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While the emergence of fintech has brought many positive changes to the financial services industry, innovation has been largely focused on mainstream payments and accounts, missing out building societies and their loyal member base.

However, as digital native generations look towards where to save their money or how to buy their first house, rate driven bias will only go so far. Ease of servicing and flexible offerings, combined with the ability to provide a personalised, local touch will be where building societies can prosper and differentiate.

Playing catch up with emerging technology

We are seeing an increase in fintechs looking to help customers manage their finances by offering more personal and integrated experiences as an alternative to traditional banking. However, building societies tend to be risk-averse and are often held back by the burden of legacy systems. It’s no longer enough to just have a website and access to your accounts online; to address the problem of modernisation, building societies are turning to emerging technologies like APIs to bridge the gap between their legacy systems and consumers’ desire for accessible banking.

Our partnership with Tandem, one of the UK's earliest digital banks, is a great example of a financial institution updating their technology to keep up with consumer demand. Tandem wanted to quickly introduce new financial services by building a new innovative product within their existing product, and embracing open banking.

All of this is fully digital via an API-driven architecture and composable, cloud-native solution, allowing Tandem to innovate and build services their customers want. In doing this, we are helping fintechs like Tandem to focus on new experiences that benefit their customers.

The democratising tech that everyone is talking about

APIs have become a democratising force within financial services, acting as the enabler for innovation and value creation in the industry. This provides a cost-effective way to create nimble ecosystems in which fintechs, banks and building societies can be seen as level players.

The cost of serving a financial customer varies by sector, but can be several hundred per year. Technology can reduce this significantly, allowing providers to better support segments that were previously underserved. This can be a motivator for building societies to put a dedicated focus on innovation. In order to meet the challenges presented by the fintech revolution head on, they must take advantage of emerging technologies and make innovation the core of their long-term business strategy.

We are committed to delivering rapid speed to market by adopting true SaaS technologies.
Elliott Limb
Chief Customer Officer at Mambu

Transparent consumption or bust

We are still seeing, though, that building societies remain shy of change due to a variety of factors. However, the desire to be more nimble to gain a competitive edge is strong. The community spirit and member commitment that is unique to building societies will ultimately be the driver of transformation - so they can better serve the digital needs of younger generations of customers.

From a cost perspective, building societies have an unbalanced cost-income ratio because their legacy systems are so expensive, and the manual burden of non-integrated/non-automated systems. SaaS removes the expensive customisation and maintenance costs by automating traditionally manual processes that then give companies a completely transparent consumption model.

The way forward

As we have seen over the last year, the future of banking is a moving target which will continue to evolve. In order to keep up with the ever-changing customer demands, we are envisioning a building society of the future that will embrace new technologies and partner ecosystems to provide reach and scale. An organisation’s freedom of change and choice is not only critical to their digitalisation journey, but to their overall success.

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Elliott Limb
With over 20 years in banking and fintech, Elliott has been named as one of the most influential people in fintech. At Mambu, Elliott is focused on a customer-centric approach to doing business, growing revenue and helping banks build flexible and scalable solutions.
Elliott Limb