In this guest blog, Patricia Moore, DXC’s financial services client executive lead, provides insights into how building societies can adapt to their local markets and set strategic goals, and highlights that it’s not all about ‘one size fits all’.
When I studied politics and history, I often asked myself key questions focused around “Why?”. “Patricia, why do you need to study and understand history?”, or “What impact does this have on the present in my life?” were some of the questions that came to my mind. I would be constantly thinking about many other similar questions, pondering over the reasons, and hoping I would get a straight answer. Whereas in fact, I didn’t. Because each question had a different answer as opposed to a ‘one size fits all’ mentality.
If nothing else, the past few decades have illustrated how important it is to understand what has happened and why it happened; and this concept of thought-provoking reasoning very much applies to our financial institutions, and particularly the building societies.
Understanding the building society landscape
To understand where building societies stand in today’s economy, it is important to deep dive and understand how they evolved in the past 250 years or so since first being established in Birmingham in 1775 – adapting and evolving with the pace of digital transformation.
This adaption to digital transformation is also important when building societies are doing their best to engage with and service their ‘local’ community that have local needs that are specific to the environment or their personal requirements. On the other hand, some of the local building societies have tried their best to compete with the big banks by growing to their size; however, in doing so, some of this competition has resulted in their demise!
Adoption to digital transformation
Therefore, adaption to transformation has been key to evolution and to provide a ‘one size fits all’ solution – from providing customers a safe haven to save money for life’s plans, such as purchasing a home or getting married – into a more flexible option which offers better services than some of the big banks.
The key question here is, does one size fit all? Maybe not, because all of the UK’s 43 building societies have their unique product offerings and have different aspirations in how they adapt and grow, and what is important to their segment of the customer base.
Some of these building societies are very much focused on their local areas and not focused on being UK-wide; while others, for example Skipton Building Society, have branches outside of their local area and do have some UK-wide branches. Indeed, it is fair to say that regionality is considered a very important part of the building society make up, especially in the UK and Ireland. A recent report by Whitecap Consulting and the Building Societies Association (BSA) found over 70% of building societies consider the branch network to be a critical part of regionality, and 90% of building societies believe community involvement is a commitment to regionality.
It is important to note that the UK’s first building society in Birmingham was born out of a tavern called The Golden Cross Inn. In a similar way, perhaps it would be great if building societies can merge with cafes, and maybe these cafes which seem to fill every high street, shopping mall, and train station can now go back to their origins? Joint bricks and mortar to serve the community? Not only would this save retail space, but also lower the operating costs and improve the customer experience because customers can go into a building society and have a chat over coffee or tea with their mortgage advisor in a more relaxed environment. Some legacy banks have recently piloted this concept to engage with some of their customers, including Capital One in the US aiming to engage with Millennials. It may be worthwhile to see if building societies in the UK may also want to try this concept, and not just for Millennials but for everyone.
Maybe you need some help with trying to get acquainted with online banking? The retail industry has seen some of this evolution already with the UK’s Post Office network, but why not get other industries involved as well to serve local communities, build relationships, gain and retain customers, and grow revenues? As I mentioned earlier, one size doesn’t fit all, and for many business models, becoming more engaged with the users to understand their thoughts may be the solution.
It is certainly worth considering how a branch network could work alongside complimentary services in the community, and how they may be the lifeline in rural areas. It is also important to point out that due to the COVID-19 Pandemic and the affect it had on communities and businesses in 2020 (and continues to have in 2021), technology is there to assist and to create a better user-experience when engaging in these services. By building digital channels and enhancing customer engagement journeys, it’s fair to say that the art of the possible is becoming more realistic
And as for size? Whatever fits, as not everyone fits the mould!
*Image by DXC Technology