In our last post, we explored how Generative AI could be a quiet force multiplier for building societies, reinventing their back-office operations in underwriting and compliance.
But while a hyper-efficient back office is essential for survival, it doesn’t solve the sector’s most glaring problem: growth. Especially growth in the smaller and medium sized mutuals/building societies.
In this blog post I begin to explore the profound paradox at the heart of UK retail banking. We have a new generation of consumers, Gen Z, who are purpose-driven, value transparency, and are deeply sceptical of shareholder-first capitalism. In theory, they are the perfect demographic for the building society model. A member-owned, community-focused, profit-sharing institution is the very definition of a “purpose-driven” brand.
And yet, where is Gen Z’s money? It’s in Monzo pots, in Starling “Spaces,” and being managed via Revolut.
This isn’t just a marketing failure; it’s a translation failure. The building society sector is failing to translate its greatest asset—mutuality—into a language this generation understands. They are selling an analogue concept of “trust” in a digital-first world.
The battle for the next generation of members won’t be won with adverts about heritage; it will be won on the app store. It is a problem that “tech” is uniquely positioned to solve and I try to draw out this perspective below
The Neobank Playbook: Marketing Experience
To understand why building societies are losing, we first must analyse why neobanks are winning.
Neobanks did not win by offering better savings rates or more complex mortgage products. They won by focusing on a single, core principle: eliminating friction.
Their entire marketing strategy is their user experience (UX).
- Onboarding: You can open a Monzo account in the time it takes to make a cup of tea. For many building societies, it can still involve branch visits, posted documents, and a multi-day waiting period.
- Control: Neobanks provide real-time, granular data. Instant payment notifications, automatic spending categorisation, and the ability to create savings “pots” give the user a feeling of absolute control over their finances.
- Brand: The brand voice is that of a helpful tech partner, not an august financial institution. It’s built for social media, not a bank manager’s office.
This tech-first approach has fundamentally changed the definition of “trust.” For older generations, trust was built over decades (“heritage,” “stability,” a physical branch). For Gen Z, trust is built in seconds (“Does this app work seamlessly? Is it transparent? Does it put me in control?”).
Neobanks are marketing utility, and as a result, they are winning the generation that values utility above all else.
The Building Society’s Dilemma: Marketing Heritage
Faced with this, the building society sector’s typical marketing response is to lean on its traditional strengths: “trust,” “community,” and “member-owned.”
This is a losing proposition. Not because those values are wrong, but because they are being communicated through the wrong medium.
- When a 22-year-old is faced with a clunky, slow app, the marketing message of “trust” doesn’t just fall flat; it feels like a lie. The poor digital experience becomes a direct proxy for the entire institution: slow, old, and out of touch.
- “Community” feels like an abstract concept when the app offers less functionality than a brand that is barely a decade old.
- “Member value” is meaningless if the member has to phone a call centre to perform a simple task.
The sector is trying to sell a “why” (we are member-owned) without first providing a competitive “what” (a seamless digital platform). The neobanks did the opposite: they perfected the “what,” and their “why” (making money easy) simply followed.
Bridging the Gap: Using Martech to Translate Mutuality
This is where the “merging” of finance and tech becomes a marketing strategy. Building societies don’t need to become neobanks. They need to use the same “Martech” (Marketing Technology) tools to prove their mutual model is superior.
They must stop selling “mutuality” as a concept and start delivering it as an experience.
1. From “Personal Service” to “AI-Driven Personalisation”
The traditional selling point of a building society was the branch manager who knew your name. This doesn’t scale in a digital world, but the ethos behind it can.
The modern equivalent is hyper-personalisation. This is where the AI we discussed in our last post pivots from a compliance tool to a marketing engine.
- Analogue: A branch manager notices you’re saving and suggests a new account.
- Digital: The society’s app uses a Martech platform to analyse a member’s goals. It sends a proactive, personalised nudge: “We see you’re saving in your easy-access account. As a member, we can offer you an extra 0.5% in our new First Home Saver. Tap here to move your money.”
