It often feels like there is only one conversation taking place in financial services at the moment: artificial intelligence. Whether it’s trade shows and conference agendas, boardroom discussions or articles such as this, AI has become impossible to ignore.
It’s for good reason as the technology continues to show its capabilities – whether it’s enhancing customer journeys or driving operational efficiencies. For building societies – and lenders more broadly – the conversation shouldn’t be about how quickly the technology can be adopted. Instead, it’s about how effectively AI can be implemented for the benefit of customers, colleagues and advisers.
After all, building societies have always been built on trust, resilience and people. Those attributes remain the sector’s competitive advantage, so any investment in technology should be laser-focused on enhancing rather than replacing. Choose your favourite cliché – silver bullet, miracle cure, magic wand – AI still isn’t that. What it is though is a powerful tool at disposal of mutuals – providing it is implemented properly and built on the right foundations.
Seeing the direction of travel, so many businesses want to be AI-fluent. In truth, they need to make sure they are tech-fluent first.
It’s no secret that AI is only as good as the systems, processes, data and taxonomy that underpins it. If the tech stack is fragmented or outdated, data quality is inconsistent or processes are still manual, no AI system will be able to work its magic. It would be like fitting a race car engine into a family hatchback – sure all the performance is there, but none of the infrastructure to deliver it.
The first step of any successful AI integration is getting the house in order – addressing legacy systems, improving data governance and ensuring technology, security and compliance are all aligned.
The most important question for mutuals to then ask themselves is what problem are we trying to solve? All the excitement surrounding AI and the sight of rivals getting stuck in can create a temptation to just plough ahead and work out the details later.
AI FOMO should never be the starting point for implementation. We need to answer a business challenge, whether it’s driving efficiency, enhancing decision-making or improving the customer/broker experience. Having that north star ensures AI adoption delivers genuine value rather than becoming an expensive distraction.
Given the mutual ethos of building societies, member benefit is a great place to start. Transformation is high on the sector’s agenda as mutuals try to deliver the convenience, responsiveness and tech-enabled experiences customers value in daily life. This shouldn’t be at the cost of the personal service and trust that has always defined the mutual model.
AI needs to be the enabler of a better customer experience, rather than a point of friction. Used effectively, it could streamline processes, speed up responses and support colleagues in delivering better outcomes.
Just as critical is the colleague experience – especially as branches remain a key differentiator and value-add for the mutual sector. Colleagues need to be taken on the AI journey too, making sure any transformation happens with them, and not to them. How will it support their roles, what are the opportunities, what are the risks and how will they be mitigated – these are all genuine questions that need answering.
Risk management is a really important point when it comes to AI. Just because the industry has something new and exciting, it doesn’t mean we can forgo the regulatory frameworks that govern us. Consumer Duty obligations do not disappear, nor do data protection requirements under GDPR.
I firmly believe that the principles that guide AI adoption should be the same as those that have guided building societies for generations: understanding customers, acting responsibly, managing risk properly and prioritising long-term value over short-term gains.
Similarly, caution shouldn’t be mistaken for hesitation. Success with AI requires the right balance of ambition and robust governance. For many societies, that will mean drawing on the expertise of trusted external partners who understand both the technology and the regulatory environment in which financial services firms operate. By leveraging specialist knowledge and proven experience in AI integration, societies can innovate with greater confidence while ensuring customer outcomes, security and compliance are fully safeguarded.
AI has the potential to be transformative for the mutual sector. But before building societies focus on becoming AI-fluent, they must first ensure they have the technology, governance and culture in place to use it effectively. By taking a measured approach, building strong foundations and drawing on trusted expertise where appropriate, societies can embrace innovation with confidence while protecting the trust that has long been its calling card.
