How Building Societies Can Digitise Without Losing Their Community Bonds

Building societies occupy an essential place in UK financial services. Member-owned, locally trusted and community-first, they are built on relationships as much as products. Members expect to sit down, talk through decisions and get advice they can believe in. That trust is a strength. The challenge is delivering it alongside the speed and simplicity people now take for granted online.

This isn’t easy. Many members continue to engage in-branch, especially around savings and mortgage products. Branches remain community hubs where conversations happen as much as transactions. At the same time, younger generations expect services that move faster. They open accounts on their phones and want updates in real time. While they still need advice when buying a first home, they want the option to move easily between app and branch.

The pull between tradition and digital expectation defines the sector today. Meeting new demands doesn’t mean tearing out legacy systems overnight. It means introducing digital building blocks that make life easier for both members and staff.

Beyond back office efficiencies

Some of that adaptation is already underway. Robotic process automation and APIs are being used to eliminate re-keying and manual entry, allowing staff to focus on providing advice. Mortgage applications are getting easier with e-signatures and integrations with property data providers. These are small shifts that make a big difference for members and employees.

Some building societies are going further, putting AI at the centre of their digital transformation. It’s key that they focus on high-impact areas for initial roll-outs: speeding up decisions, making digital platforms more personalised and freeing staff from repetitive work. That can mean smarter credit assessments, better application and complaint handling, or tools that help customers engage with financial products.

These are practical applications, not pilots designed only to broadcast a modern message. They cut delays that frustrate members while keeping people at the heart of the process. For building societies, a key focus for improvements is the process of mortgage applications. For example, many legacy systems require an initial property price valuation during the offer stage and a rework following approval, adding significant delays. With innovative, modern systems, building societies can integrate with proptechs like Rightmove or Zoopla, using AI tools to provide rough estimates during the application process. 

Partnering with banking industry-focused AI providers makes it possible to modernise step by step, building on what already works. It’s an enabler of infrastructure modernisation without disruptive and costly overhauls. Customers, product teams and branch employees see iterative improvements, strengthening key community ties.

Aligned with industry trends

Leadership intent is moving in the same direction. The Whitecap Building Societies Report 2025 finds that while AI is the most prominent technology theme in research, mobile platforms and apps are viewed as the top investment priority for the next five years. More than 60% of leaders also plan to enhance intermediary-facing digital capabilities - a nod to the broker-led nature of many journeys.

The report also reveals weaker connections with younger community members. Digitisation should be a part of building societies’ plan to improve engagement with millennials and Gen Z. This will bring their platforms up to par with national banks, and enable their strong rates and extensive advice to win young customers. A focus on first-time buyers can also help, bringing a simplified yet supported process to inexperienced future home owners.

Policy momentum

That balance of reach and relevance isn’t just on the minds of members, it’s on the policy agenda too. In her first Mansion House speech in November 2024, Chancellor Rachel Reeves highlighted the role of building societies and other mutuals in driving inclusive growth. They announced reforms to modernise the Building Societies Act 1986.

At the same time, the sector’s own performance shows its weight in the market. In the six months to March 2025, building societies and mutual-owned banks accounted for 29% of UK mortgage balances and 23% of savings. They grew mortgage balances by £14.8 billion, more than half of all net growth in the market and attracted £17.4 billion in new savings.

Building societies don’t have to become banks or abandon branches to stay relevant. Their value lies in being purpose-led and community-based, and digitisation means they can protect that identity without losing it.

For an industry marking 250 years since the first society was founded in the UK, the opportunity is clear. Use today’s digital tools to modernise, while keeping the human touch that has always set them apart.