Blog: How tech modernisation will futureproof building societies – Mortgage Strategy

Building societies have long built their reputation on relationships that encourage loyalty from their members, and I’ve sat in enough boardrooms to know how seriously they take their wider purpose.

Societies know their members, understand their circumstances, and have kept close to them – sustaining a high-street presence long after many banks pulled back. It’s a genuine strength, worth protecting, and not one many boards are willing to trade away lightly.

That same commitment to relationship-led service is one reason digital adoption has lagged. Legado’s 2026 research found just 18% of building societies say members can complete most key actions fully online. That doesn’t wholly surprise me. As societies continue to invest in front-line relationships, their digital offerings can sometimes fall behind what members experience elsewhere.

It’s tempting to read that gap as a weakness. I’d argue it’s an evolution of what ‘relationship’ actually means. Members increasingly judge their provider by how easy it is to interact, whether that’s a conversation in branch or a task completed on their phone. A younger, ‘digital native’ customer still wants a fair rate, a lender they trust, and genuine local values. They simply expect that experience to extend into their pocket rather than stop at the counter.

That shift in expectations isn’t a one-off adjustment either. Members who prefer to bank in person aren’t being replaced overnight, but they are, gradually, being replaced. Every year, a slightly larger share of a society’s customer base has never known a world without instant, on-demand service, and a slightly smaller share still expects to be immediately recognised at the counter.

Societies that treat this as a temporary blip will find themselves permanently behind the curve. The ones that get ahead of it treat good service as a standard that is consistent across channels: a member should feel just as known and just as well looked after applying for a product on their phone as they would sitting across a desk from someone who’s dealt with their family for 20 years. That principle should guide any adoption of AI too; not whether it’s clever, but whether it protects that same standard of service for whoever’s on the other end of it.

Closing the gap doesn’t mean drastic change or becoming something akin to a challenger bank. But the societies that get this right will extend their existing strengths into new channels rather than replace them: an application that can be started and tracked online but is still managed by a named adviser the member already knows; a member app that sits alongside the branch rather than trying to replace it; a joined up, digitised mortgage journey that seamlessly engages broker, lender, and borrower.

Almost all conversations I have with societies serious about transformation come back to the same three tensions: modernising without losing the trust already built up; capitalising on new capabilities without losing what’s unique or local about the business; and adopting new ways of working without losing sight of the organisation’s heritage. If that balance is struck, the result is a genuinely compelling proposition: competitive rates, real local commitment, and a service as easy to access as anything a challenger can offer.

None of this is straightforward. Many lenders I engage with are carrying legacy IT platforms that need serious investment, and that takes more than budget. It requires skilful programme delivery and a culture that can actually embrace change, not just tolerate it. Get it right, and the prize is real – faster time to market, more agile operations, genuine cost benefits. Get it wrong however, and the transformation programme becomes its own source of risk, unsettling trust and relationships the society has spent decades building. That’s why the boards I speak to are often cautious, and rightly so.

It’s also why I’d urge some caution on the current enthusiasm and, in many cases, clamouring for AI. Most leadership teams I talk to rightly understand its potential, but few have worked through the business case for their own organisation or understand the governance needed to support this new capability.

Adopting new technology because it’s available, or because a competitor has announced a pilot, isn’t a strategy. Adopting it because it strengthens the relationship a society has built with its members, and because the commercial case stacks up, is.

The challenge for boards investing in technology is doing so without entering a large-scale programme that absorbs capital and risks the trust members already place in the society. Margin pressure makes this harder still. Competition, interest rates and a difficult trading environment mean most societies are already highly focused on delivering member value: maximising income and minimising cost.  A transformation programme that goes wrong doesn’t just waste budget; it competes with every other priority the business has.

That’s as much a strategic question as an IT one, and it’s why a big, standardised transformation methodology may not be the right fit for many of the societies I work with. What tends to work better is advisory support that starts from the society’s own strategy and culture. A mid-sized mutual with a genuinely local presence needs guidance shaped around that identity, not scaled down from something built for a much bigger, very different business.

As is the case with so much in the sector, and wider: the balance needs to be right. If it is, technology shouldn’t dilute what makes a building society distinctive. It’s what lets that distinctiveness reach further, to members who’ve never set foot in a branch and never will, without losing a thing for those members who still walk in every week.

Simon Cavell, director, head of consulting, Johnston Carmichael