This year marks 250 years since the first known building society was established in 1775 at the start of the Industrial Revolution. From their origins as community-driven financial institutions, building societies have continuously adapted to meet the needs of their members.
Today, they face a new challenge: evolving their technology and member engagement strategies to remain relevant in an era of rapid digital transformation.
Against a backdrop of closing branches and an ageing population versus the always-on, tech-savvy TikTok generation with their two-click self-help services, building societies are under pressure to develop their member-facing propositions at every touchpoint.
And with the financial services market shifting rapidly – with some lenders and providers offering loans on car transactions, for example – societies are cutting their teeth on innovative products, approaches and communication tools.
Some are doing an incredible job of it with smart thinking and useful technology – both member and colleague facing.
The time is right
In the first half of 2024, building societies continued to excel in customer satisfaction within the mortgage sector. According to the H1 2024 Mortgage Lender Benchmark by Smart Money People, building societies achieved the highest average satisfaction score among all lender types, with a rating of 85.7%. The time is right for building societies to run with that momentum.
The challenge, however, is how to engage members and deliver the right financial services at the right time in the right way – to both existing members, and members of the future. They even have government backing with them asking how they double their footprint!
To a certain extent, Consumer Duty regulations mandate a more consumer-focused approach to communications. But, basically, it’s just good business sense to work efficiently and communicate effectively.
The human touch in a digital world
Transforming member-facing communications for 2025 and beyond is no small mission. With many mainstream bank branches closed and closing, and the sheer diversity and scale of existing and potential members, how they prefer to get their information can feel overwhelming at the start of the transformation journey. Societies must consider all touchpoints: smart phones, land lines, aggregator sites and online, for example.
However, building societies have sometimes hundreds of years of tradition in providing a personable, personal approach to members communications. Instincts will tell them not to lose that society zeitgeist, but instead to reimagine the human touch in a digital world.
Some societies are setting up pop-ups in libraries, car parks and YMCAs to ensure accessibility. Others have introduced members’ rewards schemes and advisory boards, where members meet with senior leaders to help shape member strategy, products and technology. In some cases, WhatsApp groups are being used to test ideas and gather real-time feedback.
Behind the scenes
And then there are the systems, infrastructure and applications to consider. What will support the business going forward? Legacy systems can be a serious stumbling block that can cause issues for both competitiveness and Consumer Duty compliance.
For example, from 1 August 2024, lenders with closed products and services needed to have implemented the necessary changes to comply with phase two of Consumer Duty regulations. It required many lenders to completely change their processes and communications with existing borrowers.
With the deadline now passed, building societies are entering a new phase – one that shifts from preparation to ongoing monitoring and continuous improvement. Meeting regulatory requirements was just the starting point; the challenge now is to ensure that systems, processes and member interactions consistently deliver positive outcomes.
For societies that have successfully transitioned, the focus will be on optimising operations, leveraging data to enhance decision-making, and ensuring member service remains at the heart of their digital transformation. Those that struggled to meet the deadline will need to prioritise investment in their servicing capabilities, whether through upgrading legacy systems, outsourcing to third-party administrators, or migrating to more agile, compliant platforms.
The sector is at a pivotal moment. Those that embrace innovation and keep the member experience front and centre will be best placed to thrive in an increasingly digital financial landscape. Gladly, we continue to help our clients achieve this. It’s an exciting time to be part of the tech transformation of building societies.
Adam Oldfield is chief executive at Phoebus Software
