Nikhil Sengupta, Commercial Director at 10x Banking, shares insights on how building societies can modernize while staying true to their roots.
The mutual model has defined community banking for centuries, offering building societies a distinct edge in trust and social responsibility. But today’s volatile climate of economic headwinds and digital-first competition are reshaping member expectations, and the sector stands at a historic crossroads.
Earlier this year, the UK’s building society sector marked 250 years of heritage at BSA25. The government’s call to double the size of the mutual sector rang loud throughout the event. Conversations and sessions at BSA25 made clear that building societies have an opportunity to seize the initiative, amplifying their relevance and reach. The challenge, though, is to do that without sacrificing the “members first” ethos that built their legacy.
Unlike shareholder banks, building societies are owned by their members, not distant investors. This gives them the freedom to reinvest profits into better rates, local initiatives, and resilience for turbulent times. Mutual values continue to foster a level of trust and purpose that commercial banks struggle to match, which is especially relevant as many members continue to face cost-of-living pressures.
Recent research found building societies ranked highest for customer satisfaction, with 41% of respondents saying they are the type of business most likely to act in members’ interests. It’s a powerful signal the model works. But holding onto this trust means adapting how societies serve both long-standing and new members in a world that has become accustomed to digital-first convenience.
Digital convenience is now table stakes, accelerating the urgency to update legacy systems. Many mutuals find themselves slowed down by dated technology - struggling to respond promptly to changes in central bank rates or launch new products at digital speed. For example, savings rates can lag behind the market, causing frustration and missed opportunities for members.
A generational gap is widening the challenge. Despite their reputation for trust, building societies currently hold just 32% market share – and only 24% among 18–34-year-olds. If they can’t connect with younger generations, stagnation and consolidation risk becoming the norm rather than the exception.
Building societies can meet today’s demands by starting at the core. Transforming outdated core platforms is crucial to accelerate product development, reduce operational costs, and fortify cyber resiliency. Modernized cores enable societies to launch member-led products swiftly, empower staff with better tools, and harmonize digital and in-branch experiences, and they can do it at scale, which has previously been a sticking point.
The technology isn’t the endpoint though; it’s the enabler for mutuals to preserve what makes them special while building new strengths for a generation with different expectations. Smaller societies can struggle to invest in modern tech alone, but collaborative approaches, like shared digital platforms or joint ventures, can democratize access to innovation.
Discussions at BSA25 highlighted that new core banking approaches, such as the cloud-native core banking platforms, are starting to empower mutuals to break through legacy limitations without the hassle and risk of neobank-style set-ups. The result is platforms that allow for tailored digital experiences and rapid adaptation, while reducing cost and risk.
Collaboration, as we know, goes far beyond integrating new tech. At BSA25, leading societies showed how working closely with technology providers, sector partners, and industry peers makes transformation not just possible, but sustainable. At 10x, we're proud to be part of that journey – supporting building societies like West Brom as they modernize their core infrastructure while staying true to their mutual values.
Regulatory reform, long called for by sector leaders, also remains crucial to allow member-centric models to flourish and innovate.
The lessons from Birmingham speak louder than ever: mutuals that embrace technology to amplify their values, connect with new generations, and operate with agility will continue to anchor communities for centuries to come.
Building societies are built to last, but history teaches us that endurance requires evolution. As member expectations shift, and new government ambitions frame the sector’s future, now is the moment to act boldly.
Curious about what the next 250 years could look like for mutuals? Download our ebook, “Transforming to Thrive: The Next 250 Years of Building Societies,” and discover practical strategies for modernizing without compromise.
Download Transforming to Thrive: The Next 250 Years of Building Societies
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