Millennials ‘confused’ by building societies

Millennials don’t really know what a building society is, according to research from Intelligent Environments<

Millennials 'confused' by building societies

LONDON, 21 November 2017 – A lack of financial understanding means that millennials are potentially losing out on the opportunities and advantages provided by building societies. This is according to research from ieDigital, a leading international provider of innovative financial services technology.

The study, which questioned 2,000 millennials on their attitudes towards the building society sector, found a lack of understanding of the benefits of opening a building society account, with nearly half (48%) unable to name any advantage. Similarly, a third (33%) stated they could see “no reason to use a building society”.

Furthermore, 73% of millennials confessed to not knowing the difference between a bank and a building society, while 45% were unsure of why they would use a building society instead of a high street bank. The research revealed further millennial attitudes, including:

  • 37% considered building societies as “old-fashioned”.
  • 29% did not feel they were relevant to their financial situation.

At the same time, the study found that 22% of millennials thought building societies “lack online banking tools”. This is perhaps a serious misconception when 90% of the UK’s top 20 building societies offer some form of online functionality.

Recognising their lack of knowledge, half of millennials expressed an appetite to better understand the advantages of using a building society. What’s more, the community focus and member-ownership of building societies is likely to appeal to the generation’s social conscious, with over 27% noting the fact that they work in the interest of their members rather than shareholders or financiers as “a crucial advantage”.

Investment in technology

Commenting on the study, Hilary McVitty, head of external affairs at the BSA, said:

“With more than half of respondents wanting to know more about building societies, this research shows the enduring power of member-ownership. With more than 23 million members, building societies engage most directly with millennials when they are looking to buy their own home. Today, one in three mortgages from our sector is for a first-time buyer, with an average age of 32. Many societies are partnering with a range of innovative technology providers to engage customers, and there is always more to do. Consumers are clear with us that they want both face-to-face and digital options.”

The solution could lie in increased tech investment, with digital-first services proving to be a big draw for millennials. Nearly a third (32%) said that they would be more likely to open an account with a building society if they offered an “easy to use” smartphone app, while 43% would consider opening an account if the building society offered online management tools. 

“These findings are a wake-up call for the building society sector,” says Simon Cadbury of ieDigital. “Clearly, there’s still much to be done as the industry ensures it remains as relevant and central to the lives of millennials as it has been to previous generations. At its heart, this is an issue of customer engagement, and building societies must find new, innovative ways to interact with its customer base, ensuring they are delivering a service that answers both current and future demands.”

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