Our recent Vox Pop report, ‘Building a Foundation for Innovation‘, explored digital progress in the Building Society sector. Along with our partner Mambu, we gathered a snapshot of insights from senior leaders, on the opportunities and obstacles that come with embracing new technologies.

We set out to build a picture of how Building Societies are striving to evolve, to better serve the demands of current and future members, and maintain the mutual model as an essential aspect of the UK’s financial landscape. Read the latest contribution to the Vox Pop below.

Scott Devereux

Scott Devereux, Head of Customer Experience, The Nottingham Building Society

Building Societies – and the systems that power them – are long-established. How can emerging technologies work alongside existing infrastructures?

I think there are two ways to look at this question. Externally, there are existing infrastructures put into place by the Bank of England, the PRA, the FCA etc. Irrespective of any digital transformation we put out into the market, we have to adhere to regulations. We are in the process of finding new RegTech innovations that could support us in best achieving this.

Internally, there are existing structures in terms of both culture and technology, which some Building Societies will have more challenges changing than others. As Societies build onto legacy systems, new regulations come into effect and processes expand, which can lead to multiple overlapping systems on the go at once. At Nottingham, we have spent a number of years consolidating and simplifying our architecture to overcome this challenge. This has enabled us to have one common view of the customer, in a single database, with one system of record, putting us in a position where digital transformation becomes slightly simpler.

Taking this single view of the customer and partnering will the right people, such as Salesforce, we’ve found that technology has enabled us to transform our internal mortgages and savings processes. As a Society, we see technology as complimentary to the goals we are looking to achieve. We don’t want to invent, we to innovate by using the new technologies that are out there to help us deliver a better experience for our members, both new and existing.

“We see technology as complimentary to the goals we are looking to achieve.”

Can FinTech partners play a role in implementing new solutions within a Building Society? What are the key considerations for making such partnerships successful?

The right partners can play a huge role in our future success. Covid-19 has demonstrated that as an industry we need to think differently about customer behaviour. We have seen reduced footprint in branches, with many customers more proactively going online. While we do continue to see long-term value in our branch network, we need to become more digitally focused and FinTech partners unlock our ability to deliver this transformation for our members.

At Nottingham, we are working with a RegTech provider to simplify our onboarding process, which currently involves customers bringing in paper documents for visual ID checks. This will be transformed into a fully digital process, enabling customers to use their mobile device to capture an ID document and selfie, for facial recognition identification. In the future, this technology will also be brought into branches to fully optimise the end-to-end process for customers. Fintechs allow us to unlock these kinds of capabilities and there are a wealth of innovations in the FinTech space that have the potential to be massive enablers for us later down the line.

In terms of the relationship between partners, there is certainly a recipe for success. For us it is born out of the need to solve a problem. Any partnership or transformation we undertake has to offer a specific solution, whether to a broad customer demand or need, or to streamline part of a process. In Salesforce, we have a service partner, who are able to bring suggestions to the table and ask us to think differently about an element of a process we are looking to redesign. Recommendations are extremely helpful in succeeding with innovation. Across the sector, Building Societies will often discuss their aims, the partners they have worked with, and their experiences. Relationships are very important in this space.

“Any partnership or transformation we undertake has to offer a specific solution, whether to a broad customer demand or need, or to streamline part of a process.”

What role do you think digital culture and internal skills play, in supporting innovation at a Building Society?

This is a journey we are currently on at Nottingham Building Society. We are in the process of a large transformation project with Salesforce, a significant part of which focuses on how we embed digital culture within our business and how we take this culture forward as we continue to grow and evolve. Culture has to come from the top. We need leaders who are digitally aware and have the ambition to grow as a digital business. But equally, it is important to have the right skills across the breadth and depth of the organisation, so we can act on this vision.

Being based in Nottingham, skills and resources can be a constraint at times when compared to businesses in cities such as London or Manchester, where you tend to get a higher resource of skills. Through the prevalence of home working due to COVID, we are finding that the skills gap has started to dissipate, and we are able to attract broader talent. This opens up interesting possibilities for building out our skills portfolio, something we are working on at the moment. We are quite far along the path of building good internal capabilities and have some great people on the ground, but we are conscious of being able to grow this team further in line with our future ambitions.

“Culture has to come from the top. We need leaders who are digitally aware and have the ambition to grow as a digital business.”

What are the main challenges that you have faced or are facing in achieving your digital aspirations?

I feel we are lucky as a business; we have a progressive thinking leader who wants us to be digitally optimised. One of the challenges we face is that there is lots for us to do and we have to pick the priority areas we want to focus on. The challenge is deciding in which order we should approach innovation. We spend a lot of time in strategic sessions trying to understand the best approach and how we can optimise the work we are doing around transformation.

Another challenge we face is the continual evolvement of technology. We have seen over the past 5 years the emergence of challenger banks and FinTech providers, who have very rapidly brought innovations to market. We risk quickly falling behind if we don’t continually keep pace and this will be a key challenge as we move forward as a business.

What does the future hold for Building Societies – do you think the role of a mutual bank will evolve as we enter a digital age?

It needs to. We all need to evolve collectively and help each other to evolve. Building Societies still have a huge role  to play in our countries economic future. We act as pillars of our communities, supporting our members and our local infrastructure. Moving forward it’s about finding a balance between continuing to be an important community presence, while offering the digital presence to meet changing customer need. There is definitely a long-term future for us.

Across the sector we went through a period of rationalisation where many banks and Building Societies merged together, reaching the low point of the economic crisis in 2008. Since then, we have seen a re-emergence of a greater number of different brands asking for banking licences. There is a future for all of us, but it’s about shaping our way into that future and making sure we continue to stay relevant for new and existing members.

“It’s about finding a balance between continuing to be an important community presence, while offering the digital presence to meet changing customer need.”

Download the full report now for contributions from the following Building Societies: Principality, Skipton, Newcastle, Furness, Hinckley & Rugby, West Bromwich, Cambridge.