Customer-owned building societies and credit unions prioritise customers over profit. Their culture, behaviour and decisions are different to banks which results in their customers getting better products, fairer rates and better services.
Building societies’ reason for existing is fundamentally the same as it was when the first building society was set up 250 years ago – to provide a place for people’s savings and to use these to help ordinary working people to buy a home of their own.
The main difference to banks is that building societies do not have any external shareholders. They are owned by their 25 million customers, who automatically become a member when they take out a mortgage or open a savings account. So whilst banks’ primary focus must be on maximising profits to pay out to their external shareholders, building societies make enough profit to ensure they remain safe and sustainable, with any further profit reinvested back in the business and local communities, giving their customers overall better value and service.
Supporting homeownership
Building societies have a strong history of offering innovative mortgage products to overcome the barriers faced by people trying to buy their own home, particularly first-time buyers. In the last five years they have helped almost half a million (496,760) aspiring homeowners by providing them with a mortgage to buy their first home.
Indeed, it is building societies which have provided almost all of the recent growth in the mortgage market (89% in the nine months to Sept 2024). Strong evidence that they continue to find solutions to the challenges facing today’s homeowners and aspiring homeowners.
Supporting savings aspirations
Helping people to build financial resilience and make the most of their savings is equally important to building societies as supporting people into homeownership.
In the last five years, building society savers received an extra £5.4 billion more in interest than if they had been paid the average rates offered by large banks.
It’s not surprising that with better overall value provided by building societies, in the nine months to September 2024 they attracted £20.7 billion in cash savings, accounting for more than a third (34%) of all the growth in UK savings balances.
Supporting communities
In prioritising their customers, building societies and credit unions support and invest in their local communities, through charitable partnerships, community projects and employee volunteering.
Building societies are more likely than banks to retain their branches, providing 30% of current high street branches, 50% more than their share (20%) five years ago. Some have committed to retain high street branches and others are innovating to develop the branch of the future.
No wonder 72% of building society customers said they are an important part of their community, compared to just 54% of bank customers.
Robin Fieth, Chief Executive of the Building Societies Association (BSA) said:
“Building societies have never lost sight of their purpose to help their members to save and to become homeowners.
“Their business model doesn’t rely on profit maximisation to line the pockets of external shareholders, it prioritises the needs of their customers, the members, and delivers value to them and their communities. At 250 years old, you could say they are the original B Corp!
“I am proud that the way customer-owned building societies and credit unions do business is different to the banks. We are the original money movement, set up by ordinary working people, for ordinary working people and to help local communities to thrive.
“Anyone who is looking for a new mortgage or savings account, I’d recommend consciously thinking about who you choose to do business with. You could find an organisation that genuinely cares about their customers, who treats them as an individual, and keeps them at the heart of every decision they make.”
