programmes aiming for full automation can take years to implement, delaying benefits and risking irrelevance if market conditions change mid-project. Pivoting becomes expensive, and the end solution may no longer meet the market’s needs.

A smarter path to automation for building societies
 

Implementing automation in bite-sized chunks, in our experience, reduces your cost to serve while improving customer satisfaction and motivates staff by reducing repetitive tasks on their to-do lists. 
Based on discussions with various members of the sector, this approach aligns with their current thinking. 

*Based on market scan of 154 UK FIs by Sandstone Technology

To find out more about Sandstone Technology’s digital origination solution, download the brochure here.

This article was first published on the Sandstone Technology website.