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.