BUILDING SOCIETIES should collaborate more to provide greater competition to the big banks, a leading academic has claimed.
Professor Jonathan Michie of Oxford University said that while building societies have increased their market share in recent years, they remain a small presence in the overall market for financial services.
Speaking at the BSA annual conference in Harrogate, he told delegates that the coalition Government failed to deliver on its pledge to promote mutuals and diversity in the sector and new regulations have piled on additional burdens for small lenders.
Prof Mitie said collaboration between the 44 building societies and increased cross-selling of products would strengthen competition.
He added: “The current sector is as a whole dominated by huge plc banks. It really is an oligoply.
“Look at other successful economies. Germany has one third plc banks, one third public sector banks and one third mutuals and cooperatives.
“It is a much more competitive environment, where there is competition between different business models.
“It would greatly strengthen competition if the mutual sector was stronger in Britain.”
Colin Fyfe, chief executive of Darlington Building Society, said the need for more collaboration is becoming more important.
Industry leaders also debated the role that technology will play in financial services.
Louisa Sedgwick, head of intermediary distribution at Leeds Building Society, said customers want “a Martini solution, where they can access services anytime, any place, anywhere”.
But David Steele, a policy advisor at charity Age UK, warned that many elderly customers struggle in the digital world.
He said two thirds of over-75s have never been online.
Mr Steele added: “There are some older people who are silver surfers and absolutely relaxed.
“But you have to be able to straddle the two groups and there has to be a proposition that still works physically for those who want to carry on using physical methods.”