How Building Societies Can Seize Their Digital Opportunities

Digital creates opportunities for more effectively and efficiently meeting customer needs. It also reduces barriers to entry, so incumbents need to find ways to design and deploy as quickly as start-ups. Digital can give building societies an edge, says Zühlke’s Myles Davidson, if they can use their size and scale to take advantage.

The Zühlke’s Senior Leaders’ Roundtable recently hosted five building society CEOs. Discussing the challenges and opportunities presented by the pandemic, they highlighted how the unique circumstances had enabled most of them to accelerate digital transformation initiatives. Responding to enforced branch closures (due to Covid), the first myth the CEOs dispelled was that only younger customers expect to interact digitally. “Age is no barrier to digital; mindset is,” one CEO said.

Most people – across all age groups – want to be able to check their balances, take action or get help digitally. It isn’t just ‘neo-banks’ and challenger brands that have changed customer expectations for building societies. Everyone from Uber to Amazon and even the NHS has raised the bar regarding how people access services and manage their affairs digitally.

Keeping up the pace of change

While COVID created a range of challenges, many organisations found that it also accelerated their adoption of digital. Teams became more agile and more able to focus and prioritise, delivering the most critical requirements. And they found ways to do it quickly and flexibly. Traditional assumptions and constraints were often forgotten because the situation was extraordinary. Can this continue in more normal times?

In my experience, much of the digital adoption in building societies has focused on the front-end of processes (acquisition) and meeting compliance requirements. There is considerable opportunity to build on the customer-centric approach inherent in most building societies. It isn’t about large-scale initiatives and multi-year programmes. Instead, it’s about delivering services and features at speed to assist customers and meet their changing needs.

What customers want

Customers want great digital banking experiences that anticipate their needs. Prospects want a reason to select (or switch) based on their specific situation. The key to mastering digital and data is making sure that user needs are driving the whole development process – from design to development to service. The benefit in budgetary terms is that you deliver the right features for your customers, not all the possible features.

Of course, the challenge can be that people don’t know what they want or aren’t in a position to tell you. So, you must improve how you discover these needs, test them and iterate around them. It means collecting data and digitising the front-end application process to get insight from across the customer journey, using it to create and deliver added value to customers.

What’s stopping you?

Increasing the pace of change and changing the mindset is a great foundation. It will help your teams deploy digital initiatives that reduce servicing costs and increase the effectiveness of cross-selling. However, smaller organisations can struggle with access to digital skills, talent, and experience to establish and maintain the momentum. Moving beyond spreadsheets and manual analysis to becoming data-driven at scale can be challenging. It requires digital literacy to be embedded in strategy, development, innovation and marketing activities. It removes bottlenecks and increases your pace of change.

Creating an action plan

In my experience, there are three main ways to accelerate digital transformation in building societies. Depending on the current level of digital maturity, you might want to build your roadmap for digital change. By adding digital thinking into your plans and defining where your society should focus its delivery, you can understand the outputs and investment required over the medium-to-long term.

Prioritising the highest-impact initiatives will ensure meaningful change is delivered. Once you understand the likely ROI – whether in terms of customer acquisition, reduced cost of servicing or revenue per customer – you can begin to deploy features and functionality rapidly and continuously that deliver against your strategic goals and user needs.

On this journey, you should be augmenting your teams with partners who can support your teams with user research expertise, data and machine learning experience and agile development skills. They will help move beyond feature matching to start deploying services that create competitive advantage and drive customer acquisition and retention.

When it comes to moving quickly, being smaller is often a virtue, especially if you use it to embrace change and change your rules of engagement. It is especially potent when it’s focused on creating things that customers value.