Why Building Societies should be focusing on Digital Transformation

Discover why building societies need to address their digital transformation agenda and utilise the digital opportunities available to transform their business processes and to enhance their member experience.

In the current landscape of challenger banks and digital banking, building societies have a long way to go to compete in a digital space. The likes of Starling, Monzo and Atom are showcasing how digital comes first, and how this is working in the sector’s favour.

Building societies may have history, tradition and long standing customer service in place that the challenger banks cannot compete against. However, more consumers are expecting their financial services institution to offer a digital experience, which means that building societies are falling behind. The sector needs to adopt digital transformation and technologies. Technologies to transform business efficiency and enhance their customer processes.

What is the digital landscape in banking?

It is clear to see which direction the market is going in. An increasing number of high street banks are saying goodbye to their bricks and mortar set-ups and the likes of challenger banks are offering a complete digital service. With digital offerings at their fingertips, customers know they can open an account, make transactions and view their statements, all without ever having to set foot in a bank again.

Customers expect a digital offering to be in place. 81% of customers¹ are using digital channels to engage with their current bank. 68%² are saying the pandemic has only elevated their expectations of their bank’s digital offering and capability.

Financial institutions are competing to get the attention of the market. Knowing that the majority of customers prefer a digital banking experience works in many of the banks’ favour, except that of building societies.

Building Societies and Digital Transformation

How far are building societies on their digital transformation journey?

Kagool ran a census in 2018 to analyse the UK’s top 40 building societies digital capabilities. Factors looked at mobile optimisation, social media use and digital offering. Kagool ran the same census in 2020³ and the results were not much different. Kagool’s research found only 18% of the top 40 building societies offered an app as part of their customer communication processes. Revealing how the sector is not meeting the demands of the average customer.

But yet, many building societies are saying that digital transformation is at the top of their agenda. 67%⁴ said technology can help drive efficiencies within business. 75%⁵ said digitisation would improve their broker journey. And 67%⁶ stated digital transformation is on their agenda within the next 5 years, even though they see this being a challenge.

90%⁷ of firms are relying on legacy systems. One in three building societies⁸ state they do not have the in-house resources to look at digital transformation. Building societies are not embracing the opportunities that digital technologies can bring to their business and customers. But with even the smallest steps towards digital transformation, building societies have an opportunity to move forward in the right direction.

Small steps towards digital transformation

Digital transformation can start with small steps, such as digitalising customer communications and offering customers more than one communication channel of choice. These opportunities will show the sector’s users that they are moving in the right direction and are responding to the growing digital needs of the market.

Digital technologies are providing building societies the opportunity to compete in the digital space. Building Society Association Chief Executive Robin Fieth has commented⁹ on the adoption of digital technologies, and how they are a positive change within the sector:

“Building societies are already making use of robotics, chatbots, cloud-based solutions, API connectivity, mobile apps, digital IDs and open banking. At the same time, they are remaining present in their communities reimagining the purpose of the branch using design and technology to turn them into spaces for engagement and support within their communities.”

Freith’s comment shows how building societies need not fear what digital transformation will do to their history of tradition and face to face customer service, as their teams and branches will still have a great purpose. Digital technologies will only enhance their offering, not hinder it.

What is the digital transformation opportunity for building societies?

There is a clear opportunity for building societies to adopt digital technologies to better deliver their long standing customer service to their members. Using these technologies could allow for better member communication, or even to allow members to serve themselves. Using these technologies provides an endless opportunity for the sector, but it needs to be on their agenda.

Some building societies do already have digital transformation on their agenda and are making strides in this space. In 2020 Yorkshire Building Society¹⁰ hired over 30 tech recruits for IT and engineer roles, to enhance their customer service and experience and to improve operational efficiencies. By Yorkshire Building Society improving their digital experience, they have increased their conversions by 54%¹¹. They have also seen a reduction in inbound calls and wait times, showing the flexibility of what digital technologies can offer both their customers and customer service teams.

Digital transformation is an opportunity for the sector. Even though building society teams have reservations about their legacy systems and a lack of resources, they can still combat their reservations with the right technologies and digital partners in place.

Building societies need to find established partners that will create digital roadmaps to show how digital technologies can improve business efficiencies and enhance their customer experience. Building societies need to adopt a partner that can provide customer friendly experiences and information at the touch of a button. Combine these business improvements with the building blocks building societies already have in place, there is no question that the sector will thrive.

Digital Transformation Journey with Prime Document

At Prime Document we have partnered with building societies to show the businesses the opportunities that digital transformation can bring. By creating clear project plans and digital roadmaps, we work with your business to show how even small steps towards digital transformation can create business and customer experience improvements.

We will partner with you, and even integrate with your legacy systems, to help you realise how digital technologies such as your own branded portal, digitalising customer communications, and providing your customers with multichannel choices, can make you a competing player in this digital space.

Get in touch with us today for an initial chat to discuss how we can partner with you on your digital transformation journey.

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