BANKING TECHNOLOGY SUPPORTS BUILDING SOCIETY GROWTH

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

 

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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.