But 35% have not assessed Open Banking yet
Digital transformation is viewed as the key challenge for the sector
Moneyhub warns that Building Societies could miss out on opportunities by not embracing Open Banking
Over half (55%) of CEOs at Building Societies view Open Banking as an opportunity according to a new report published by Whitecap Consulting, in partnership with the Building Societies Association (BSA). However, this technology is relatively new and unexplored by the sector with just over a third saying that they have not yet assessed Open Banking’s benefits for their business. Only a further 10% view it as a potential threat.
Moneyhub, the market leading Open Finance data, intelligence and payments platform and contributor to the report has called for Building Societies to capitalise on the Open Banking opportunity.
According to the senior leaders interviewed as part of the report, digital transformation is the primary challenge for the sector over the next five years (67%). In addition, the report found that the need to remain relevant to customers and improve engagement was also a key priority for them going forward.
Of the 95% of those CEOs that viewed Open Banking as an opportunity 52% said that it would help to improve customer engagement and experience. In addition, of this group of building societies, 79% said that it would enhance the mortgage underwriting process, 76% said it would improve customer data connectivity and 71% believe it would improve operational efficiencies.
In addition, embracing Open Banking/ Finance technology by partnering with Moneyhub can offer a multitude of other opportunities for Building Societies including:
Digital banking: For building societies who have struggled to build their own online banking app, Moneyhub can be easily and swiftly be white labelled for use. This gives customers a holistic view of their finances from savings and mortgages to pensions, investments, property values and more and allows them to benefit from smart nudges to encourage more informed financial decisions, and faster payments can help make nudges a reality, making it easier for customers to save.
Consolidation of savings and mortgages: Moneyhub’s Open Finance solution allows users to see a full picture of their net worth and track savings and mortgage rates to ensure they are always on the most favourable rates for them.
Affordability and income verification: Using Moneyhub’s Open Banking data API or whitelabel offering, allows for a better customer journey when applying for finance, by speeding up application processes and reducing costs. With more granular data and advanced analytics, lenders can streamline processes meaning decisions can be made quicker.
Supporting buy-to-let landlords: A specific use case for Open Finance is the role it can play in helping landlords manage their portfolios. Moneyhub can provide landlords with the ability to tag expenses and income against each property, run simple profit and loss reports to help assess profitability, identify mortgages held with other providers that are more suitable and feed data directly into HMRC to create tax returns.
Building Societies benefit in return through the data they receive enabling a better understanding of total portfolios and an early look at when mortgages are sent to be renewed.
Samantha Seaton, CEO of Moneyhub comments: “Without the large pockets of the major banks, most building societies have not been in a position to keep up with the rate of digital transformation within the sector. Legacy systems and budget restraints have both been pointed to as the primary obstacles between building societies and true digital transformation. However, not adapting could risk falling behind amongst peers and the wider industry. For this reason it is encouraging to see that there is a widespread acknowledgement that Open Banking does present an opportunity for digital transformation within the sector.
“Indeed, Open Banking has the potential to improve efficiencies across the board from savings to mortgages and helps build strong relationships with customers, improving loyalty and retention rates. This technology can be easily applied when working with a third-party provider like Moneyhub without the need to overhaul legacy systems.
“The reality is that building societies’ competitors are no longer just other building societies and banks, there are now other intermediaries with capabilities, through Open Banking, that can better serve their customers. For building societies, embracing Open Banking and Open Finance, will help them to both survive and thrive in this new environment. And this is where Moneyhub can help.”
Julian Wells, Director, Whitecap Consulting comments: “It’s an exciting time for financial services as we continue to move towards a more digital economy, and our report highlights numerous areas of opportunity for building societies based on the combination of their mutual status, regional strength, and the potential role technology can play in their future.
“Open Banking and Open Finance are fascinating developments for the sector to consider as there is the potential to enhance the customer experience while also improving the underlying efficiency of individual building societies. Additionally, this could be an area where non-competitive collaboration within the sector may be possible, due to the common technology and data requirements.”
Moneyhub has already provided successful solutions to several building societies including Nationwide.
2021 Building Society Sector Analysis Report - Open Banking
A review of the strategic landscape for Building Societies
Notes to editors
Research Methodology
The research for the report involved a quantitative data analysis of all 43 building societies, interviews with 33 building society CEOs, and an online survey which received a total of 134 respondents. The project was funded through the Building Societies Association partnership and sponsorship from a number of industry stakeholders including: Credera, DPR, EQ Credit Services, Mambu, Moneyhub, Mutual Vision, Nivo, Sandstone Technology, Sopra Banking Software, Shoosmiths, and Phoebus Software.
For more information please contact:
David Sells/Eleanor Ross at Teamspirit for Moneyhub
moneyhub@teamspirit.uk.com / 07393 758446
About Moneyhub
Moneyhub is the leading Open Banking and Open Finance platform that uses the power of data, intelligence and payments to enhance the lifetime financial wellness of people, their communities and their businesses. Moneyhub’s APIs and white label solutions help businesses - both within and outside of financial services - drive customer engagement through hyper-personalised experiences.
The company takes consumer data security seriously and has been instrumental in the roll-out of Open Banking from its beginning. Leading the way in Open Finance since 2014, Moneyhub is authorised as AISP and PISP by the FCA, ISO-27001 certified, co-founder of FDTA and works on the Pension Dashboard and TISA Open Savings, Investment and Pension steering committees to put the power of data into the hands of those who own it: the consumer.
For more details, please visit https://www.moneyhubenterprise.com
About The Building Societies Association
The Building Societies Association (BSA) represents all 43 UK building societies, as well as 6 credit unions. Building societies have total assets of over £435 billion and, together with their subsidiaries, hold residential mortgages over £338 billion, 23% of the total outstanding in the UK. They hold over £297 billion of retail deposits, accounting for 17% of all such deposits in the UK. Building societies account for 37% of all cash ISA balances. They employ approximately 42,500 full and part-time staff and operate through approximately 1,380 branches and have over 25 million members.
About Whitecap Consulting
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Bristol, Newcastle and Birmingham. Whitecap typically works with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies.
The firm works with clients across a range of market sectors, with strong experience in the financial services and technology. Over recent years, Whitecap has worked with a number of building societies in relation to business strategy, technology strategy and partner selection, digital and FinTech engagement, and marketing strategy.