Yorkshire Building Society has emerged as the UK’s most efficient mutual, according to new analysis by fintech provider Target Group. The study, which examined annual reports across the sector, found that Yorkshire holds £28.3m in assets for every full-time equivalent employee – significantly ahead of peers.
The research reviewed data from building societies representing combined total assets of almost £550bn and employing more than 30,000 people. Across the sector, the average was £18.1m in assets per employee, a figure Target says reflects differing rates of digital transformation and operational investment.
Among Tier 1 societies – those with more than £10bn in assets – Yorkshire was the standout performer, followed by Coventry at £26.8m. Newcastle Building Society trailed at £10.8m per employee. In Tier 2, with assets of £1bn to £10bn, Progressive recorded £14.4m per employee compared with just £6.7m at Cumberland. In Tier 3 (£500m–£1bn assets), Swansea led with £10.4m, while Mansfield posted £6.0m.
At the smaller end, mutuals with under £500m in assets averaged £7.2m per employee. Stafford Railway led this group with £10.1m, while the Ecology Building Society posted £5.3m.
Melanie Spencer, business development director at Target Group, said: “This is a crude measure. But the ratio of assets to employees strikes at the heart of the issue of automation in the sector – of building societies’ willingness or otherwise to adopt technology to improve their productivity. You’d expect the largest societies to be the most efficient since they’re enjoying the biggest economies of scale. But our research highlights that this isn’t necessarily the case.
“Nottingham is a large operation, with total assets of £5.2bn, but it employs 510 people – that’s £10.3m worth of assets per employee. That’s a similar ratio to Stafford which only has £25m worth of assets. At the other end of the spectrum, Nationwide’s total assets are three times greater than Yorkshire’s – but their workforce is five times the size.
“A lot of this is down to digital transformation. Some societies have invested so they can do more with less while others have not. That’s somewhat concerning for the sector given that societies need to be embracing digital transformation and addressing legacy systems. Technology is going to be absolutely critical for long-term success of the mutual movement. If mutuals don’t adopt emerging technologies, they’ll fall behind.”
The most efficient outliers identified by Target were Stafford Railway, Beverley and Earl Shilton. Those deemed least efficient relative to their size included Cumberland, Monmouthshire and Darlington.
Spencer added: “To survive in the coming decades, many of the smallest building societies will need to hire a CIO. And they must look at adopting cloud core systems as a service as a matter of urgency, rather than attempting to maintain their out-dated legacy technology. Leaving it any longer risks failing to deliver for a new generation of savers and borrowers.”
