When digital innovation in banking is discussed, a great deal of attention is typically paid to up-start challenger banks operating in the digital space. It is true that these firms have been pioneering when it comes to digital transformation, but building societies and credit unions are also increasingly embracing the power of digital.
While many building societies had planned out digital strategies before the pandemic, this event led to even more seeking diversification through digital transformation. Utilizing technological innovations, including Open Banking, building societies have launched a range of tools for users. Newcastle Building Society was an early innovator in this area and launched a debt advice tool, developed with Paylink Solutions.
The service aggregates customer spending and earning, giving customers easy access to personalized support to help them gain control of their debts. By leveraging their strong relationships and trust with clients, building societies are in a unique position to be able to help their customers with a range of financial concerns.
Some building societies may be concerned that making the transition to digital could see vulnerable people, including elderly people, being excluded from essential banking services. However, a hybrid strategy is a powerful way to continue to ensure services are available to people who need in-branch services, as well as offering comprehensive digital services.
In a relatively short amount of time, the percentage of elderly people using the internet has increased significantly. According to figures from the Office of National Statistics, the number of people aged over 75 going online has grown from 29% in 2013 to 54% in 2020.
The number of disabled adults who used the internet has also increased, with more than 80% being recent internet users in 2020. Thanks to the uptick in elderly people using digital services, online services offered by building societies would now be accessible to more people than ever before.
Growing numbers of buildings societies are embracing a hybrid approach that ensures that digital services are given the same level of priority that in-branch banking receives. In practice, this means that these societies launch or improve their app offering and fund services like live chats and virtual appointments.
Yorkshire Building Society are one example of a society that spent time during the pandemic making sure that their customers were supported as much as possible, even as in-branch banking was not possible. The Yorkshire Building Society savings app launched in 2020 and within a year had supported more than 140,000 people to transact through this new digital channel.
At the same time as innovating in the digital space, Yorkshire Building Society also established a partnership with the Citizens Advice Bureau which saw a number of branches host advisors from Citizens Advice to provide free advice to both members and non-members. The entire financial industry is working to ensure technology is able to improve the customer experience, with building societies also being set to embrace the benefits of digital innovation
Finbarr Toesland, Editorial Contributor, VC Innovations