How cultural change can help building societies help vulnerable customers

Modernisation takes many forms, and building societies are well placed to update culturally as well as digitally. This will make it easier to help, advise and support vulnerable customers.

We’ve written extensively about the opportunities open to building societies around digital transformation. This is a great time to be a relatively small player in a sector dominated by big banks. One of the advantages we see is being nimble enough to adapt to new cultural expectations, particularly in how to help vulnerable customers.

Change in financial services was happening before the pandemic, and was subsequently magnified tenfold. Bank branches were already closing, but Covid-19 accelerated digital services so that branches fell more regularly. Businesses got government help, recruitment strategies adapted to “the new normal”, and the emphasis was on leaders to be better at everything. Digital payment systems became ubiquitous.

There’s still much to do, but the ball is rolling. What can building societies do next to capture the moment? We think it’s about paying more attention to vulnerable customers, how to identify them, and create experiences that help them through financial difficulties. The solution lies in cultural change.

The front line is where everything happens

It’s sometimes hard to identify what a vulnerable customer is. The FCA has guidelines for treating customers fairly. Yet, the definition of what a vulnerable customer is is so wide that having a policy that covers the basics is good, but what happens on the front line is more important. Frontline staff are more likely to interact with vulnerable customers, who find comfort in face-to-face support. Because branches are few and far between, it’s become harder to identify people’s needs. It’s also unethical to record or track people as being in a “vulnerable” category.

And while the financial services sector is speedily transforming into being digital, not everyone can keep up. This is a leadership challenge because much of what needs to change to recognise and serve vulnerable customers better is cultural. If your workforce struggles with new technology, how can they help others? There are many ways to define what organisational culture is, so where do leaders start? Often, company policies for structural and strategic change are set at a high level, with leaders often unable to facilitate positive effects throughout the business.

Yet, there are solutions to these obstacles, particularly for more nimble financial institutions that fundamentally operate as people-first businesses. And here we’re talking about building societies.

The advantages of being a people-first organisation

In 2019, we wrote: “Meaningful innovation is the goal, not innovation for the sake of innovation. If it’s not helping your customer, it’s time to rethink the plan and focus on what makes a building society different from a bank.”

We maintain a belief that the iron is still hot. Building societies are already undergoing transformation projects, so things are moving in the right direction. Yet, digital isn’t the whole puzzle. Other pieces exist and require attention, such as people skills, leadership skills, transparent pathways to financial access, a broader understanding of mental health, and so on. These are sometimes wrongly dismissed as soft skills.

With a good leadership team, a building society can complement its digital transformation by encouraging specific organisational behaviours. Customer-centricity must cascade down so that frontline workers are empowered to interact on a personal level with vulnerable customers.

People-centric, not transaction-centric

Perhaps the key to success is in not seeing a person as being vulnerable, but seeing the situation they’re in as being a catalyst for vulnerability. Cultural change will help FIs develop the skills to be able to recognise who needs support. When you hire and develop empathetic people with the natural ability to listen and understand, you become more adept at solving customers’ problems. Leaders should take comfort from seeing the effects of empathy running through the company, and being passed on to customers who most need it.

And about those branches … they should also undergo change. No one should open a branch that encourages transactional queueing. Being people-centric is the new queue. Branches should be open spaces where people find help, advice, and support. It’s a channel many people still need, to help all sorts of people in vulnerable situations interact with someone who can put them on the right track. The setup of branches needs to be relationship-centred.

Digital experiences can help people become more financially literate, which helps customer retention. And intelligent use of data can be the difference between offering a loan to someone a bank may otherwise have rejected. Digital modernisation is crucial. But if building societies only focus on what they do digitally, they could miss out on the positive effects of cultural change. With exemplary leadership, everything can modernise for the better, with particular emphasis on how to spot vulnerability.

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