A new report published by Whitecap Consulting in partnership with the Building Societies Association (BSA) finds that societies continue to leverage mutuality, regionality and technology to create customer value and differentiation in the UK Financial Services market; however the degree to which societies utilise each of these assets varies across the sector.

The research for the report involved a quantitative data analysis of all 43 building societies, interviews with 33 building society CEOs, and an online survey which received a total of 134 respondents. The project was funded through the Building Societies Association partnership and sponsorship from a number of industry stakeholders including: Credera, DPR, EQ Credit Services, Mambu, Moneyhub, Mutual Vision, Nivo, Sandstone Technology, Sopra Banking Software, Shoosmiths, and Phoebus Software.

The report, which was launched via a webinar yesterday, identifies four key themes:

• There are different strategies and areas of commercial focus available to societies, and selection and focus are critical to success.
• Mutuality can become a point of difference with greater relevance to customers, possibly with a modernised focus on social purpose.
• Meaningful community engagement is core to regional success, customer engagement and branch-based savings.
• Societies will need to continue to invest for a digitally enabled future, to support customer engagement, distribution and operating efficiency.

The implications of each of these key areas are highlighted in the report, together with the potential opportunities for societies to consider.

Richard Coates, Managing Director of Whitecap Consulting, says:

“Change has been a familiar and constant challenge for building societies, and the sector has successfully navigated many dramatic economic and social events, most recently the global pandemic. The sector has performed strongly through Covid, but building societies today face new competitive challenges fuelled by a combination of changes in consumer behaviour and the advances of technology in the Financial Services sector. We are delighted to publish this report, which highlights the strategic opportunities available to building societies, and how they can capitalise on them.”

Robin Fieth, Chief Executive of the Building Societies Association, says:

“Society is rapidly transitioning from an era of big hard-wired mainframes and decades of different programmes to one of cloud based services connected via APIs, data science and intelligent automation. Building societies are already making use of robotics, chatbots, cloud based solutions, API connectivity, mobile apps, digital IDs and Open Banking.  At the same time they are remaining present in their communities reimagining the purpose of the branch using design and technology to turn them into spaces for engagement and support within their communities. Where building societies go next, as this report makes abundantly clear, will give a range of answers based on individual strategies, but will be fundamentally driven by mutuality or social purpose as it is more commonly called today.”

Keith White, Director at Credera, says:

“We are delighted to support and contribute to a report that provides valuable insight into how building societies can develop future-proof and tailored digital strategies. The report shows that building societies are well-placed to continue to thrive, but outlines the barriers they need to overcome in getting their digital strategies optimised. For example, how do building societies balance, prioritise, and integrate their traditional offerings, such as brick and mortar branches, with their digital offerings? By trying to answer these types of questions now, they will be equipped to offer their customers a truly connected experience while maintaining their core principles of providing a trusted and localised experience.”

Richard Morgans, General Manager for UK & Ireland at Mambu, says:

“The financial industry has changed a lot over the last decade and people raised on Amazon and Netflix are looking at financial service providers with new eyes. Reaching a younger demographic is essential for long-term sustainable growth and building societies offer products that help members achieve so many goals; be it saving for a holiday, budgeting effectively or buying your first home and more. We are delighted to sponsor this report, which supports building societies in successfully navigating their individual challenges and being prepared for their future growth.”

Richard Wainwright, Chief Executive at Mutual Vision, says:

“Mutual Vision believes the building society sector can not only survive, but thrive in the future, and the way the sector has responded to the recent pandemic proves this to be the case. We have seen our customers accelerate their digitisation strategies with a greater desire to connect with technology partners through Mutual Vision’s ecosystem. We are also working with societies to maintain and even enhance customer intimacy by ensuring that digital offerings are personalised to meet the specific requirements of different members and customers. Building societies play a critical role in the financial landscape and to the communities they serve. As the Digital Mutual, we are wholly dedicated to enabling societies deliver their critical services to their customer communities through collaboration and technology.”

Some of the findings highlighted in the research include:

• 93% of building societies who responded say mutuality affects their decision making.
• 66% of building societies who responded consider mutuality is about culture, values and social purpose.
• 71% of building societies who responded consider the branch network to be a critical part of regionality.
• 90% of building societies who responded believe community involvement is a commitment to regionality.
• 67% of building societies who responded identify digital transformation as the primary challenge over the next 5 years.
• 65% of all stakeholders surveyed believe Open Banking to be an opportunity for the sector.

The report summary can be downloaded here.