More than 100 years ago, groups of like-minded people established mutual building societies and a new industry was born. These pioneers pooled their financial resources to buy houses and dreamed of a world full of similar socially owned institutions. For a time they thrived, but the twin realities of commercialism and competitiveness became the main drivers of mortgage providers and today, for many, the feeling is no longer mutual. In 1979, there were 14 mutual building societies in Ireland. Now there are just two - the EBS and Irish Nationwide.

During that time, the global trend of demutualisation - where an organisation converts from a member-owned entity to a publicly quoted company - transformed the status of savings banks and insurers. One by one, institutions that had been wholly-owned by their members were floated on the stock exchange. Building societies became banks. Members became shareholders. According to Mr Des Byrne, director general of the Irish Mortgage and Savings Association, this development reflects what is happening in the financial services sector and business in general. "Sadly, there is no room for the small player," he says. "Sheer economies of scale militate against them."

Back in the 1840s, as the industrial revolution was going full steam ahead, building societies were set up under the name of terminating societies. A group of say 20 people would put enough money together to build 20 houses, after which they would terminate the temporary arrangement and the society would cease to exist.

The schemes proved so successful that permanent building societies were established. Some of these new institutions took their name from their newly-enduring status - e.g. Leeds Permanent and the Irish Permanent, the latter of which came into being in 1884.

Exactly 110 years after it was founded, the Irish Permanent became the first Irish mutual to complete the complicated process of demutualisation. Among the factors that prompted it and others to follow such a course was the wider involvement of the banks in the mortgage area and the increased need for capital funding.

Up to the mid-Eighties, banks had less than 10 per cent of the mortgage market in Ireland and were involved to a much greater degree in corporate financial services. According to Mr Diarmuid Bradley, of Irish Permanent plc, up until this time banks were somewhat wary of private sector lending.

"As the banks moved in on the mortgage area . . . building societies began to realise that they wouldn't survive as a competitive force unless they could broaden the products and services available," he says. The lines of demarcation between banks and building societies were becoming blurred.

Legislation was required to enable the mutual institutions become involved in a wider range of financial services. The 1989 Building Societies Act allowed for this but more crucially, it allowed for the possibility of building societies abandoning their mutuality in favour of stock market flotation.

According to Mr Bradley, greater access to capital was needed in order to be successful in the newly-competitive environment. As a publicly quoted company it has more flexibility to raise funds from a wider variety of sources. It would, they believed, allow them to retain their customer base, maintain profitability and provide more services to customers.

"If we hadn't converted we would have survived, but we wouldn't have become the top flight commercial outfit we are today," he said. First National, now First Active, is the most recent Irish institution to engage in conversion. It took two years but last month the company was floated on the stock exchange. Mr Paul Reville, group operations director, says that the main reason for the conversion was the need for a more flexible approach to raising capital in order to drive the business forward.

The conversion could not have taken place without the approval of the First National members, who voted for the development at this year's annual general meeting by a majority of 97 per cent. The benefits to shareholders are much more tangible according to Mr Reville. As part of a building society, members benefited from cheaper mortgages. As part of a public company, they received up to 900 shares and options to buy more. "Our strategy is not about to change dramatically . . . but there will be an improved level of service and wider distribution channels such as the Internet. It would have been more difficult to obtain the capital to make these changes as a mutual building society," he says.

In addition to building societies, mutual life insurers such as US companies Prudential Insurance and Metropolitan Life, Canada's Sun Life, Old Mutual in South Africa and Britain's Norwich Union have changed status in recent years.

But despite the worldwide clamour to go public, some mutuals are committed to staying as they are. EBS, for example, has stated that it does not intend to go down the road towards demutualisation.

The EBS was founded in 1935 and aimed to benefit members through better-value savings rates and loans. "This ethos has served us very well; we exist to serve our members and believe that the mutual way is the best way for customers," says Mr Pat Farrell, general manager of marketing.

This view is supported by a section of the public which has helped expand the EBS market share over the past few years. As for benefits, the society returns money to its members in the form of lower lending rates and higher deposit rates. It gave back almost £9 million in such a mutuality package last year.

While the public limited companies (plcs) talk about gaining greater access to capital, the EBS insists that being mutual is not a barrier to sourcing funds.

"We have a good capital base and have experienced significant growth which we have been able to sustain and maintain as a mutual," said Mr Farrell.