The open finance data, intelligence and payments platform made the statement in response to a report which analysed the strategic landscape for building societies.

The report, published by Whitecap Consulting in partnership with the Building Societies Association (BSA), found over half (55%) of CEOs viewed Open Banking as an opportunity. But the report also identified digital transformation was a key challenge for the sector.

Indeed, it acknowledged this technology was relatively new and unexplored by the sector with just over a third of CEOs questioned admitting they had not yet assessed Open Banking’s benefits for their business. A further 10% viewed it as a potential threat.

Moneyhub, has now called for Building Societies to capitalise on the Open Banking opportunity.

Appetite for digital transformation

According to the senior leaders interviewed as part of the report, digital transformation was the primary challenge for the sector over the next five years (67%).

In addition, the report found that the need to remain relevant to customers and improve engagement was also a key priority for them going forward.

Of the 95% of those CEOs that viewed Open Banking as an opportunity 52% said it would help to improve customer engagement and experience.

In addition, of this group of building societies, 79% said it would enhance the mortgage underwriting process, 76% said it would improve customer data connectivity and 71% believed it would improve operational efficiencies.

The report took in quantitative data from 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 BSA partnership and sponsorship from a number of industry stakeholders including: Credera, DPR, Equiniti, Mambu, Mutual Vision, Moneyhub, Nivo, Phoebus Software, Sandstone Technology, Shoosmiths and Sopra Banking Software.

Samantha Seaton, CEO of Moneyhub, said: “Without the large pockets of the major banks, most building societies have not been in a position to keep up with the rate of digital transformation within the sector.

“Legacy systems and budget restraints have both been pointed to as the primary obstacles between building societies and true digital transformation. However, not adapting could risk falling behind amongst peers and the wider industry.

“For this reason it is encouraging to see that there is a widespread acknowledgement that Open Banking does present an opportunity for digital transformation within the sector.”

Key themes

The report identified four key themes and highlighted the implications of these areas as well as offering potential opportunities for societies to consider.

• 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.
• Continued investment in a digitally enabled future is necessary, to support customer engagement, distribution and operating efficiency.

Richard Coates, managing director of Whitecap Consulting, said: “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.”

Robin Fieth, chief executive of the BSA, added: “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.”

You can view a summary of the report via this link.