Yorkshire tops efficiency rankings among UK building societies

Yorkshire Building Society has emerged as the most efficient mutual in the UK, according to new research examining productivity across the sector. 

The analysis by fintech firm Target Group reviewed annual reports from building societies with combined assets of nearly £550 billion, employing more than 30,000 full-time equivalent staff. The study measured efficiency by calculating assets per employee, revealing significant variations in productivity across the sector. 

Yorkshire Building Society achieved £28.3 million worth of assets per employee, outperforming the industry average of £18.1 million. This placed it ahead of other major mutuals, including Coventry Building Society at £26.8 million per employee and Nationwide at £18.9 million per employee. 

Productivity across the sector 

The research divided societies into four tiers based on asset size. Tier 1 societies, those with more than £10 billion in assets, averaged £20.0 million per employee. However, the range was substantial – while Yorkshire excelled, Newcastle Building Society managed only £10.8 million per employee. 

In Tier 2 societies, with assets between £1 billion and £10 billion, Progressive Building Society led with £14.4 million per employee, whilst Cumberland managed just £6.7 million. The tier averaged £9.5 million per employee. 

Smaller societies in Tier 3 (£500 million-£1 billion assets) averaged £7.9 million per employee, with Swansea Building Society topping the category at £10.4 million compared to Mansfield’s £6.0 million. 

The smallest building societies, with under £500 million in assets, achieved £7.2 million per employee on average. Stafford Railway Building Society led this group with £10.1 million per employee. 

Impact of digital initiatives 

“A lot of this is down to digital transformation,” Melanie Spencer (pictured) from Target Group explained. “Some societies have invested so they can do more with less while others have not.” 

Spencer described the findings as “somewhat concerning for the sector.” She highlighted that efficiency doesn’t necessarily correlate with size, noting that Nottingham Building Society, with £5.2 billion in total assets, employs 510 people – achieving a similar ratio to much smaller Stafford Railway. 

Source: Target Group 

The research identified Cumberland, Monmouthshire, and Darlington as the least efficient societies relative to their size, whilst Stafford Railway, Beverley, and Earl Shilton outperformed expectations. 

Spencer warned that smaller, less efficient societies must “hire a CIO” and adopt “cloud core systems as a service as a matter of urgency” to survive coming decades and serve a new generation of savers and borrowers. 

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