Guest blog by Mark Gilliver, Business Development Director at Target. This article was first published in the spring edition of Society Matters magazine.

These are turbulent times. The UK is in the grip of a cost of living crisis, with many customers feeling the squeeze. Inflation soared to 5.4% in January. In response, the Bank of England increased the base rate from 0.25% to 0.50%. They also warn that inflation could rise to 7.25% in April.  

What does this mean for building societies and lenders? Mortgages are set to become more expensive. Customers on variable rate deals may struggle to meet payments. Many will fall into arrears. Lenders may need to provide repayment holidays to help customers through challenging times. 

In my whitepaper ‘The Future of the UK Financial Services Ecosystem’ I discussed how the creation of interconnected experiences, sustainable communities and new revenue via Platformification would transform the market. The current economic crisis is just one of many factors which will accelerate this transformation. 

Customer-centric for success 

The next ten years will see a rapid evolution of a new ecosystem allowing consumers to benefit from an interconnected network of services. Customer demand for self-service will both improve their experience and reduce the cost to serve. 

We've seen this begin to play out with the use of financial apps and mobile banking services increasing by 72% in 2020, with 80% of consumers saying they prefer to bank digitally. Gartner predicts that in 2022 85% of customer service interactions will start with self-service, and 88% of customers worldwide expect companies to have a self-service portal. 

Building societies must ensure services are digital-first, with the customer at the centre. So, instead of a change request being made via email to customer services, the user can make that change themselves via a customer portal.  

Harnessing digital  

Disruptive technologies like Artificial Intelligence, Machine Learning, Robotic Process Automation and Data Insights bring significant advantages. Resilient computing capacity enables the use of these technologies to develop a much deeper understanding of customer behaviour. Cloud technology helps provide resilience, scalability, capacity, efficiency and security.  

The customer is at the centre of this model, in control of their data and able to make near-instantaneous decisions on a whole-of-market range of choices both passively and actively via big data and AI.

Customers can access the information they need, when the need it and on the platform of their choice. The customer can benefit from human interaction or use a virtual assistant coupled with avatar technology, should they prefer a fully digital engagement.  

Barriers to adoption 

Providers may be slow to adapt to a digital ecosystem for many reasons such as: 

• Budget and resource constraints 
• Dependency on legacy systems 
• Risk appetite 
• A confusing technology partner landscape 

The big risk for building societies in failing to adopt or invest is stagnation as, competitors begin to forge ahead. Societies may need to look beyond traditional models and explore wider options for funding digital development. 

Disrupting the mortgage industry 

Our award-winning Mortgage Hub is an excellent example of digitalisation, imagined, researched, designed and built from the ground up, predicated on CX and a live ecosystem using best in class third party solutions and APIs. Powered by open banking technology, it's transparent and fast – enabling a highly accurate DiP in under 20 seconds. 

For more information: Read more on the Future of the UK Financial Services Ecosystem here. 

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