To Attract Younger Generations, Building Societies Must Respond to Challenges Posed by Neobanks, According to New Unisys Research
Digital offerings, combined with security and brand trust, prove critical to the success of building societies
LONDON and BLUE BELL, Pa., December 18, 2019 – A new survey by Unisys Corporation exploring the attitudes of UK consumers towards their building societies found that prioritizing innovation and providing new services are key to reaching a younger demographic, which is essential for long-term, sustainable growth. In fact, digital offerings that could rival challenger banks were cited as the key driver of choosing new savings and current accounts. Surveying over 300 consumers in the UK, the most important deciding factors when choosing a banking provider were technological innovation, security and using a trusted brand. Other key highlights from the survey included:
- Investing in the future generation – consumers are seven times more likely to open 'digital children's accounts' with a building society than a neobank;
- Establishing a younger customer base – If a building society offered a children's account with age-appropriate interactive features such as e-pocket money and the ability to create savings goals, non-building society customers would be more likely to consider opening it than building society customers would (68% vs 46%);
- The desire for new digital services – 86% of consumers under 35 want a simple, intuitive digital current account offered by a building society;
- Open banking is an attractive offering – 61% of consumers believe open banking is attractive to new customers;
- A focus on security of services – 57% of consumers say security is most important to them when choosing a building society;
- Building on brand trust – 46% of consumers cited that brand trust was one of the main factors that influenced them taking out a building society account.
"Often, building societies succeed with the younger age group where parents and grandparents open savings accounts for their children and grandchildren, but we often see a decline in this customer base when they reach the ages of 12-18," commented Simon Healy, Industry Director for Unisys Financial Services, EMEA. "Working with Unisys, Monmouthshire Building Society is adopting a new digital banking platform that will enable the Society to grow its membership, while providing both existing and future members with a multi-channel offering. It's important to be able to offer a limited current account to the teenage demographic so that building societies don't lose them when they want financial freedom; and at the same time attract new, younger members through innovative offerings."
For building societies to meet the same offerings as challenger banks, embracing open banking was seen as a critical component of success. More than three in five (61%) of respondents believed it was key to attracting new customers, and more than one-third (36%) said it would have a positive impact on how they manage their finances. In fact, an overwhelming 74% said they would be interested in an intuitive digital current account, while all respondents would be more likely to open such an account with a building society (46%) than a bank (38%) or a digital bank (7%).
When it comes to opening new savings accounts, half of respondents cited being able to open an account online as most important to them followed by online account management (43%) and mobile applications (33%). Telephone support is a lower priority, with just 22% of respondents reporting it as important to have when choosing a savings account.
"Once upon a time, product innovation in the banking sector was an inward-looking and investment-heavy process. But with the introduction of open banking, there's a real opportunity for smaller players and building societies to develop their products in a new way, delivering fresh customer experiences by integrating with other providers and technologies," continued Healy. "It's clear that consumers want smaller banks and building societies to do well – but it's those that embrace the right digital drivers that will ultimately succeed."
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