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Building Societies must embrace digital transformation
The dynamic landscape of financial services in the UK is undergoing significant transformations for banks and building societies. The pace of disruption shows no signs of slowing down, with new and unconventional competitors entering the market offering digital-first products accessible anytime, anywhere. Financial institutions are no longer competing among themselves but with big tech companies that are transforming quickly.
ebankIT offers invaluable guidance for banking leaders in this new report: "The state of play in banking 2026 | A UK Perspective". Discover practical strategies to assist leaders in navigating the complexities and obstacles to sustain competitiveness in the ever-changing financial environment.
How should financial services firms respond to the Financial Services and Markets Act 2023?
The FCA is currently developing a "post-Brexit handbook" in partnership with the industry, viewing the Financial Services and Markets Act 2023 as a promising opportunity. The introduction of new regulations presents both challenges and possibilities for financial services firms, potentially fueling growth and inspiring the launch of groundbreaking services.
Between now and 2026, the nature of the relationship between the UK, EU, and other external markets will be subject to potentially significant changes. There is uncertainty ahead for all players in the UK, and leaders have a chance to set strategies that allow their organizations to thrive in the new post-Brexit world. Here are some key strategies to focus on in the coming years.
1. Leverage compliance-ready platforms
Opt for digital banking platforms that have already integrated compliance measures aligned with the new legislation. This will streamline the process of adhering to the new regulations and allow leaders to focus on achieving strategic goals and driving growth.
2. Embrace digital transformation
The Act is a catalyst for the adoption of fintech solutions. Look for digital banking platforms that offer innovative solutions to your company’s challenges while ensuring they have robust compliance mechanisms in place, particularly around uncharted areas such as crypto assets.
3. Enhance consumer protection
Make consumer protection a priority. Choose platforms that offer enhanced disclosure requirements and improved transparency that can drive better customer outcomes to stay aligned with the Act’s objectives.
4. Monitor regulatory changes
Financial services firms should maintain an ongoing dialogue with their digital platform providers to ensure continuous compliance with emerging regulations. Regular updates and training are essential.
Transformative technology for banks and building societies catering to a new generation
Technology investment is key to solving the challenges facing building societies, as well as unlocking further growth opportunities. Overcoming the limitations of legacy technology is a priority across the sector, as institutions move away from monolithic systems towards cloud-based digital banking systems.
More than 90% of firms rely on legacy technology, which adds complexity to operations, hinders transformation, and impacts customer experience. More than half (60%) of building societies face budget constraints.
An answer to these hurdles is within reach. By embracing omnichannel platforms, building societies can deliver digital services and bolster branch operations. These versatile platforms, integrated with compliant open APIs, PFM tools, and cutting-edge technologies, are the key to fostering growth and setting themselves apart in a rapidly evolving and competitive landscape.
Benefits of an omnichannel digital banking platform
1. Customer experience enhancement
- AI-driven customer support: AI chatbots and virtual assistants can provide 24/7 customer support, improving response times and assisting with common queries and transactions.
- Omnichannel banking experience: banking users can benefit from a seamless transition between various banking channels (online, mobile, in-branch) and have a consistent and integrated customer experience.
- User-centric design: always consider the user’s needs and preferences when developing technology. Enhance their experience through feedback and testing to create platforms that truly meet their requirements.
2. Digital onboarding and account opening
- Video identification and verification: implementing video-based KYC (Know Your Customer) procedures enhances the level of security while offering a user-friendly experience during identity verification processes.
- Digital KYC documentation: customers can upload all the necessary documents through a secure portal, streamlining the verification process and reducing manual data input.
3. Mobile banking
- Advanced security features: incorporate cutting-edge security measures such as one-time passwords (OTPs), encryption protocols, and robust secure APIs.
- Integration with payment systems: it allows for seamless integration with popular payment systems and digital wallets for convenient transactions.
Integrated finances: the power of Open Banking and embedded solutions in 2026
Open banking is emerging as a transformative tech for all financial institutions, enabling a wide range of services to draw on the access to data enabled by open APIs. Personal financial management (PFM) tools are particularly useful for building societies that have a reputation for genuine customer-centricity.
When customers are given new abilities to manage their finances and the ability to drive better outcomes, the result is likely to be increased loyalty and positive brand affinity.
Open finance empowers banks and building societies to gain a deeper insight into their members' financial needs and behaviors, paving the way for personalized and comprehensive financial solutions. With embedded finance, financial institutions can seamlessly deliver banking services through various channels, revolutionizing accessibility to lending services.
By leveraging data and cutting-edge technologies like open banking, institutions can now explore the intricate financial patterns of their customers in ways never before possible.
By partnering with fintech firms and utilizing APIs, building societies can enrich their product portfolios, providing cutting-edge digital banking services, sophisticated financial planning tools, and expert investment guidance.
The future of UK financial services: building a platform for growth
As we look forward to 2026, there are many unanswered questions. Technological disruption, economic uncertainty, geopolitical tensions, evolving regulations, and a fast-changing competitive environment show that adopting yesterday’s strategies will not guarantee success.
By collaborating with nimble fintech companies, banks and building societies can introduce innovative services at a speed that was previously unimaginable, all while alleviating the compliance burden.
This is possible because platform providers have already navigated the complexities of adhering to regulations, allowing financial institutions to focus on delivering cutting-edge solutions to their customers.
Explore further insights on how to outpace your competitors by delving into the complete report.
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