Building societies and banks...what's the difference anyway?

MoneySavingExpert founder, Martin Lewis, recently ran a series of polls on X, asking his followers about the differences between banks and building societies.

Many thought there were no differences at all. However, those that did know there were distinctions weren't always able to put their fingers on exactly what those differences were, or what they meant in real terms.

In this article, we break down some of the key differences, as well as a couple of things that make building societies brilliant.

Are banks and building societies the same?

No! While both provide mortgages and savings accounts, banks and building societies are run differently.

Banks usually have shares listed on the stock market and are owned by their shareholders (whom they aim to generate profit for), while building societies are owned by their customers, known as ‘members.’ Profit that building societies generate is reinvested to make improvements and provide long-term value for those members.

This difference in ownership gave rise to the term ‘mutuals’ – you may have heard Newbury or other building societies referring to themselves in this way in the past, or using the word 'mutuality.' 

According to the Building Societies Association's latest lending and savings figures (September 2023), building societies have nearly 26 million customers across the UK and have helped 3.5 million people get onto the property ladder. In addition, they hold £370 billion worth of retail savings (19% of all cash savings in the UK).

We’ve been at it a long time

Building societies have a long and proud history.

The first was Ketley's Building Society, who popped up in Birmingham in 1775. Ketley's gave working class citizens (who didn't have access to banks like the upper classes did) a way to buy homes. People would sign up to become members and then pay into a central fund, used to construct houses. 

Early building societies were known as ‘terminating.' Once all of their original members had purchased a home, the society would shut up shop. This changed in the mid-1800s when building societies started to become ‘permanent,’ (Newbury Building Society began its life in 1856 under the name of Newbury Permanent Benefit Building and Investment Society!), taking on new members to replace the old ones and accepting savings deposits. 

Members have a voice

Building societies want their members to have a say in how they do things, and strive to build meaningful, long-term relationships with their customers to deliver great service. Some of our current members have been with us since the 1980s!

Each year, building societies hold an Annual General Meeting (AGM). AGMs are a brilliant opportunity for members to meet the people in charge and vote on whether they're happy for them to continue steering the ship. There are also opportunities to provide feedback and learn about upcoming developments.

Newbury Building Society's 2023 AGM

At Newbury, in addition to the AGM, we have an active Member Forum, where customers test and provide valuable feedback on digital improvements, for example. We also recently launched Member Talk, which invites our members to branch to meet employees, find out about new projects, learn about topics such as online scams, and have their say.

Building societies give back

A vital aspect of mutuality is supporting local people. These roots can be traced back to the original building societies, which were community-led organisations that often met in the social hubs of the time, such as taverns. 

At the Society, our community involvement is wide-ranging and constantly evolving. We donate to and volunteer at local charities, provide funding to grassroots sports clubs in our branch towns, sponsor community events, run financial education schemes in nearby schools, and much more. Being able to reinvest some of our profit in this way is one of the benefits of not having shareholders!

Newbury Building Society present a cheque for £1,000 to the Kimel Cafe in Wokingham, who support autistic young people in gaining work experience.

For us, mutuality also means we're committed to serving customers in a way that works for them. While many banks continue to close branches in our local areas, we're updating our bricks-and-mortar branches as well as our digital offerings, so customers can access our services how they want to, whether that's over the phone, online, or in person.

The feeling is mutual

Whilst technological advances, economic changes and evolving customer expectations have transformed the modern financial services landscape, today's building societies still work to uphold the fundamental principles that inspired the first-ever building society, way back in 1775.

Like what you've read? Learn more about the benefits of being part of a mutual and how you can become a member here.

Figures correct as of September 2023.

Register or amend your preferences for your choice of email alerts

Keep up to date with our latest news, product and event details

You can check the Financial Services register on the FCA's website.


How can we help you?

01635 555700

Call me back