Adding value - the case for building societies
A Building Societies Association case study

Page 1: Introduction

Building societies are mutual organisations.  This means that they have no shareholders and operate solely in the interests of their members. A member is a person who has a savings account or a mortgage loan. Each member has voting rights to influence how the building society is run.The earliest building societies were established during the Industrial Revolution by skilled workers who wanted...
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Page 2: The role of building societies

The primary business of a building society is to: attract savings from its investing members make loans for house purchases to its borrowing members. The savings of the investing members provide most of the funds that the borrowing members use to buy their properties. The borrowers pay interest on their loans and this is used to pay investors interest on their deposits. About 23% of all...
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Page 3: The organisational structure of building societies

Both mutuality and plc status have their advantages and disadvantages, strengths and weaknesses. This is why these different types of organisation can exist side by side in direct competition with each other.Businesses exist to organise economic activity and add value in the economic system. They control resources and turn these resources into products that customers want. Financial service...
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Page 4: Financial inclusion

Research sponsored by the Joseph Rowntree Foundation has shown that approximately 7% of all households in the United Kingdom have no account with a financial institution; 84% of these are tenants of social housing landlords such as local councils or housing associations.Building societies, which were originally set up to help people who might otherwise be excluded from the financial organisations...
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Page 5: Benefits of mutuals

There are numerous benefits that arise from the existence of mutuals in the financial services market: Having different types of business organisation makes the market more responsive to external and internal change. Building societies provide competition for banks within the financial services market (for example, through offering lower rates of interest). Building societies provide greater...
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Page 6: Conclusion

There appears to be no single structure that is ideal for a financial services organisation. It cannot be assumed that the most successful will be either the largest or the most diversified. Some of the strategies which lay behind conversion have also been called into question by the potential for new organisational structures within the financial system. Internet banking is a good example...
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