This is no longer an abstract “member benefit.” It is a tangible, digital-first experience that proves the society is proactively working for the member’s financial well-being.
2. From “Community” to “Content-as-a-Service”
Building societies rightly pride themselves on their community focus, which often manifests as sponsoring a local team or high-street branch events.
For a digital-native, “community” is found online. The single greatest failure of the sector is its surrender of the financial education space to “fin-fluencers” and neobanks.
- Analogue: A “First-Time Buyer” event in a branch.
- Digital: A powerful, integrated content marketing strategy. The society’s app should be a hub for financial literacy: jargon-free articles, in-app calculators for deposit saving, and short-form videos (yes, TikToks or YouTube) that genuinely help Gen Z navigate the cost-of-living crisis or understand their credit score.
This approach transforms “community” from a slogan into a service. It digitally demonstrates the society’s commitment to its members’ financial health, building the exact kind of trust that Gen Z values.
3. From “Member Value” to “Member Experience (MX)”
The ultimate “member value” is the annual dividend or “Fairer Share” payment. While a welcome bonus, it’s a once-a-year event. A neobank provides “micro-value” dozens of times a day with every instant notification and spending summary.
Building societies must redefine “member value” as the entire Member Experience (MX). The app is the brand. The ease of applying for a mortgage is the brand. The speed of a money transfer is the brand.
Every point of friction—every clunky interface, every broken link, every need to phone a call centre—is a marketing failure. It is an active statement that the member’s time is not valued.
The Hybrid Advantage: Reimagining the Branch
This commitment to a flawless digital experience does not mean the branch is obsolete. Quite the opposite. It makes the branch more powerful than ever.
Neobanks have a critical vulnerability: they are 100% digital. For complex, high-emotion financial “moments that matter,” their model shatters. You cannot, and should not, get a mortgage, manage a bereavement, or navigate financial hardship over a chatbot.
This is where building societies have an unassailable advantage, if they integrate it with their tech.
The branch must evolve. It is no longer a place for transactions (like paying in a cheque—that’s what the app is for). It must become a high-value consultation hub.
This is how the “phygital” (physical + digital) journey should work:
- Digital Identification: The society’s AI identifies a member on the app who is saving into a “First Home” pot (a Gen Z member). When the balance hits a certain threshold, the app triggers a new kind of marketing message.
- Seamless Escalation: Instead of a generic ad, the app says, “Congratulations on hitting your £10,000 saving goal. You’re ready for the next step. Would you like to book a video call, or pop into your local branch to chat with our mortgage adviser, Sarah, about what happens next?”
- Empowered Staff: When that member walks into the branch, Sarah already has their full financial picture on her screen. The member doesn’t need to start from scratch. The conversation is high-value from the first minute.
This is the hybrid advantage. It combines the seamless utility of a neobank with the empathy and expert advice that only a human-staffed branch can provide. While big banks are seen as abandoning communities by closing branches, building societies can market their presence as a deliberate choice—a premium service for the moments that matter.
This is an advantage neobanks simply cannot buy.
Stop Selling the Past. Start Proving the Future.
The irony is that building societies already have the one thing the neobanks are spending billions to build: a genuine, purpose-driven brand.
But they are trying to sell this story instead of showing it.
The fight for Gen Z will not be won with better slogans. It will be won by the institutions that can successfully merge their “why” (mutuality) with the “how” (seamless, predictive, and educational tech). I should also point out that this also applies to many other segments such as Millennials and Baby Boomers, who now expect a certain baseline of digital services.
Although, it maybe not the whole answer, it’s part of the answer to how Mutuals evolve. To survive Mutuals must stop marketing what they were and start using Martech to prove what they are: a genuinely better alternative.
I’ve covered a lot of ground in this post. Feel free to disagree, agree or posit alternative views, happy to hear them all
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MN
Finovation 