Building Society Branches Matter. But Where Is the Evidence That Mutuality Does?

The Building Societies Association’s new report, Building Community: The Social Value of the Building Society Branch Network, makes an important contribution to the debate about the future of high street branches.

At a time when banks continue to close physical locations, the report provides credible evidence that building society branches generate significant social value through financial guidance, fraud prevention, community engagement and support for vulnerable customers. Based on surveys, interviews and Social Return on Investment (SROI) analysis, it estimates that branches generate £7.6 billion of annual social value.

It is a well presented piece of research, and it deserves to be taken seriously. But reading it raises a much bigger question.

A report about branches, not mutuality

The report repeatedly reminds readers that building societies are different because they are Member owned rather than shareholder owned.

Yet remarkably, almost none of the research actually investigates whether Member ownership creates different outcomes.

Nearly every benefit identified could equally be delivered (and is) by well run shareholder-owned banks:

• face to face financial guidance
• fraud prevention
• support during bereavement
• financial education
• digital skills support
• community events
• high street presence

These are all valuable services. But they are branch services, not uniquely mutual services.

The report never asks whether members receive better outcomes because the institution is Member owned. It never compares building societies with banks. It never demonstrates that mutual ownership itself produces better outcomes.

Are building societies better than banks?

The research demonstrates that building society branches create social value. That is an important finding.

What it does not demonstrate is whether they create more social value than equivalent branches operated by shareholder owned banks.

There is no comparison with banks such as Barclays, Lloyds, HSBC, Santander or NatWest. No attempt is made to establish whether building society staff are more trusted, better at preventing fraud, more effective at supporting vulnerable customers, or more active in their local communities.

Yet these are precisely the claims often made about the mutual model.

Without a comparator, it is impossible to conclude that these outcomes are a product of mutual ownership rather than simply the result of having branches.

The report repeatedly reminds readers that building societies are Member owned organisations. But it never asks whether that ownership model actually changes customer outcomes.

• Does mutual ownership lead to higher trust?
• Does it improve customer wellbeing?
• Does it result in better financial guidance?
• Does it produce stronger community engagement?
• Or are these benefits equally achievable by any retail bank willing to invest in its branch network?

These questions matter because they go to the heart of the value proposition of mutuality. If building societies are genuinely different, the sector should be able to demonstrate where that difference exists. If they are not, then the case for mutuality must rest on something other than the existence of physical branches.

At present, the report shows that branches create social value. It does not show that building societies create more social value than anyone else.

Surveying today’s branch users is not the same as understanding tomorrow’s Members

The study surveyed 576 customers using branches across eight building societies.

• More than half of respondents were aged 65 or over.
• Only 11% were under 35.
• Almost half rarely or never use digital banking.

None of this is surprising. Older customers are naturally more likely to use physical branches. But this raises an important methodological question:

If you primarily survey today’s branch users, are you discovering what future Members want, or simply confirming what existing branch users already value?

A strategy designed around today’s branch users may not be the strategy needed for sustainable growth over the next generation.

The trade offs are never explored

Perhaps the biggest omission in the BSA report – much like the building societies leaders it serves – is that it doesn’t ask Member owners to make choices. Every organisation operates within finite resources. Every pound spent maintaining one part of the business cannot be spent elsewhere.

Yet the report never explores questions such as:

• Would Members rather have another branch or a greater financial benefit through better pricing?
• Better savings rates or longer opening hours?
• More community investment or more digital services?
• More financial education or lower fees?

These are genuine strategic trade offs. Instead, the report assumes that more branches are always better. Good research should test competing priorities rather than assume them.

Where is the BSA’s Member engagement research?

For many years, the Building Societies Association published research examining Member engagement across the mutual sector. Those reports provided valuable insight into how Members viewed their societies and how engagement was changing over time.

The last such report was published in 2015.

More than a decade later, despite enormous changes in digital banking, customer expectations, demographics and regulation, there has been no comparable update. Instead, the sector now has a detailed report valuing branches but remarkably little contemporary evidence about what Members themselves expect from mutual ownership. That should concern every building society.

Branches matter. But mutuality matters more.

None of this is an argument against branches. Physical branches clearly create value, particularly for older people, vulnerable customers and communities that have lost other banking services.

The report makes that case well. But building societies do not exist simply to preserve branches.

They exist because they are mutual organisations owned by their Members.

If the sector wants to explain why mutuality matters in the twenty first century, it needs to ask much harder questions.

• What do Members actually value?
• How should building societies balance price, service, digital innovation, community investment and branch networks?
• How do those priorities differ between younger and older generations?
• What governance rights do Members expect?
• What role should Member ownership play in strategic decision making?

Those are the questions that will determine whether mutuality continues to thrive. Until the sector starts researching the value of Member ownership with the same rigour it has applied to the value of branches, it risks confusing the means with the end.

Branches are one way of delivering value. Mutuality is supposed to be the reason building societies exist.