The UK building societies market is a unique corner of the financial services ecosystem. As member-owned institutions with deep roots in their local communities, building societies offer an essential counterbalance to the big banks. However, the model is not immune to the broader challenges–such as market volatility and increased competition–impacting the sector today.
Our recent whitepaper, Building for Society: Plotting the Route to Transformation, examines why progress toward transformation has been difficult for building societies. Today's market lends itself well to the membership model, so what can be done to capitalize on the opportunity?
Based on interviews with five senior executives in the space, we explore what is holding societies back and how to make transformation happen. Here are five key takeaways from the report.
The building society model means there are no shareholders, and every decision gets made with members in mind: from better savings rates to more protection for mortgage customers. By being purpose-led and member-driven, building societies can create greater trust with their members, which is a potential advantage over traditional banks. However, interviewees told us they felt there was a lack of awareness among younger generations of what it means to be a member of a building society. Therefore, societies must find ways to entice younger generations and provide a digital experience that appeals to them.
Legacy tech is a challenge across financial services, and unfortunately, building societies are no different. While building societies can offer tailored services to members that big banks can’t match, legacy systems make identifying and reacting to those opportunities challenging. Legacy tech stacks are also more costly to run and harder to update. Interviewees told us that in-house IT teams spend most of their time managing the existing tech stack rather than innovation and member-focused initiatives.
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While legacy tech is a blocker to digitization, many organizations make the mistake of thinking technology alone will improve their competitiveness. Instead, transformation should start with identifying problems faced by members that need to be solved. Building societies can then look at the tech tools that will help meet them—ensuring digital transformation efforts are relevant, focused in the right areas, and have the right impact.
Unlike the big banks, most building societies lack the budget and people to deliver large and complex digital transformation programs. As one interviewee said: “If you’ve never migrated from old technology, how would you know what to do?”
To bridge that gap, building societies must partner with technology providers who can guide them on a journey and overcome challenges along the way. For instance, 10x’s managed service includes onboarding and migration support, cloud management, 24x7 security operations, and more, supporting the full lifecycle of your transformation.
Many building societies have delayed embarking on their digital transformation journeys because migrating from legacy systems is difficult without a large IT team. By partnering with a provider like 10x, building societies can get the support and experience they need to deliver a successful implementation. That usually involves a phased approach focusing on one part of the business at a time, reducing the risk of disruption and ensuring a smooth transition.
Download the full report here to learn more about how 10x can help your building society accelerate its digital transformation efforts.