Now is the time for Building Societies to reinvent their “Customer First” philosophy for the digital era

As mutual organisations co-owned by their ‘members’, building societies are a very British institution, don’t you know. They formed in seventeenth century Birmingham with the aim of providing members with support to purchase a home – and were so sincere in this purpose that they literally ‘terminated’ once all members owned a property. Part of a local movement to foster innovation and economic success, these societies were considered radical – far removed from the received wisdom that profit should be the key force driving financial institutions.

Birmingham 1770s Built Street

While much has changed, this fundamental delineation remains today. Building Societies are still genuinely focused on their members, driven by long-term relationships and attending to their members’ needs. Of all the industries, they have a very genuine association with customer engagement – and are uniquely placed to achieve this.

Of all the industries, Building Societies have a very genuine association with customer engagement– and are uniquely placed to achieve this.

Under continual pressure from high street banks (whose clout stems partly from their scale and reach) and sprightly new market entrants, engagement is easier said than done. Most building societies are geo-centric, with loyal local bases driven by local branch networks and a very personalised service. Associated costs are relatively high, so naturally, the industry is planning sustainable growth through complementary digital customers. And of course, these new online experiences must align with those provided so brilliantly ‘in branch’.

Whatever the channel, we’re really talking about achieving customer engagement. So, considering the trust issues surrounding financial institutions, we see a golden opportunity for building societies to deliver on a promise made long ago…

What does it mean to put members at the heart of a modern, digital organisation?

Building societies have done exactly this since 1775; technology may have changed, but fundamentally, people haven’t.

We break it down like this:

Our Customer Engagement Platform, Thunderhead ONE, has been built from the ground-up on these four well-trodden principles. By understanding the members’ needs and intentions (‘true intent’), ONE delivers long term relationships through highly personalised digital (and offline) experience. For building societies, ONE serves as the agent catalysing their brand promise to ‘put customers first’.

Of course, the numbers support the theory – customer engagement directly correlates to business growth. Forrester’s The Digital Banking Imperative report stresses the importance of owning the customer relationship across channels: “Personalisation will play a crucial role in next-generation experiences that enable financial well-being — and, as a result, improve business outcomes.”

A ten per cent increase in customer satisfaction can increase loyalty by 30%

 According to the Institute of Customer Service’s UK Customer Satisfaction Index, a ten percent increase in customer satisfaction among the 253 organisations surveyed impacted loyalty by +30% and trust to the tune of an astonishing +48%. Banks and building societies where customer satisfaction was above the sector average were rewarded with an average 5,492 net account gains (compared with a net loss of 3,407 for everyone else). In summary, “Performing consistently better than the sector average for customer satisfaction is key to sustainable financial growth.”

“Performing consistently better than the sector average for customer satisfaction is key to sustainable financial growth.”

Of course, consumers are increasingly savvy and may well be skeptical of financial organisations attempting to engage. According to PwC’s Retail Banking 2020 report: “Customers are demanding ever higher levels of service and value. Trust is at an all-time low”. Fortunately, since building societies are not tarnished with quite the same brush as the rest of the industry in this area, customer engagement initiatives typically see greater impact for the business. Together, tailored services, personalised and timely conversations and empathetic staff (fuelled by up-to-date intelligence) all ladder up to significantly improved customer engagement (and NPS).

Jonathan Davidson (Director of Supervision – Retail and Authorisations at the FCA), describes customer relationships as an industry priority. At the recent annual Building societies conference, he laid out the opportunity for building societies to:

  • “embody the values of membership and long-term trust-based relationships
  • know their members and the local community personally
  • understand consumers as individuals rather than as archetypes in a risk-scoring model”

Engaging with members may sound complex and overwhelming, but with the right team (and tools) it’s eminently possible to demonstrate a proof-of-concept to the business [Listen/Understand/Act/Impact] within a matter of just 12-15 weeks. We’ve done it, many times.

The culture of putting customers first is already in place. It’s been in the blood for over 250 years.

And fortunately, for many building societies, the culture of putting customers first [which eludes many organisations; here’s a handy ebook if you fancy a little further reading] is already in place. It’s been in the blood for over 250 years. The ability to operationalise and deliver customer engagement at scale should now be the immediate focus, preparing building societies for the next 250 years to come…

Article by: Tom Huxtable, Director, Building Societies Sector, Thunderhead.

References:

The Digital Banking Imperative Vision: The Digital Banking Strategy Playbook by Peter Wannemacher and Jacob Morgan March 21, 2017 – https://www.forrester.com/report/The+Digital+Banking+Imperative/-/E-RES135946

https://en.wikipedia.org/wiki/Midlands_Enlightenment

https://en.wikipedia.org/wiki/Ketley%27s_Building_Society

https://www.instituteofcustomerservice.com/research-insight/research-library/ukcsi-the-state-of-customer-satisfaction-in-the-uk-january-2018

https://www.fca.org.uk/news/speeches/building-societies-and-future-retail-banking

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