By Sarah Harrison, Chief Executive, Building Societies Association

As I travel around the UK, listening to and speaking with colleagues from building societies and credit unions, it’s exciting to learn how technology is making a difference to their customers, and how building societies and credit unions are using it to fulfil their purpose – helping people to save and buy their homes. It is also clear that there are challenges of the adoption of technology – ambition is not a precursor to success and progress can be uneven with some organisations solving similar challenges in isolation.

While collaboration can bring its own challenges, I am gaining a clearer picture of where the  opportunities might lie within the sector - shared learning, joint procurement, common approaches to fraud, financial crime and security - and where it could go further.

Customer-owned building societies and credit unions have strong links to their communities and a long history of supporting homeownership and building financial resilience. 251 years ago, bold innovation  saw the establishment of the very first building society and it continues to be a key differentiator in the sector, from customer-driven mortgage products to supporting communities by providing access to cash to customers and small businesses. It is also how we can deliver value in a world of evolving customer expectations, rising fixed costs and regulatory demands.

The Government’s commitment to double the mutual and co-operative  sector is an opportunity to build on that innovation and grasp the potential for mutual collaboration to help drive the growth of the sector.

Digital-first journeys are now expected, fraud is becoming more sophisticated, and regulatory  expectations (for example on operational resilience) are rising. The cost of modernising legacy platforms is significant. But this sector has a natural advantage – a shared purpose, similar product sets, and a long tradition of co-operation. Could the next wave of innovation be achieved not by every  organisation building everything itself, but by collaborating where differentiation is low and member benefit is high?

Collaboration should not eliminate competition and distinctiveness, a balance of competing on member experience and relationships and collaborating on the shared plumbing that underpins our sector’s  resilience and efficiency is needed to achieve the best of both worlds, for businesses and consumers.  Areas such as identity; fraud and financial crime with common controls, shared intelligence and joint testing; collective procurement and vendor management, particularly when modernising legacy  platforms, to improve terms and reduce risk; reusable components that members can adopt to speed up delivery, for example of account openings, onboarding and affordability and AML checks. And even shared learning on AI and automation with use cases on governance and fairness testing.

Collaboration is by no means the simple answer, with 42 building society boards, around 26 million  members and significant variation in size, this is not a case of one size fits all. It’s also essential that collaboration improves resilience and consumer outcomes and does not create concentration risk. The principles of any such collaboration must include transparent governance; clear member benefit cases;  privacy and security by design; proportionate assurance; and shared incident learning.

UK regulators and government increasingly value sectors that demonstrate robust operational resilience and responsible adoption of emerging technology, especially where it supports financial inclusion, homeownership and responsible lending – areas that our sector excels in.

Mutual institutions have long innovated and collaborated to better serve members and today, shared technology is the modern expression of that co-operative spirit. Let’s work together to build on the positive difference mutuals bring to their customers and communities.