By Daniel Broadhurst, Commercial Director at Finova
After spending a decade in Tier 1 banking and another in fintech, I've watched the same investment debate play out repeatedly: should we modernise lending or savings first? For years, the answer seemed obvious. Lending is where the revenue concentrates, where innovation happens, where executives naturally focus their attention.
But something's shifted in the market that's worth paying attention to. The assumptions that made lending the obvious priority are becoming less clear-cut, particularly for institutions wrestling with funding costs and customer acquisition challenges.
The distribution channel that changed everything
The shift centres on savings aggregator platforms - Raisin, Hargreaves Lansdown Active Savings, Flagstone - which have quietly reshaped how retail savers access products. These platforms let customers compare and open savings accounts across dozens of institutions through a single login. For savers, it's straightforward and convenient. For financial institutions, it's rapidly becoming an essential distribution channel.
But there's a catch. Participating in these platforms requires modern technology infrastructure: seamless digital onboarding with Open Banking integration, API connectivity for real-time rate updates, and automated account opening without manual intervention. Institutions still relying on paper-based processes or legacy systems can't easily join. As UK Finance pointed out recently, those without the right technology infrastructure risk being shut out of a distribution channel that's becoming standard for retail savings.
This goes beyond keeping pace with fintech challengers. It's increasingly about maintaining access to the retail funding market as customer behaviour evolves.
The economics have changed
The business case for savings technology used to be straightforward but unexciting: reduce operational cost, improve efficiency, maybe launch products slightly faster. Important, but not exactly compelling when you're competing for budget against lending transformation.
What's changing is the revenue opportunity that comes from participating in aggregator platforms. Customer acquisition costs through these channels tend to be dramatically lower than traditional branch or direct marketing approaches. You're reaching savers who are actively searching for products, with relatively minimal marketing spend. For institutions that have historically found customer acquisition expensive or challenging, the economics look different than they used to.
There's also the funding cost equation. In a normalised interest rate environment, the ability to rapidly adjust rates across products and respond to market movements in days rather than weeks has real P&L impact. The institutions that can move quickly are capturing deposits at lower rates than those stuck waiting for manual rate change processes to complete.
The sequencing question
Most financial institutions face a practical reality: they can't modernise everything at once. Budget, organisational capacity, and risk appetite all dictate sequencing decisions. The traditional answer has been to start with lending because that's where revenue is most visible.
Yet there's a growing conversation around whether that traditional sequencing still makes sense in every case. More institutions - from building societies to challenger banks to new entrants - are weighing up whether savings might be a more pragmatic starting point. Here's what's driving that thinking:
- Implementation timeline - Modern savings platforms can be deployed in as little as 6 months, whereas lending transformation projects can take 12 months or longer in some instances. When aggregator participation is time-sensitive, that difference matters.
- Operational complexity - Savings products have fewer moving parts than lending. No broker networks to integrate, no underwriting engines to configure, no regulatory capital calculations. It's a cleaner implementation with less organisational disruption.
- Predictable ROI - The returns from savings modernisation are easier to model: operational cost reduction, participation in aggregator channels, lower funding costs. Lending transformation ROI depends heavily on volume assumptions and market conditions.
- Foundation for what's next - The architectural principles that enable modern savings platforms - cloud-native infrastructure, API-first design, modular product configuration - apply equally to lending. Starting with savings doesn't mean rebuilding everything later.
What modern savings architecture actually delivers
The value here isn't simply replicating existing savings operations in newer technology. The institutions getting genuine returns from modern platforms tend to be rethinking what's possible rather than just upgrading infrastructure.
Product flexibility that lets you launch new savings products in days, not months. Tier rates by balance, relationship, or customer segment. Create promotional rates with automatic reversion logic. Test different product structures, measure results, iterate quickly.
Distribution optionality that supports direct channels, branch origination, and aggregator platforms from the same core. One product configuration, multiple distribution routes, consistent customer experience.
Operational intelligence that provides real-time visibility into product performance, customer behaviour, and funding costs. Not just retrospective reporting, but the kind of forward-looking insight that drives better commercial decisions.
Open Banking integration that reduces onboarding friction and enables instant verification. What used to take days of back-and-forth can now happen in minutes.
The cultural shift required
Of course, technology alone doesn't drive these outcomes. The institutions that seem to be getting the most value from savings modernisation tend to share a common characteristic: they've shifted from viewing savings as a necessary but uninspiring funding exercise to treating it as a strategic capability worth investing in properly.
That shift matters because it changes investment decisions. It influences how you prioritise features. It determines whether you pick technology that enables experimentation or technology that replicates existing constraints in newer code.
There's potentially an advantage for smaller institutions and new entrants here. They can often move faster than large universal banks, make decisions without navigating complex organisational structures, and deploy modern savings platforms whilst larger competitors are still working through lengthy core banking transformation programmes. That agility can translate into meaningful competitive advantage when distribution channels are shifting this quickly.
Where this goes
I'm not suggesting savings should universally take priority over lending modernisation. For institutions with broken lending operations or aggressive growth targets in mortgages, lending transformation makes sense as the starting point.
But for those with stable lending businesses, funding pressures, or limited access to retail deposits, the case for prioritising savings has become materially stronger. The combination of changing distribution dynamics, improved economics, and faster implementation timelines creates an opportunity that didn't exist even two years ago.
The institutions investing in savings platforms now are setting themselves up for compounding advantages: better customer data, more funding flexibility, faster response to market opportunities, and participation in distribution channels that are becoming table stakes for retail savings competition.
This isn't about choosing between savings and lending. Eventually, institutions need modern technology for both. But the sequencing decision matters, and the factors that inform that decision have shifted in ways that make savings a more credible starting point than many financial services executives assume.
The institutions investing in savings platforms now are positioning themselves for some potentially compounding advantages: better customer data, more funding flexibility, faster response to market opportunities, and participation in distribution channels that look like they're becoming table stakes for retail savings competition. Whether that translates into lasting competitive advantage will depend on execution, but the window for establishing these capabilities is open now. How long it stays open is anyone's guess.
