Banking And Building Societies


Banks are companies owned by their shareholders and listed on the stock market. If the bank is successful financially, shareholders will benefit from this. And bank will pay them dividend which is a share of the earnings made by the company. So we can say there is pressure on banks to satisfy their shareholders. And keep them not to invest somewhere else. Building societies are set up as mutual institutions, and their members with accounts have certain rights to vote on issues affecting the society. Each member has one vote regarding the amount he saved or borrowed.


Mortgage borrowers, savers, and current account holders are members who vote on decisions that affect the society. As building societies don’t need to pay dividends to shareholders. It enables them to offer better rates of interest on savings and mortgages.

There is no need to just look at those in your area, many from outside will lend or accept deposits and offer services such as postal, telephone and internet accounts.

Two in one

Over the past decade, there has been a monumental change. And there is very little practical difference between banking and building societies. The process where building societies started to morph into banks is called demutualization. This is a result of some society savers who have been trying to turn these institutions into banks in the hope of securing a jackpot.


There were even a moments of commenting that the days of building societies are over and will all turn to banks in few years. One of the reasons to this was that banks now offer deals equal or even may beat offers from building society.

In future

With the ability to offer a better service in long-term. There is believing building societies are better placed to avoid financial difficulties. But an ever-increasing range of products and services are available. Which directly forces building societies to work harder than ever to make their place in an ever more bigger marketplace.

One of the main challenges is to embrace the technology. And product innovations needed to attract a new breed of customer. And it is not just in matching the technology with a various customer types but rather in shaping products and services to match this diversifying population. For now keeping pace with change and using it as an advantage is going pretty well for building social institutions.