From their humble origins as a method for members to pool resources to buy homes, to the modern trusted financial institutions they are today, Building Societies represent both the past and future of consumer financial services.
A big question in the world of finance at the moment is: Can Building Societies be the next big thing in changing how we handle our finances? Over the last few years, the British public have seen more options in how we conduct our financial affairs, with over 20 organisations opening since 2010 according to the Bank of England. These challengers to the traditional banks are looking to offer personalised and more responsive products. Two of the key challenges for these new players are customers and trust. Here’s where Building Societies can leverage their years of experience in delivering financial services and the excellent reputation they have developed with their customers.
These new players are looking to leverage the underserved customer by building products which meet customers where they are today. They’re aiming to disrupt physically by breaking away from in-branch services, digitally by offering online and app based support, and financially by tailoring services based on trends and machine learning. This creates a new model where financial services are there for their customers when they need them most. The Coronavirus pandemic has shown how important this is, but it has only uncovered a trend which has been progressing for some time. Customers want an accessible service, which understands their needs and offers an ethical approach. This is especially true for the younger customer market. McKinsey has reported that Millennials are much more likely to make a decision based on the ethics of the company. Capturing the Millennial and Gen Z customer base is integral for the future of Building Societies.
Success in the new model of financial services relies on an understanding of what customers want. Newcastle Building Society, in partnership with Paylink, has represented this well by using data analytics gathered from customers and open banking to launch a debt advice tool to analyse customers financial situations and recommend the products tailored to help them most.
Here’s where a move to the cloud could help put Building Societies in the driving seat for the financial services sector. Adopting a cloud strategy allows for connecting to customers where they are, centralising and securing customer information, and modernising infrastructure so it’s ready to serve the modern customer.
A move to the cloud also presents an opportunity to free organisations of legacy equipment, reduce the costs of upkeep that older equipment demands and an opportunity to reduce environmental impact by reducing carbon footprint and energy consumption.
A move to the cloud, with all the advantages that can bring, does not mean a compromise on security. By partnering with experienced cloud partners, Building Societies can expand their digital capabilities, free themselves from the shackles of legacy kit to achieve digital transformation and offer an accessible and secure platform for customers to use to manage all aspects of their finances.
Primed to take advantage of the benefits from digital transformation and with customers’ trust at the heart of what they do, Building Societies could be the future challengers to big banks in the UK.