Public trust in banking has been steadily marching along the often-quoted “slow road to recovery” since the financial crisis of 2008/9. Consumer trust has risen steadily, and the growth of challenger banks such as Monzo or Starling has breathed some [much needed] life into the wider sector. 

At the same time, a shift is underway, with consumers increasingly moving their savings and deposits to building societies and specialist lenders. This is especially surprising in today’s ultra-connected, digital-first approach to banking, with building societies typically characterised as ageing institutions unsuitable to modern consumers.  

Despite this, reports of their decline have been much exaggerated. On the contrary, many of them seem to be thriving in the current environment. What is driving this trend? And what are commentators and popular voices missing? Does this represent a permanent shift towards mutuality, or will it be over before it gets off the ground?  

Banking’s Changing Relationship with Society 

The last decade has profoundly reshaped how Brits interact with their banks. Branch closures have accelerated, with most high street banks opting to consolidate operations and prioritise digital services. The effect has been stark: the UK has lost more than half of its bank branches since 2015, leaving many communities – particularly rural or older populations – with limited face-to-face financial access. 

While challenger banks have emerged to serve this gap in customer need, as they’ve matured, they have also faced concerns about profitability, fees, and the sustainability of their growth. 

Against this backdrop, building societies have gained traction. The Building Societies Association (BSA) reported in June 2025 that total savings balances at building societies reached £507 billion, accounting for around 19% of all cash savings in the UK. This represents a striking £20.7 billion year-on-year increase, demonstrating that consumers are seeking stability and mutuality in an era of economic uncertainty. 
 

Building from history 

Building societies emerged in the 18th and 19th centuries as cooperative, member-owned institutions designed to pool savings and provide access to mortgages. Unlike commercial banks, they do not exist to maximise shareholder profits. Instead, they reinvest surplus into services, interest rates, and community initiatives that benefit their members. 

The core strength of building societies lies in this mutual model. They offer savings and mortgages as their mainstay products, with a reputation for caution and reliability. This often translates into more competitive mortgage deals for first-time buyers, higher savings rates, and a customer ethos centred on long-term relationships rather than transactional gains. 

At the same time, there are limits. Building societies do not offer the full spectrum of financial products found at large banks, such as extensive investment services or corporate lending. Historically, their reliance on physical branches and a reputation for being slow to digitise has also appeared to dampen their appeal to younger, more tech-savvy demographics. 

Nevertheless, far from being relics, building societies have demonstrated resilience and adaptability. Their ability to balance tradition with innovation will determine whether they can sustain and expand their influence in the modern financial landscape. 

Adapting to a Changing Market 

One of the clearest challenges facing building societies is digital transformation. For many years, limited online platforms and lack of app-based services were viewed as barriers to attracting younger customers. However, this is changing. Large societies such as Nationwide, Coventry, and Skipton have invested heavily in mobile apps, online mortgage applications, and hybrid service models that combine digital convenience with branch-based advice. 

Skipton, for example, has launched digital mortgage tools that allow customers to track and manage applications entirely online, while maintaining specialist advisers in-branch for those who prefer face-to-face interactions. This dual approach may help bridge generational divides: retaining older members who value physical presence, while enticing younger savers with streamlined digital access. 

Beyond digital, building societies are reasserting their role in community banking. Local sponsorships, financial education programmes, and schemes to support first-time buyers have positioned them as community-focused institutions at a time when large banks are retreating from the high street. In an era where consumers increasingly value ethical finance, building societies’ cooperative structure provides a natural advantage. 

There are, however, opportunities to go further. Expanding partnerships with fintechs could accelerate innovation without the overhead of building proprietary systems. More targeted outreach to younger demographics – for instance, through green mortgage products, shared-ownership schemes, or embedded savings tools – could underline their relevance in today’s economy. Building societies also have scope to differentiate themselves more strongly in the sustainability space, using their shared ethos to promote energy-efficient housing and climate-conscious savings products. 

In short, the sector has already proven it can adapt, but its future success depends on embedding these changes into a broader strategy that aligns tradition with modern consumer expectations. 

Looking Ahead: Building Societies’ Future Potential 

Looking to the future, building societies are well positioned to leverage their strengths in trust, stability, and community. As households navigate high borrowing costs, rising rents, and economic volatility, mutual lenders that prioritise member value over profit will appear increasingly attractive. 

However, the question is whether building societies can sustain this new-found momentum without losing their unique character. Their “traditional” image can be both an asset and a liability. On one hand, stability and conservatism are highly valued during times of uncertainty; on the other, younger consumers may hesitate if building societies are perceived as outdated or inaccessible. 

A balanced path forward is therefore essential. Continued investment in digital infrastructure will ensure accessibility for younger members, while their community orientation will help retain the loyalty of older generations. Importantly, building societies have the opportunity to champion causes – such as financial inclusion, sustainability, and ethical banking – that resonate deeply with today’s values-driven consumers. 

Sector-wide, the trend suggests growth. As of mid-2025, building societies account for nearly a quarter of all UK mortgage balances, according to BSA data. Meanwhile, research from Marsden Building Society highlights how the sector has delivered a £207 billion boost to UK savings, cementing their role as trusted custodians of household wealth. 

Building societies should not be seen as institutions clinging to the past, but rather ones that could reshape the financial services landscape as a viable, trusted alternative to both traditional high street banks and digital challengers. Their influence in the UK market appears set not just to endure, but to expand – provided they meet the challenge of marrying their traditional strengths with the demands of a new generation.