Why Building Societies should walk the path to digital utopia
A building society is a mutual approach to building and running a financial institution, giving control to staff and customers, not shareholders. Revolving around communities, they tend to serve a region or multiple regions offering mostly savings and mortgages to their members.
Large financial institutions, particularly the retail banks, are taking huge strides in digitising their approach to solving problems; from providing a far richer digital customer experience, all the way through to the use of machine learning to help their staff be more efficient, technology is drastically changing the DNA of financial institutions.
While different in stature and complexity to the large financial institutions, building societies recognise the need to embrace a new digital approach in many aspects of their business to ensure they are offering the best experience to the customer.
Here are three ways building societies can learn from larger financial institutions and digitise their approach.
1. Develop a truly omni-channel experience
Many customers, encouraged by the pandemic, are placing increasing emphasis on digital availability and access to digital offerings outside of the branch. While customers are returning to branch as we slowly progress forward, 87% of surveyed customers plan on maintaining their use of digital services as encouraged by the pandemic. Building societies must ensure access to a fully flexible and omni-channel experience to suit the changing demands of their customers, who are increasingly demanding a more virtual banking and lending experience. Building societies generally offer a network of local or regional branches frequented by customers, but have generally not taken steps to meet these changing demands.
It’s crucial that building societies focus on integrating their in-branch experience with mobile and online channels to ensure a seamless customer experience. A sophisticated and data-driven customer relationship management tool, or CRM, would work holistically across the business by removing barriers to communication and customer data, and would help cement that integrated experience. A CRM comes with the second benefit of supplying staff with tailored customer insights, allowing them to personalise offerings based on customer behaviours and ensure customer needs are met even as they change or develop.
2. Co-creation of digital features with customers
A report by PWC showed that 1 in 3 customers will leave a brand after just one poor experience; this is a figure to be acutely aware of when working to implement new features or changing fundamental aspects of your offering. Despite offering a mutual experience, building societies are becoming increasingly disconnected from their customers’ desires, and this could continue in the digitisation process.
It’s crucial that building societies follow in the footsteps of the larger financial institutions and co-create their digital features using customer input, to avoid customers feeling isolated or left underappreciated. There has been a huge shift by the larger financial institutions towards including customer input throughout the design stage and all the way through to delivery when developing new digital customer offerings. First Direct, for example, have created a community of customers who regularly provide feedback on digital projects and design ideas via a simple web app.
Building societies need to involve their customers in their digital journey, guiding their offerings based on what the customer wants to ensure they’re maintaining the sense of mutuality and community that drives their business.
3. Reducing friction in the customer onboarding process
As we move to a more digital way of living customers are becoming increasingly concerned with the convenience of a service or offering. Customers no longer want to have to go to branch to verify their identity or to use their finances, and a recent Woodhurst poll showed that 78% of customers only attended branch because they could not get a feature online. Building societies need to work harder to capture their younger, more digital customer base, beginning with offering a simpler digital onboarding and verification process.
Building societies can follow in the footsteps of the large financial institutions to utilise third party solutions to streamline the customer onboarding process and to increase the convenience of their services; offering digital identification and verification allows new customers to open accounts in a matter of minutes. At the same time, digitising core aspects of the onboarding and verification process can help reduce operational overhead costs while reducing rates of fraud and other compliance issues for the building society.
Implementing a cutting-edge and efficient digital onboarding process will help entice the growing younger customer base that building societies need to tap into to survive in an increasingly digital world.
What could you do to begin your journey?
Taking the initiative to highlight your customers’ needs and issues is the first step of many along your digital transformation journey. As a building society it’s crucial you put the customers’ needs and wants first to ensure you maintain the strong two-way relationship you have built. Surveys, newsletters, or similar feedback forms are a key first step in collating the desires of your clients to give you a foundation to map your strategy.
Once you have clear goals for your transformation you can start to plan and build your approach, beginning with getting a holistic view of where you currently stand in relation to what you’d like to achieve.
Whilst we continue to support the banks on their digital transformation, Woodhurst believe that Building Societies have a different path to become digitally leading. You face different challenges, have different priorities, and should be able to transform much faster. We can help you understand how to translate an aspirational digital strategy into a reality for your organisation, and if needed help deliver the changes to get you there.
If you would like to understand your digital blind spots, get some insight on what others are doing, or just want to discuss your path to becoming a digitally leading Building Society, please get in touch with Ben.Nadel@woodhurst.com