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Small building societies are well placed to thrive

Smaller building societies are likely to thrive in the post-coronavirus economy, the leader of the 162-year-old Dudley Building Society says.

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Dudley Building Society chief executive Jeremy Wood

Chief executive Jeremy Wood said he was confident that his Brierley Hill-based society was strongly placed to continue supporting its community, as it had done through two world wars and countless economic crises.

"If we go back in time to the establishment of the building society movement, the principle of mutual benefit by pooling savings in order to advance funds to build dwellings will have seemed old fashioned and probably quaint in a pre-Covid market, predominantly funded by shareholder capital.

"Yet the tried and trusted principles of saving and borrowing through a mutual building society will be likely to provide the most available source for both funding and savings when the market recovers whilst other sources take time to come back on stream," he said.

Mr Wood said that at the turn of the year on the savings front, while the returns for savers have been marginal at best, building societies were offering a better return on average than banks.

"Certainly, until the current crisis, although returns are low, immediate access accounts, which make up the bulk of savings accounts were better served by building societies than other providers. When the market recovers, there is little to suggest that this will change.

In terms of trust and approachability, a glance at the high street shows us that many banks have pulled back from serving local communities, usually on the basis of cost and because more customers are moving to online transactions.

For smaller building societies like ours, maintaining a retail presence is not just a business decision, it is part of the unwritten understanding between us and the people we serve. Every piece of research tells us that while our members like the reassurance of a physical presence through which they can interact to withdraw or invest funds, we also provide a bridge and platform which acts as a social as well as a working hub for the community. This identity with our local members and their financial wellbeing is key to our strength we will maintain our presence on the high street as long as we are needed," he added,

Mr Wood stressed that because building societies accumulated reserves over many years and did not pay money out as dividends to shareholders or owner directors and partners, they were better able to navigate the consequences caused by unexpected events.

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