Why customer-centric strategies are the future of Building Societies

By Rob McElroy, CEO, Sopra Steria Financial Services

Building Societies have been a staple of our high streets for over 100 years, with their main purpose being to increase prosperity among the communities they serve. However, the Covid-19 pandemic forced the entire industry to focus on digital services, and customers’ expectations have been rapidly changing ever since. As a result, Building Societies will increasingly need to provide personalised products and services to customers, and base this on a strong understanding and data around consumer behaviour, expectations and requirements.

In recent years the emergence of fintech providers, alongside ongoing innovations in banking technology, have transformed the way banking services are delivered. This, in turn, has heightened citizen expectations of financial service providers, with customers increasingly expecting more from their Building Societies and the services they provide.

However, the future of Building Societies won’t just be a case of reinventing the wheel; it will be about making incremental changes to lending, savings, and collections processes to place customers at the heart of them. So, how can Building Societies meet these ever-changing citizen expectations and ensure a successful future for years to come?

1. Ongoing technological innovation

Customer expectations have transformed during the Covid-19 pandemic, and they’ll continue to evolve in the months and years ahead. This means, like many organisations, Building Societies will increasingly need to develop new and innovative products and services in order to meet the changing needs of their existing and potential members, who now expect a real-time, 360-degree view of their finances, as well as access to services and product eligibility at any time via any device.

When accessing information, customers will increasingly want to know their best interests have been catered for, and that this information is transparent and readily available for them to make informed choices. To do this, Building Societies must continue to embrace both digital and traditional channels, and explore new ways of delivering personalised and targeted services. With the ongoing cost of living crisis and rising levels of inflation disproportionately impacting society’s most vulnerable, member engagement will also need to be built around the ‘moments that matter’ in citizen’s lives and be prepared to assist during times of crisis. Whilst digital, telephone and email might work for business as usual, members will continue to take comfort in knowing that their local Building Society is there to help them through major life events, or when they face financially vulnerable situations.

This availability of information and ease of access via a customer’s device will become a key differentiator for those able to make it happen. Failure to make the necessary changes or an over-reliance on traditional systems to deliver a true ‘digital’ strategy could see a rise in member attrition rates and cause businesses to stagnate in a worst-case scenario. This could result in an imbalance in member demographics, making Building Societies increasingly more vulnerable to changes in the market.

2. Changing customer behaviour

The rise of connected services such as Open Banking and the Internet of Things will see customers gradually shift towards aggregator sites for a more cohesive overview of available deals suited to their needs. We’ve already witnessed the impact these sites have had on the savings, credit cards and loan markets-including the ability to open up access to otherwise inaccessible markets or customer groups.

As technology advances and provides members with the confidence to go directly to their chosen providers, mortgages and straight-through product and service processing will be the primary focus of these sites. In the short term, Building Societies should also continue to regard aggregator sites as a key route to market for their savings and loan products.

However, this is not without its challenges. Many Building Societies are still heavily reliant on mortgage broker networks and don’t have the appropriate infrastructure to provide aggregator sites with real-time information and deals, potentially impeding Building Societies from competing via these channels as customers look for the best deals. This means that Building Societies will need to prioritise building an infrastructure capable of delivering real-time data and availability of products and services on their latest offers to these sites, to ensure that they are future ready.

However, building an infrastructure capable of delivering real-time data and an enhanced customer experience does not necessarily have to involve a large multi-year transformation project – an assumption made by many. There are many quick wins to be made by building micro-services around existing infrastructure which will allow an almost immediate implementation of a digital strategy.

3. Increasingly personalised services

Historically, simply being on the high-street was enough to instil a sense of credibility and respect from prospective members that the local building society was the go-to place for their savings or mortgages. Longevity, resilience, and being at the heart of the local community built and sustained an emotional connection to a brand.

However, in today’s consumption-based world, we’ll continue to see an increase in personalised and tailored content, with the majority of citizens consuming content based on their likes or browsing history. As a result, the journey the member is taken on will become increasingly personalised in order to increase the likelihood of completion.

In the future banking landscape, members will expect product and service offerings to be designed specifically for them. Using customer data at every touchpoint and continually refining the personalisation approach will therefore not only be an option, but a necessity for Building Societies worldwide.

Simple personalisation efforts, such as an email with exclusive offers, and leveraging multi-channels to engage and facilitate client accessibility, will go a long way in further enriching customer conversations and relationships. Taking a greater personalised service and understanding, and applying it to our multichannel world, will be key to designing a future digital strategy with the customer at the centre.

4. Continuing to serve the community

Building Societies have always been a key part of local communities. Simple services like providing a mortgage for first time buyers to setting up a child’s savings account have enabled them to build a close connection with members over many years. Therefore, it’s important that this community aspect is not lost due to a lack of personalisation and digital channels.

Restrictions and branch closures during the Covid-19 pandemic saw communities increasingly having to access digital services, and the ongoing digitalisation of banking processes means that this is a trend that’s here to stay. It is therefore vital that Building Societies continue to provide digital versions of their services alongside the more traditional methods of customer engagement. If they fail to ensure that the digital/traditional mix is right for the communities they serve, they’ll find their member base diminishing and the ability to attract new customers seriously impacted.

Final thoughts

With financial services providers increasingly having to adapt their services in line with changing citizen expectations, Building Societies must prioritise creating tailored experiences for members through both digital and traditional channels, and deliver real-time data to retain the competitiveness of their offerings.

This, however, doesn’t mean overhauling existing processes and strategies. Rather, it requires gradual, small-scale changes to the services they provide in order to guarantee success. The Building Societies who take the time now to build their ‘digital’ foundations will be in a strong position to implement a member-first strategy in the next ten years, which is both realistic and achievable for their organisation.

Thanks to ongoing technological innovation and changing citizen expectations, members will increasingly expect a more personalised banking experience, and services designed with the customer at the centre. However, this provides a significant opportunity for Building Societies to re-position themselves for the modern age, and align their processes accordingly. By making cost-effective and incremental changes to customer engagement based around the ‘moments that matter’, Building Societies will be equipped with the skills, knowledge, and expertise needed to deliver a customer-centric banking strategy in the months and years ahead.