MoneySavingExpert founder, Martin Lewis, recently ran a series of polls on X, asking his followers about the differences between banks and building societies.
Many thought there were no differences at all. However, those that did know there were distinctions weren't always able to put their fingers on exactly what those differences were, or what they meant in real terms.
In this article, we break down some of the key differences, as well as a couple of things that make building societies brilliant.
Are banks and building societies the same?
No! Both provide mortgages and savings accounts, but banks and building societies are run quite differently.
Banks usually have shares listed on the stock market and are owned by their shareholders (whom they aim to generate profit for), while building societies are owned by customers, known as ‘members.’ The profit that building societies make is reinvested to provide value for those members. This difference coined the term ‘mutuals’ – you may have heard Newbury or other building societies referring to themselves in this way in the past, or using the word 'mutuality.'
According to the Building Societies Association's lending and savings figures from September 2023, building societies have nearly 26 million customers across the UK and have helped 3.5 million people get onto the property ladder. In addition, they hold £370 billion worth of retail savings (19% of all cash savings in the UK). That's quite a bit!
We’ve been at it a long time
Building societies have a long and proud history in this country. The first known was Ketley's Building Society, who popped up in Birmingham in 1775.
Ketley's gave working class citizens (who didn't have access to banks like the upper classes did) a way to buy their own homes. People would sign up to become members and then pay into a central fund, used to construct houses. Newbury Building Society began its life in 1856 under the name of Newbury Permanent Benefit Building and Investment Society.
Members have a voice
Building societies want their members to have a say in how they do things, and strive to build meaningful, long-term relationships with their customers to deliver great service. Some of our current members have been with us since the 1980s!
Each year, building societies hold an Annual General Meeting (AGM). AGMs are a brilliant opportunity for members to meet the people in charge and vote on whether they're happy for them to continue steering the ship. There are also opportunities to provide feedback and learn about upcoming developments.
At Newbury, in addition to the AGM, we have an active Member Forum, where customers test and provide valuable feedback on digital improvements, for example. We also recently launched Member Talk, which invites our members to branch to meet employees, find out about new projects, learn about topics such as online scams, and have their say.
Building societies give back
A vital aspect of mutuality is supporting local people. These roots can be traced back to the original building societies, which were community-led organisations that often met in the social hubs of the time, such as taverns.
At the Society, our community involvement is wide-ranging and constantly evolving. We donate to and volunteer at local charities, provide funding to grassroots sports clubs in our branch towns, sponsor community events, run financial education schemes in nearby schools, and much more. Being able to reinvest some of our profit in this way is one of the benefits of not having shareholders!
For us, mutuality also means we're committed to serving customers in a way that works for them. While many banks continue to close branches in our local areas, we're updating our bricks-and-mortar branches as well as our digital offerings, so customers can access our services how they want to, whether that's over the phone, online, or in person.
The feeling is mutual
Like what you've read? Learn more about the benefits of being part of a mutual and how you can become a member here.
Figures correct as of September 2023.
