Rob McElroy, CEO, Sopra Steria Financial Services
Our high streets are finally starting to heal from the challenges experienced during the Covid-19 pandemic, and the building society remains a vital part of this recovery. For over 100 years, building societies have been a staple in our communities, having built and maintained a loyal customer base. However, this traditional model is being turned on its head as members now have more choice as to how, when and where they manage their finances.
Whether it’s traditional high street banks, new and digital-savvy challenger banks or fintech product providers, building societies now have a range of digital products and service offerings to compete with. This is especially true in the mortgage and savings markets, where they have their biggest stakes.
It’s now or never to move with the times to ensure market share. Building societies must modernise their more traditional operating models. Thankfully, these changes aren’t a case of reinventing the wheel. Instead, it’s about making incremental changes to lending, savings and collections processes to ensure members are at the heart of strategies and they can create a customer experience that’s a true differentiator from their competition.
To create a truly ‘member first’ strategy, building societies should explore the following considerations:
- Increase digital touchpoints with customers
Customer expectations have changed. Like many other organisations, building societies are tasked with identifying new and innovative products and services 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 products at any time via any device.
To ensure this, building societies must embrace both digital and traditional channels, exploring ways to deliver personalised and targeted services and offers. Member engagement should also be built around the ‘moments that matter’ in their lives. Whilst digital, telephone and email might work for business as usual, many members take comfort in knowing 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 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 the business to stagnate.
- See connected services as an opportunity
With the rise of connected services, such as open banking, customers are rapidly shifting towards aggregator sites for a 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.
As technology improves and provides members and potential members with the confidence to go directly to their chosen providers, mortgages and straight-through product/service processing will be the next focus of these sites. In the short to medium term, building societies should also remember aggregator sites still provide an important route to market for their savings and loan products.
Despite this, connecting to these services is not without its challenges. Many building societies are still heavily reliant on mortgage broker networks and don’t have the appropriate technology infrastructure to provide aggregator sites with real-time information and deals, potentially stopping them from competing via these channels. It’s time therefore, for building societies to prioritise building – through incremental change – an infrastructure capable of delivering real-time data and availability of products/services on their latest offers to these sites. This will ensure they are future ready.
There are many quick wins to building micro-services around existing infrastructure and establishing an orchestration engine which will allow almost immediate implementation of a digital strategy. Once in place, this infrastructure will also provide the foundation many building societies will need to ensure they’re correctly set up for the exchange of customer data to comply with open banking regulations.
- Personalise offers and services to meet members needs
Building societies need to ramp up personalisation efforts and keep pace with the advancing technology available to them. They’ve targeted sales and marketing campaigns aimed at specific segments, but still have much to learn when it comes to personalised offers and services. For example, many building societies still have a ‘one journey fits all’ approach to customer experience via digital channels, with no differentiation in the customer journey between different product sets.
In today’s data rich environment, customers expect to receive personalised experiences and offered products and services designed specifically to meet their needs. Using customer data at every customer touchpoint and continually refining the personalisation approach is no longer an option – it’s a necessity. Even simple personalisation efforts, such as an email with exclusive offers, can lead to strong conversions and better customer relationships.
- Maintain a community-first approach
Building societies have always been a key part of local communities. Whether it’s providing a couple with the mortgage to their first house, or setting up a child’s first account, this connection with customers has been built over many years. Therefore, it’s important this is not lost due to a lack of personalisation and/or digital channels. Communities are embracing digital, especially since the start of the pandemic which forced us to stay at home and closed local branches, and it is vital building societies provide these services alongside the traditional. Failure to do so will, over time, lead to severed customer relationships.
Final thoughts
In a post-pandemic world, building societies need to think about more than just surviving, they need to put processes in place to help them thrive. They must focus on delivering a member-first strategy and personalised products, services and experiences across digital and traditional channels. By planning these changes incrementally, and not undergoing a complete overhaul, they can start actioning these changes immediately.
