There is a growing need for building societies to digitalise, or they could miss out on attracting the next generation of customers; data and payments fintech Moneyhub has warned after its latest report.
Moneyhub revealed that as much as 47 per cent of building society customers reported difficulties engaging with their services, with digital experience a frequent pain point for many. Meanwhile, 73 per cent of 18 to 34-year-olds said they look for an easy-to-use app when choosing financial products.
Building societies could fail to attract new customers and retain existing ones by failing to accelerate their digital propositions and experiences according to ‘Digitise or Die‘, by Moneyhub.
While building societies hold 32 per cent of the market share in the UK across all banking services, this drops to just 24 per cent for the share amongst 18 to 34-year-olds. This age group appears predominantly interested in financial services providers that can offer the technology to make money management easy and efficient.
Because of this, younger generations are increasingly more likely to turn to challengers and neobanks for financial products. These financial institutions currently hold over a quarter of the market share amongst 18 to 34-year-olds, compared to 16 per cent overall.
The newer challenger and neobanks often position themselves as technology first, and without the legacy systems that more established banks and building societies have, are able to innovate and develop their technology at a quicker pace.
Building better support
While three-quarters of the younger generation look for an easy-to-use app when choosing financial products, only 58 per cent of over 55s do the same. Moneyhub suggests that building societies risk losing out on the younger customer base if they do not digitalise and embrace the opportunities that technology offers to their business and their customers.
When asked what building societies could do to better support customers, 31 per cent said they would be more likely to join a building society if they had a mobile app and 26 per cent would be more open to them if they had a web-based portal.
Moneyhub also asked consumers who don’t currently use a building society why they don’t, with one in ten saying they were unsure whether building societies have as good digital banking services as other banks, and a further seven per cent were concerned that the majority of building societies didn’t have mobile apps.
In addition to technology services, customers are also looking for their building societies to provide better support on their money management with 21 per cent asking for insight on saving and investments from building societies, as well as guidance on the state of their finances (19 per cent).
The time to digitalise is now
Mark Horwood-James, MD of personal finance technology at Moneyhub, discussed the findings: “Building societies have traditionally been some of the most customer-centric organisations within financial services. It is clear that their customers are core to their values but building societies have generally failed to embrace and implement digital and data-led experiences. They are struggling to meet the needs of the customers of now, and will definitely fail to meet those of the future unless they take action.
“Building societies are at a pivotal juncture. There is still a huge opportunity for them to transform their digital capabilities and bridge the gap between consumer expectations and product offerings. At Moneyhub, we believe that open finance offers this opportunity to building societies, and can be easily implemented into existing experiences and systems.
“The research shows a clear demand from consumers that building societies have to digitalise now. We hope that our report serves as a roadmap to help firms get ready and embrace the transformation that changes like open finance bring, which are now essential for creating advocacy and loyalty among today’s and tomorrow’s consumers.”
