New research from Moneyhub found that concerns over app functionality and digital services could be preventing customers from joining building societies
Moneyhub’s report addresses how building societies can better support customers through digital transformation
73% of 18-34 year olds said they look for an easy-to-use app when choosing financial products pointing to a clear customer need for better digital services
Building societies could be missing out on attracting a new generation of customers and retaining current ones by failing to accelerate their digital propositions and experiences according to a new report, “Digitise or die”: a call to arms for building societies’, from Moneyhub.
Almost half (47%) of building society customers reported difficulties engaging with their services, with digital experience a frequent pain point for many.
Moneyhub’s report and research highlights the growing need for building societies to digitalise as they struggle to attract a new generation of younger customers. Indeed, while building societies hold 32% of the market share in the UK across all banking services, this drops to just 24% for the share amongst 18-34 year olds. This age group is predominantly interested in financial services providers that can offer the technology to make money management easy and efficient. As such, younger generations are increasingly more likely to turn to the challenger and neobanks for their financial products - this group hold over a quarter of market share amongst 18-34 year olds compared to 16% 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.
According to the research, three quarters of 18-34 year olds said they look for an easy-to-use app when choosing financial products compared to 58% of over 55s. 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.
In addition, when asked what building societies could do to better support their customers, 31% said they would be more likely to join a building society if they had a mobile app and 26% would be more open to them if they had a web based portal.
Moneyhub’s research 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 7% 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 1 in 5 (21%) asking for insight on saving and investments from building societies, as well as (19%) guidance on the state of their finances. 17% of consumers also want to better understand their financial health score.
Mark Horwood-James, MD of Personal Finance Technology at Moneyhub comments: “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.”
Drawing on new research conducted by Lansons Team Farner among building society leaders and the wider public, Moneyhub’s latest report aims to provide building societies with insights and guidance on navigating the complexities of a marketplace that is increasingly governed by data and evolving consumer demands. It emphasises the necessity for firms to adapt and innovate, outlining the strategies required to secure customer primacy in a competitive environment.
Contacts
Ingrid Anusic
Marketing Director, Moneyhub
ingrid.anusic@moneyhub.com
M: +44 783 722 6553
Eleanor Ross
Senior Account Director, Teamspirit (Moneyhub PR Agency)
ERoss@teamspirit.co,uk
M: +44 7393 758 446
Research Methodology
Research conducted by Opinium Research on behalf of Moneyhub amongst 2,000 UK consumers (nationally representative sample). To provide further insight for the whitepaper, Lansons Team Farner interviewed 16 senior building society stakeholders in February and March 2024. Interviewees were drawn from a mix of large and medium-sized building societies, as well as the Building Societies Association and Open Banking Limited.
About Moneyhub
Moneyhub’s goal is simple; to work with clients to improve the financial wellness of people, their businesses, and their communities. Hundreds of companies use our award-winning Open Banking and Open Finance technology to better understand their customers through data so they can comply with Consumer Duty, deliver them more suitable products, and automate money management or payments to ultimately increase their capacity to spend, save or invest more.
To find out how to give the gift of financial wellness, and reap the rewards, please visit www.moneyhub.com.