The regulatory landscape – the playing field upon which building societies compete – has grown increasingly intricate recently. That poses significant challenges for mutuals. Compliance with an ever-expanding web of rules, from the Financial Conduct Authority (FCA) and other regulatory bodies, demands substantial resources and expertise.
Finding people with the right skills is not easy and the costs associated with meeting these obligations continue to climb, straining operational budgets. Key regulations such as Consumer Duty, the Mortgage Charter, and BIFD are designed to protect consumers, but their complexity – and the occasional trade-off that this can present – create hurdles for building societies striving to deliver exceptional customer service while adhering to compliance requirements.
Consumer Duty, in particular, has emerged as a focal point of frustration. Introduced to ensure firms prioritise customer outcomes, it requires building societies to demonstrate consistently fair treatment of consumers. However, overlapping rules from various regulatory frameworks can make this challenging. For example, compliance with Consumer Duty might necessitate tailored solutions for individual borrowers, but other regulations, such as stringent capital requirements, can limit flexibility. This creates a paradox where well-intentioned rules inadvertently complicate customer servicing, potentially slowing down processes and increasing the risk of suboptimal outcomes. For smaller building societies, these challenges are amplified as they approach critical regulatory thresholds, where capital requirements become more stringent, often perceived as a barrier to growth.
Despite these complexities, regulation does not have to stifle progress. Technology, particularly artificial intelligence (AI), offers transformative solutions to streamline compliance, reduce costs, and enhance customer experiences. By leveraging data-driven tools, building societies can navigate the regulatory maze more efficiently while maintaining their commitment to member-focused service.
A prime example of this is the adoption of AI-powered platforms like NICE CXone, which we have integrated into our inbound and outbound telephony operations. This technology has unlocked a range of features that deliver significant value to our operations teams while addressing regulatory demands. One standout capability is live auto summary. At the conclusion of every customer call, NICE CXone generates a complete, written transcript (it’s an advanced bit of kit; it can, by way of example, recognise different dialects).
In the past, agents would dedicate substantial time, often 30 minutes or more, to manually document call details during wrap-up. This process was not only time-consuming but also prone to human error or subjective interpretation.
With AI-driven transcription, this burden has been eliminated. Agents can now focus on ensuring customers receive the right outcomes rather than being bogged down by administrative tasks. The AI not only transcribes the call but also summarises key points and seamlessly integrates them into the customer’s journey within our system. This creates a comprehensive, auditable record of every interaction, including details such as the call’s duration and timestamp. For building societies, this could be a game-changer.
A guaranteed transcript of every customer call provides a robust audit trail, ensuring compliance with regulatory requirements like Consumer Duty. The factual, documented record removes ambiguity, offering assurance that information shared during interactions is accurately captured and easily accessible for audits.
The potential of AI extends far beyond transcription. Emerging capabilities could revolutionise the management of compliance and customer care. One exciting development on the horizon is sentiment analysis and the identification of vulnerable customers. Soon, AI systems will be sophisticated enough to detect specific phrases – such as “I’m struggling at the moment” – that indicate a customer may be in a vulnerable position. When such phrases are detected, the AI can alert the agent in real time, prompting them to adjust their approach. For instance, the system might suggest discussing forbearance options, flexible payment schedules, or other tailored support mechanisms. This proactive identification of vulnerability aligns directly with the principles of Consumer Duty and “treating customers fairly,” ensuring building societies meet regulatory expectations while addressing customer needs empathetically.
From a compliance perspective, this technology offers significant protection. By documenting that appropriate actions were taken to support vulnerable customers, building societies can demonstrate due diligence during regulatory audits. While this advanced functionality is not yet widely available, proof-of-concept testing is already underway. The technology is advancing rapidly. Building societies that adopt these tools early will be well-positioned to stay ahead of regulatory demands.
The broader implications of AI adoption are profound. By automating time-intensive tasks like call documentation and enabling real-time insights into customer needs, AI reduces operational costs and frees up resources for strategic priorities. Rather than viewing regulation as a barrier, societies can use technology to turn compliance into a competitive advantage. As AI continues to evolve, its ability to address complex challenges, from vulnerability detection to regulatory reporting, will only grow. By adopting these technologies, building societies can reduce the compliance burden, enhance customer outcomes, and position themselves for sustainable growth in an increasingly regulated world.
Melanie Spencer is growth and sales lead at Target Group
