By Ben Baigrie (Engagement Manager)
Two decades ago, banking was simple and local. You chose the branch nearest home, opened a current account with few, if any, frills, and rarely thought about switching. Mobile apps, digital onboarding, and rewards accounts didn’t exist.
Fast-forward to today, and the picture couldn’t look more different. Consumers are more empowered and more discerning. We switch banks with a few taps. We expect 24/7 access, intuitive mobile interfaces, personalised offers, and value-added services. Comparison sites and social media shape perceptions. Financial services are increasingly embedded in our lifestyles. Convenience has shifted from geography to user experience.
Of course, all incumbent banks face pressure to modernise in the age of app-first challengers. But for building societies, the challenge is more acute and more complex. With older customer bases, limited digital capability, and a brand image still rooted in the past, they risk falling even further behind. And yet, they also hold something unique: a values-led, community-driven model that today’s younger customers increasingly crave. The question is whether they can translate it into relevance.
Building societies currently hold just 32% of the overall UK market share, but among 18–34-year-olds, this drops to just 24%, while neobanks have captured over a quarter of this younger segment. The average building society customer is over 45, with many under-35s either drifting away as their financial needs evolve or bypassing the category entirely.
And yet, there’s a paradox at play. The very principles that define building societies: community reinvestment, fairness, and member-first governance, are more appealing than ever. A growing segment of consumers, particularly younger ones, actively seek out ethical brands, sustainable practices, and transparent leadership. Mutuality isn’t a weakness; it’s an under-leveraged strength.
Building societies are already seen as highly customer-centric, scoring 41% for acting in customers’ best interests, ahead of energy providers, social media firms, or insurers. The challenge lies in converting this goodwill into growth, especially among younger consumers who often prioritise digital ease and instant access over traditional values.
Only a small handful of building societies, most notably Nationwide and The Co-operative Bank, currently offer current accounts. For the majority, the traditional focus has remained on savings products, ISAs, and mortgage lending. But as consumer needs evolve, is there an untapped opportunity for building societies to expand into everyday banking?
Offering a current account isn't just about transaction capability, it's a gateway to deepening customer relationships and improving share of wallet. If positioned well, a values-driven current account could differentiate in a market dominated by reward-hungry, feature-led offers.
Younger customers don’t just want ethical finance; they want it to be easy to access and manage. 68% of 18–34-year-olds prefer managing their money via digital apps, compared to 48% of the overall population. Two-thirds of this group want access to financial products and services without needing to visit a branch.
Encouragingly, when building societies do offer digital platforms, members engage: 80% use them, and 90% say those experiences influence their decision to stay. Improved digital services increase loyalty for 83% of members, but 80% still want more seamless digital journeys when it comes to renewals and new offers.
Meanwhile, the broader context reinforces the urgency: the number of physical bank branches in the UK has nearly halved over the past five years, while online banking usage has nearly doubled since 2009. And yet, building societies now hold a 30% share of all UK high street branches — more than double their 14% share in 2013. This shows a deep-rooted commitment to physical presence, but also underscores the need for a truly hybrid model.
None of this transformation is possible without a deep understanding of what members, current and future, truly want. Building societies need to see themselves through the eyes of their customers. That means investing in meaningful customer insight, not just to fix what isn’t working, but to uncover untapped strengths and emotional drivers.
Customer research helps answer questions like:
These are the kinds of things you only uncover by talking to real people:
With insights such as these in hand, building societies can better tailor their positioning, refine products, and create experiences that connect with a new generation, without alienating their loyal base.
Building societies were designed for a different era, but their founding principles are arguably more relevant than ever. The challenge is not whether they can stay true to those principles, but whether they can translate them into a modern, digital, emotionally resonant offering.
What would it take for a 25-year-old to proudly say they bank with a building society? Well, the answer starts with asking them...
One thing is for sure: standing still isn’t an option. To win the next generation, building societies must evolve authentically, deliberately, and on their own terms. That evolution begins by understanding what today’s (and tomorrow’s) members truly value, expect, and emotionally connect with.
KAE help banks and building societies make confident commercial decisions by providing clear, contextualised and actionable insights about your customers, your competitors, and your markets. If you want to chat about how we can help you, book an intro call with one of our experts.