The report found that building societies were outperforming banks across a number of financial indicators, while offering higher saving rates and lower mortgage rates to their customers.
The research examined the performance of building societies relative to banks over the last 15 years, using funding from the Building Societies Association (BSA).
Building societies were also found to have the ability to recover faster from a financial downturn than banks, despite returns being lower on average. According to the research, the sector has recovered from the financial crisis fastest, with more stable asset growth than its banking counterparts.
Equally, while building societies’ cost to income ratios were not, on average, higher than banks, the sector still displayed good levels of efficiency with ratios of around 60%, the report said.
Report author, Dr Barbara Casu, director of Cass Centre for Banking Research, said building societies ‘continue to play an integral role’ in supplying finance to UK households.
BSA chief executive, Robin Fieth (pictured), added: “In the years following the financial crisis of 2007 and the banking scandals that continue to occupy the headlines, attributes such as “more stable” and “less risky” are often what people want to hear when it comes to their financial providers.
“When weighing up the shape of the financial services sector, we urge the government, opinion-formers and policy-makers to take research of this nature into account, ensuring our sector – with its distinct purpose and customer-owned mutual business model – has the recognition and support it needs to continue offering a better deal for consumers,” he said.