Unlocking the potential of building societies

Unlocking the potential of building societies

Building societies are facing increasing pressure from new entrants and High Street banks. Many new entrants are backed by ambitious venture capitalists and the banks are employing aggressive marketing techniques to defend their market share in lending and saving.

However, mutuals have a unique advantage over their commercially driven rivals in that they possess a greater affinity with their local community and an approach which takes into account more than shareholder value.

In this article, we look at the latest research which highlights the opportunity for building societies and other mutuals if they can develop an effective marketing strategy.

Changing priorities for financial institutions

A key financial services trend in 2020 is personalisation and purpose-driven banking. Broadly speaking, this approach focuses on the targeted needs of individual consumers and seeks to make financial institutions transparent in their services. Honesty, integrity and genuine benefit to the consumer are vital. Green finance, emphasis on sustainable investing and giving back to the community are also top priorities. A recent EY report found that 52% of banks view environmental and climate change as a key emerging risk over the next five years, up from 37% one year ago.

The rise of Fintechs, challenger and neobanks in recent years have shown strong competition in this personalised and socially responsible approach. With the market flooded with options and online reviews ensuring companies are kept accountable, consumers are overwhelmed with choice.

The challenge for building societies is whether they can maintain their unique position and avoid competitors taking over their socially responsible homeland.   

Building Societies – a unique proposition?

Building Societies typically have a strong and valued presence in their community holding partnerships with local authorities, businesses and schools. Many building societies have dedicated community funds and allow staff opportunities to take ‘charitable days’ to get involved with local causes. According to a Building Societies Association poll, 67% of building society customers feel that their Society is an important part of their community compared with 47% of big bank customers.

This will be positive news to the 88% of consumers polled by Forbes who revealed they wanted brands to be more ethical and environmentally friendly in daily life.

The BSA also explains how building societies are rapidly investing in the latest technology and expanding their digital offerings to meet the demands of changing consumer behaviour. In many ways, they offer an appealing hybrid of traditional, customer-facing services, community focused priorities and growing technological innovation.

There are also some clear benefits regarding savings rates. The website Savings Champion reported earlier this year that for the last 12 months, building societies had paid their customers over 27% more than banks. More than two thirds of building society accounts currently pay a higher interest rate than the base rate, compared to just over half of accounts held with banks.

Challenges that Building Societies face

While a combination of higher rates and personalised services does create an attractive proposition, it is important to be mindful of the challenges building societies face:

  • There is an increasing threat to the Building Society sector and their position in the community. Banks and new entrants are developing marketing strategies built on purpose driven themes and sustainability.
  • Marketing teams within mutuals are often overwhelmed with mandatory communications and hence don’t have the time or resources to refine and grow their approach and develop a unique proposition. An evolving strategy is vital to keep up with changing consumer needs and will allow a building society to stand out from its competitors and immerging threats.
  • Building Societies often have fewer resources than fintechs (who are funded by venture capitalists) and banks (who have greater marketing budgets) to put these strategies into practice.
  • An effective marketing approach requires the ability to test, analyse and assess which methods are most impactful on the target audience. Building Society marketing departments can sometimes lack the time to carry out these assessments.

How can Financial Services Partnership help?

We have extensive experience in working with building societies to offer additional marketing support in terms of strategy, internal and external communications and media partnerships.

We can help to:

  • Differentiate a building society’s overall brand to ensure it has its own unique voice and proposition within the market
  • Utilise our contacts across the trade press to increase media presence
  • Manage both B2B and B2C social media campaigns to increase visibility
  • Set and achieve ambitious commercial targets

To learn more about what we can do to help, please get in touch here






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