Concerns over app functionality and digital services could be preventing customers from joining building societies, new research has found.
Almost half (47 percent) of building society customers reported difficulties engaging with their services, with digital experience a frequent pain point for many, according to a new report from Moneyhub.
The report highlights the growing need for building societies to digitalise as they struggle to attract a new generation of younger customers.
While building societies hold 32 percent of the market share in the UK across all banking services, this drops to just 24 percent for the share amongst 18-34 year olds.
The report argues that this age group is predominantly interested in financial services providers that can offer the technology to make money management easy and efficient.
Younger generations are increasingly more likely to turn to the challenger and neobanks for their financial products – this group hold over a quarter of market share amongst 18-34 year olds compared to 16 percent overall.
The newer challenger and neobanks often position themselves as technology first, and without the legacy systems that more established banks and building societies have, are able to innovate and develop their technology at a quicker pace.
According to the research, three quarters of 18-34 year olds said they look for an easy-to-use app when choosing financial products compared to 58 percent of over 55s.
Building societies risk losing out on the younger customer base if they do not digitalise and embrace the opportunities that technology offers.
Moneyhub’s research asked consumers who don’t currently use a building society why they don’t and one in ten said they were unsure whether building societies have as good digital banking services as other banks.
A further 7 percent expressed concern that the majority of building societies didn’t have mobile apps.
Customers are also looking for their building societies to provide better support on their money management with 1 in 5 (21 percent) asking for insight on saving and investments from building societies, as well as (19 percent) guidance on the state of their finances.
17 percent of consumers also want to better understand their financial health score.
Mark Horwood-James, MD of Personal Finance Technology at Moneyhub said: “Building Societies have traditionally been some of the most customer-centric organisations within financial services.
“It is clear that their customers are core to their values but Building Societies have generally failed to embrace and implement digital and data-led experiences. They are struggling to meet the needs of the customers of now, and will definitely fail to meet those of the future unless they take action.
“Building societies are at a pivotal juncture. There is still a huge opportunity for them to transform their digital capabilities and bridge the gap between consumer expectations and product offerings. The research shows a clear demand from consumers that Building Societies have to digitalise now.”
