Can Building Societies survive?

longleggedhair

Yesterday I visited one of the many branches of my local building society The West Bromwich, whom I’ve been a member of for decades. I walked into the lovely branch, which was empty, with three cashiers sat twiddling their thumbs. I paid into my account with my old fashioned passbook which has a reasonable rate of 1.4%. This branch is one of probably about 10 in a 5 mile radius, still clinging on in places where the other banks have been gone for years. I was thinking of what must be an enormous cost when you factor in the wages, rent, heat, business rates etc. I doubt if the deposits taken in a day cover the costs of running these branches. I’m a bit old fashioned and it’s lovely to still have a passbook and go in and have a chat to the ladies in the branch, but I just can’t help but feel it’s completely unsustainable.

ranciduk

Yep these institutions don’t want to speak to their customers either on the phone or in person face to face

we are all just a number on a screen now - and they won’t be happy until each and everyone of us does all our banking from our armchairs on a little screen

which is nice...

Uxb1

Agree
I told a CEO of a minor Building Society 10-15 years ago much as the OP posted.
not that they as finance experts were going to listen to me a Chartered Engineer!
One Building society the Newcastle did see the way the wind was blowing and set up a subsidiary which runs the customer facing front end of online accounts.
So when you see a suspiciously similar online experience between different financial groups - then quite likely its the Newcastle subsidiary running both on behalf of the different finance group.  In fact they ran the online system for the infamous Icesave Icelandic bank which later collapse into insolvency.

Iain_For

My bank branch is a World Heritage Site and owned by the bank since 1825, working on the principle that it will be the last branch they close!

Bigwheels1111

In 5 years  I don’t think there will be any banks or building societies left on the high street.
All banking will be done in one place, say the post office.
Every banking institution will be linked to it.
How are banks going to compete, saving, loans etc with out any large influx of savings to fund them.
As at the moment they offer rates for savings of 0.01% and say Chase who offer 1.5%.
I had a lot of savings with the big 6 banks in the past, Now it’s with newer smaller bank, Chase, Atom, Tandem, Ford Money etc.
If the boe raise the base rate next week, 3% rates should be available for savers.
The boe sit 5 more times this year and if they keep raising the rates due to inflation who knows how high savings rates could go. 5% please for me.

Section62

Bigwheels1111 said:

In 5 years  I don’t think there will be any banks or building societies left on the high street.
All banking will be done in one place, say the post office.

I think the Post Office (if there is one of those left) will be a place to do banking with multiple providers, but I also think the banks deserting the high street provides an opportunity for the smaller building societies to cash in on.

Some people still like to use cash, some don't like app or online banking, some want/need face to face contact. Not all of those people are the older 'stuck in their ways' kind who may be dismissed by some as a declining and dying breed.

If the Post Office can act as a centre for people to do their banking then in principle there is no reason why building society branches couldn't do the same.

The USP of a lot of the smaller building societies is their localism.  If they abandon the high street then, as the thread title asks, they may not survive because the online marketplace is already full of highly efficient minimal-costs providers that the smaller building societies will never be able to compete with.

I also expect some of the larger building societies - particularly Nationwide - to convert into banks, so I think they will disappear (as building societies) too.

roddydogs

Oh goody, a windfall from NW?

Section62

roddydogs said:

Oh goody, a windfall from NW?

A windfall for the Nationwide Foundation maybe.

refluxer

Bigwheels1111 said:

In 5 years  I don’t think there will be any banks or building societies left on the high street.
All banking will be done in one place, say the post office.
Every banking institution will be linked to it.

This might indeed be the way things go and would at least give those who want high-street banking an option, but they're closing a lot of the post offices too.

I live in a large town  - our main post office was closed down a few years ago and has only recently been re-introduced in the form of a small desk in a high-street shop. If you want a paper passport form or another service only found in main post offices, you have to drive to the another town.

Albermarle

Bigwheels1111 said:

In 5 years  I don’t think there will be any banks or building societies left on the high street.
All banking will be done in one place, say the post office.
Every banking institution will be linked to it.
How are banks going to compete, saving, loans etc with out any large influx of savings to fund them.
As at the moment they offer rates for savings of 0.01% and say Chase who offer 1.5%.
I had a lot of savings with the big 6 banks in the past, Now it’s with newer smaller bank, Chase, Atom, Tandem, Ford Money etc.
If the boe raise the base rate next week, 3% rates should be available for savers.
The boe sit 5 more times this year and if they keep raising the rates due to inflation who knows how high savings rates could go. 5% please for me.

Although high st banks offer derisory rates, some building societies offer reasonable rates, although not usually market leading.
The Leeds and Coventry building societies often feature in best buy tables ( not right at the top though) . 

Thaddeus_Wagstaff

My wife and I were tempted into opening a building society savings account for the first time in many years by the interest rate on offer. Then we found that when interest rates are raised, we have to apply to open a new account to get the new rate. And go through the whole procedure of ID checks again. Which involves either a trip to the nearest branch (miles away) or a call to customer services (up to one hour wait). With my Marcus account, rates are raised automatically, and any bonus rates applied with a single mouse click. So the building society can say goodbye to our funds. Really not worth the hassle, unless you're saving for a mortgage deposit, I guess.