This blog’s focus is on Diversification and Collaboration, two strategic levers enabling societies to evolve and remain resilient in a rapidly changing environment. This chapter of the report was sponsored by CGI.
Chapter Summary: Diversification & Collaboration
The CEO interviews conducted for the report found that diversification away from the core business proposition of mortgages and savings is not currently seen as a key priority or opportunity for most societies. The sector is considered to be collaborative and well networked but more formal collaborations are challenging to implement despite the theoretical benefits of joint opportunities being widely acknowledged by CEOs.
Strategic Diversification
This was a topic where the size of a building society influenced wheat we heard. Large societies are typically maintaining, in some cases expanding, their diversified product and business offerings, with a few exploring entirely new markets. In the case of Nationwide and Coventry, these societies have entered new markets via their acquisitions of Virgin Money and Coop Bank respectively. Most notably, these two large societies have entered the business banking market via these transactions, as explained by Graham Lloyd, Strategy Director at Nationwide:
“We wanted to expand into business banking, and it was hard to do that organically. Acquiring Virgin Money gives us scale so that over time we can explore that market with the same kind of mutual ethos and long-term decision making that we apply to our retail businesses.”
In contrast, smaller and medium-sized societies remain primarily focused on core activities, primarily mortgages and savings, with an emphasis on organic growth. Many have simplified their product offering, withdrawing from areas such as commercial mortgage lending. Andrew Craddock, CEO at Darlington Building Society, explained the evolution of their thinking:
“We used to offer insurance and financial advice. But we have now decided to focus on lending and savings. The overall aim is to grow much faster than we have previously.”
Types of Initiatives
Examples of diversification include specialist lending, wealth management, insurance services, and partnerships with FinTech providers. Some societies are looking at developing B2B services or offering white-label products for third parties. Each approach is tailored to the society’s size, market position, and long-term vision.
Sue Hayes, CEO at Nottingham Building Society, outlined their approach:
“As a building society, you can’t always get all of the specialisms that you need. So we need to forge partnerships with interesting people and organisations who can benefit from working together.”
Collaboration in the Sector
There is acknowledgment that collaboration across the sector appears logical in areas such as technology, compliance, data, and operational efficiency, albeit there is also acknowledgment that this is very difficult to implement. James Paterson, CEO, Dudley Building Society, said:
“Collaborating with other societies to share resources or auditors are good ideas, but there seems to be limited appetite for collaboration. It can be difficult to collaborate when you are also competing.”
With building societies sharing common business models and core markets (mortgages and savings), there is a strong case that collaboration can deliver economies of scale and reduce duplication of effort, but there is frustration that this has not been implemented, as voiced by Alun Williams, CEO of Swansea Building Society:
“I think it’s a tragedy that building societies haven’t collaborated more over the years in areas of a non-competitive nature.”
Balancing Innovation with Identity
While exploring new directions, societies are conscious of staying true to their mutual values and customer-centric model. Any diversification must align with their mission and enhance member value, rather than dilute their identity.
Culture and Leadership
Successful diversification and collaboration require adaptive leadership and a supportive culture. Societies are investing in developing the skills and mindsets needed to lead change and engage employees in transformation journeys.
Enablers and Barriers
Key enablers include digital infrastructure, regulatory support, and peer networks. Barriers include resource constraints, cultural resistance, and the need for clearer strategic alignment. Societies that invest in partnerships and shared platforms are better placed to overcome these hurdles.
Richard Fearon, CEO at Leeds Building Society, explained why collaboration and partnerships within the sector are challenging:
“Building societies are at different stages in their strategy, in their technology life cycle, and in their approach. It can make collaboration in areas such as technology difficult.”
What next?
Building societies should explore how collaboration and diversification can help them better meet the needs of their members. As the sector modernises and becomes more tech-enabled, these opportunities may become more desirable and realistic to pursue.
In terms of strategic collaboration between societies, this is a bigger challenge. The sector is collaborative by nature, which provides a foundation for more meaningful strategic collaborations to be developed. Identifying societies that are ready to work together and appropriate opportunities to explore is key for societies interested in collaboration.
This is Blog 7 in our nine-part series covering the Building Societies Report 2025. You can explore the full series here:
- Blog 1: Strategy & Mutuality
- Blog 2: Mortgages
- Blog 3: Savings
- Blog 4: Branch of the Future
- Blog 5: Homebuying Process
- Blog 6: Green Finance
- Blog 7: Diversification & Collaboration
- Blog 8: Technology
- Blog 9: Regulation, Policy & Risk
The Building Societies Report 2025 was created in partnership with the Building Societies Association and made possible by the support of sector sponsors including: BJSS, Digilytics, Finova, FintechOS, FIS, GDS Link, Mambu, Mast, Monument Technology, Mutual Vision, MQube, nCino, Ohpen, PEXA, Phoebus, RSM UK, SBS, Target Group, Temenos , Unblu, Unisys, and Vilja Solutions.