Thriving Through Change: Key Hurdles for Member-Focused Banks in 2025

Member-focused banks—including credit unions, building societies, mutual banks, and other customer-owned financial institutions—stand at the heart of their local communities. Unlike traditional commercial banks, these organisations prioritise member value over shareholder profit, offering tailored financial solutions and fostering trust through cooperative principles. As we move into 2025, this sector faces a unique crossroads: balancing its core commitment to members with the need to navigate an increasingly complex financial landscape.

At CustomerMinds, we’re dedicated to empowering these institutions to thrive by addressing challenges head-on and embracing opportunities for transformation. A key part of this is helping to reduce the cost to serve by digitising, automating, and hyper-personalising the customer experience. In our first blog post of the year, we’re exploring five key hurdles that will define the journey for member-focused banks in 2025—and how overcoming these challenges can drive smarter, more efficient ways of serving members.

1. Navigating Regulatory Landscapes: Spotlight on DORA

In the EU, the Digital Operational Resilience Act (DORA), came into effect this month (January 2025) and this new regulation sets stringent requirements to ensure financial institutions can withstand and recover from operational disruptions, including cyberattacks. For mutuals and member focused banks, compliance with DORA is more than regulatory adherence—it’s an opportunity to strengthen resilience and demonstrate best practices.

These frameworks complement existing regulations such as GDPR (General Data Protection Regulation) and ISO 27001 (Information Security Management). In the UK, Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) guidelines focus on operational resilience, while in Australia, APRA’s CPS 230 Operational Risk Management Standards, effective July 2025, set similar high benchmarks.

By aligning with international standards, member-focused banks not only meet compliance requirements but also improve operational efficiency. These frameworks help streamline processes, reduce risks, and lower costs associated with regulatory breaches or inefficiencies. Embracing these standards equips institutions to deliver cost-effective solutions while enhancing member trust. This alignment positions them to navigate risks effectively and compete confidently in a highly regulated financial landscape.

2. Responding to Mergers and Market Consolidation

The financial sector is seeing a wave of mergers, driven by the need for economies of scale and competition with larger players. While this trend is more pronounced in Australia, it is gaining momentum in Ireland and the UK.

Mergers offer opportunities for operational efficiencies and expanded product offerings but come with challenges such as maintaining brand consistency, member communication, and integrating multiple core systems. Financial regulators will closely scrutinise these transitions, making a transparent and well-documented compliance approach essential.

To ensure smoother integrations, a unified member engagement platform that accommodates multiple brands, domains, and datasets can minimise confusion, reduce operational overhead, and safeguard member trust. By consolidating engagement processes, institutions can streamline operations, enhance member experiences, and mitigate the risks associated with mergers.

3. Competing with Major Banks and Fintechs

Member-focused institutions often face stiff competition from larger banks and fintechs offering highly innovative, data-driven solutions. Despite providing excellent products and services, mutuals have traditionally struggled to match the speed and personalisation delivered by these competitors.

The potential for personalised, 24/7 services often lies untapped in their existing datasets. By adopting data-driven approaches, mutuals can unlock this potential to deliver tailored experiences, leveraging their local roots and community focus to stand out.

Technology is the enabler here. Platforms like Which50 empower organisations to create seamless omnichannel experiences, turning agility and local knowledge into strategic advantages. With a commitment to customer-centric innovation, mutuals can deepen member loyalty and attract new audiences while competing effectively with larger, more resourced players.

4. Leveraging Collaborative Technology for Operational Excellence

The mutual sector thrives on co-operative values, and technology providers that share this collaborative ethos can drive better outcomes. Whether integrating core systems, payment gateways, loan decisioning platforms, or communication channels, collaboration ensures technology solutions are tailored to each institution’s unique needs.

Integrated technologies are key to operational excellence, but the idea that APIs are the sole solution is a misconception. While APIs offer flexibility, batch processing can still remain effective in many cases. The priority is always delivering a seamless digital experience to members driven by the data and business rules that are at the heart of the existing organisation and its systems.

By working with trusted partners, mutuals can foster innovation while reducing dependency on call centres. Digital-first solutions combined with member-preferred engagement channels—including both digital and print—support efficient, effective communication, particularly during challenging economic times. From core systems to payment gateways and communication platforms, collaborative solutions help automate workflows, reduce manual interventions, and streamline processes—all while lowering the cost to serve.

5. Harnessing Technology to Drive Down the Cost to Serve

Reducing operational costs without compromising service quality is crucial for member-focused institutions. By embracing digital-first strategies, automating repetitive tasks, and streamlining workflows, organisations can achieve significant efficiencies.

Platforms like Which50 enable institutions to create automated processes that free up resources, allowing teams to focus on higher-value activities. Streamlined communication systems also reduce the need for manual intervention, cutting call centre reliance while enhancing service efficiency.

By adopting smarter, technology-driven approaches, mutuals can deliver more with fewer resources, maximising value for both the organisation and its members—a critical advantage in today’s competitive and cost-sensitive environment.

Looking Ahead

In 2025, member-focused banks and financial mutuals face both significant challenges and incredible opportunities. By addressing regulatory compliance, embracing technology, and reducing the cost to serve, these organisations can build resilience and maintain their commitment to delivering value for members.

At CustomerMinds, we believe the future of this sector lies in reducing the cost to serve by digitising, automating, and hyper-personalising the digital customer experience. These strategies not only reduce costs but also elevate service delivery, enabling institutions to thrive in a competitive landscape.

As we embark on this journey into 2025, our goal remains steadfast: to help you overcome challenges, seize opportunities, and build a smarter, more sustainable future for your members. If you would like to find out more about how we can help you to reduce your cost to serve – please get in touch with us by filling in the form below.

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