For Ahmed Michla of specialist mortgage software solutions provider Sopra Banking Software (http://www.soprabanking.com), now is the time to look beyond operational excellence and use available and emerging technology to unlock market success through greater insight into customer behaviour

From my unique vantage point of serving both UK building societies and European banks, I can see that societies typically differ from banks in the way they approach technology. Traditionally, mutuals have been very good at maintaining solid and reliable systems to underpin their core business. But where building societies have scored less highly to date compared to banks, arguably, is in using technology to drive innovation.

It hasn’t always been this way: Nottingham was one of the first users of e-banking in the world, but it does seem to be the general rule of thumb that this side of the UK financial services market has been slow to use technology as aggressively as their banking counterparts. The opportunity for societies over the months ahead is to redress that balance – not so much by following where banks have gone before them, but in delivering the most appropriate experiences for their own customers both retail and intermediary, so that everyone continues to deliver growth.

This means opening up new channels certainly, but it’s more than that. It’s about recognising that the qualities and channels that made societies a vital and trusted part of society remain at the heart of the proposition. The branch channel may be seen by some as reducing in importance or even being redundant, but I don’t think that’s the case at all. It’s about each society evolving their branch experience and tuning it to the needs of their own communities. The branch has to exist as part of the new society infrastructure and live harmoniously with digital channels. At the simplest level it means allowing interactions to move seamlessly between the different channels, so that an online application can be completed in a branch or started in a branch and completed online.

Making new connections

According to the Internet Adverting Bureau, smartphone penetration will hit 75% of the UK population and tablet use 50%. In the light of this, it would be unwise for any financial services provider to avoid this important channel. Mobile channels may not appear as relevant to a typical building society as they might do to a banker where there are more frequent transactions. But in the context of social media and customer engagement, there may well be a role. As societies are beginning to realise, non-traditional pathways offers a means to engage with an otherwise disenfranchised younger generation – a generation that feels little motivation to save when interest rates are so low, and where many potential customers could benefit from help with managing personal finances, for instance.

According to Andrew Gall, economist at the Building Societies Association, discussing the contribution technology could make for members, “one of the more interesting developments is the rising use of social media; we’re seeing evidence of more societies developing a presence here. Much of the motivation is to do with engaging members at a new level to provide a forum for informal feedback. The appeal of social media is that it provides access to a different demographic, and allows two-way conversations, in contrast to the one-way traffic of letters pushed out to customers. Ipswich, Skipton and Nationwide building societies, for example, have devoted a lot of energy to Facebook and Twitter.”

Social media also offer building societies a route to high-quality market data – if they can find a way to mine it. This could include insight about customers who are house-hunting, who’ve just landed a good job, or who are having financial difficulty; let’s use such knowledge to flex the products we offer these customers, and make it easy to engage. A culture change is needed about how we view this type of data and the potential value it holds. It is not merely a by-product of our age; generated through IT-enabled processes, transactions and interactions – it is a valuable digital asset capable of providing customer insight that would have been simply unattainable only a few years ago.

Delivering a true alternative

The government is keen to present such institutions as a viable alternative to High St banks, as it tries to soothe consumer mistrust in the wake of widespread perceived misconduct in the financial services industry. Those societies that have signed up to the ‘seven-day switch’ are seen as offering good and fair services, for example; but the challenge now for these organisations is to make sure their systems and associated processes are robust and dynamic enough to keep up with associated new demands.

Something else to bear in mind is the importance of keeping staff motivated, so that societies continue to retain the people their customers trust. Much attention is being paid by the financial services industry to the customer journey at the moment, but is important not to neglect the journey for the employee and related job satisfaction as they deliver those high-priority customer-facing services. Building societies rely heavily on personal relationships, so continue to work hard at keeping the workforce motivated, satisfied and fully engaged.

Creating space to think

Ultimately, the priority for the sector now should be to look beyond operational excellence – something the sector is very good at – but harnessing/exploiting greater market and customer intelligence, so that societies can become more competitive in the wider British financial services market.

How? By broadening automation, so that as many standard transactions and communications are dealt with swiftly and economically (though still with an acceptable degree of personalisation). In this way, building societies can ensure that staff time and attention is focused on exceptional interactions, where the truly personal contact the sector is so good at will really come into its own.

Strategic use of automation will also mean skilled employees can be liberated from the stresses of time-consuming routine, day-to-day enquiries, freeing them up so they are able to apply their knowledge, expertise and personal skills where they can really make a difference: giving advice, solving problems, spotting opportunities, and alerting the customers with whom they have built up such valuable trust to compelling new offerings.

The last word goes to the BSA. According to the BSA’s Robin Fieth, chief executive of the trade body for the UK Building Society community, innovation has been flourishing among UK building societies but strategic investments in technology could even further aid the cause.

“Increasingly robust, automated systems are one key to sustainable business models. Societies need a good CRM system to track customer activity and the status of members’ accounts. Customers now expect their society to know all about them and their specific requirements. Without clear visibility across the relationship and across all customer dealings, service providers will struggle to maintain the right level of dialogue with their members, which is one of the main contributors to high levels of customer satisfaction.”

The author is Head of UK Marketing at Sopra Banking Software (http://www.soprabanking.com/), a leading provider of specialist solutions for the European financial services sector