Why building societies must embrace digital finance

Digital is a great opportunity. Is your building society ready to become part of the digital revolution? Story by Maz Ahmad.

Why building societies must embrace digital finance. Image by metamorworks, iStockphoto

Traditional, local, accessible, great rates – ask the average person in the street to sum up a building society, and these are some of the things they might say. They may also say building societies are branch-centric and known for their savings and mortgage products, but is this enough to survive in today’s fast-changing, digital-centric world?

Building societies thrive thanks to their loyal, local customer base. Many customers opened their first account at their local branch at a very young age, and their parents felt it was a great place to teach their children how to manage their money. After all, the local building society was where they held their own mortgage, and it offered great rates for savers.

This strong sense of loyalty may reach back even further. Grandparents and even great-grandparents would often have turned to the local building society for their financial services.

Youngsters expect more

I believe loyalty is no longer enough to thrive in today’s competitive financial landscape. After all, today’s youngsters want more. They expect their digital financial provider to offer them the same convenience and ease of use they see across other aspects of their lives. They expect a digital customer journey that gives them 24/7 access to their bank accounts, so they can see and manage their finances no matter where they are or which digital devices are available to them. More than this, they expect their financial services provider to be able to not only provide all the financial services they need, but to help them through the major milestones in their lives too. They need more than a debit card, credit card, and easy access to foreign currency – they also want insurance for their mobile phone, their first car and their travels, cashback on their purchases, and more besides.

Embracing digital

It’s time building societies recognized that the world has changed. To retain the younger demographic, they need to keep up with the banks, and not just the traditional banks, but also today’s new, digital startups. To close the gap, building societies first need to modernize their services, to embrace the digital banking revolution. Take Yorkshire Building Society as an example: It now offers a complete end-to-end digital customer journey for its mortgage, savings and insurance products, allowing customers to transact on their terms, not bound by standard office hours.

Secondly, building societies need to broaden their offerings. Yorkshire Building Society, again, is partnering with investment management companies to offer stocks and shares ISAs, while market leader Nationwide has offered unsecured loans and credit cards for quite some time. Nationwide also offers apps for mobile, tablets and smartwatches, allowing customers to manage their multiple relationships at any time through a single app.

A cultural shift

I recognize that embracing digital is no small feat. It’s a journey that will take building societies out of their traditional comfort zones and into new, yet-to-be-explored areas. That journey is manageable one step at a time; it doesn’t all have to be undertaken in one go.

What’s more, the digital journey is a commitment to continual change. After all, new technologies are emerging at a pace the world has never seen before: smartphones, smartwatches, smart homes, connected cars, biometrics, artificial intelligence, machine learning, analytics … the list goes on.

Undertaking this journey needs total commitment from senior management. It’s important that those at the helm are digitally aware and able to see the opportunities – some of them still out on the horizon – that embracing digital will bring.

Digital is a great opportunity. Is your building society ready to become part of the digital revolution?

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