By Hamza Behzad, Business Development Director at Finova

In the face of rising competition, evolving customer expectations, and regulatory pressure, building societies are rethinking the role of retention in long-term sustainability.

That’s one of the key takeaways from our latest research report, Retentions & Technology: How Mutual Lenders Can Drive Growth Through Digital Innovation, which draws on qualitative interviews with CTOs from small and mid-tier mutuals across the UK.

While there’s broad consensus on the value of digitising mortgage operations, the report finds that customer retention is increasingly seen as a strategic imperative, not just an efficiency play.
 

The retention boom — and why it matters

According to UK Finance’s 2024 Household Finance Review, 1.4 million borrowers opted for a product transfer, compared to just 284,000 remortgages. This marks a shift in borrower behaviour, driven by rate volatility, friction in the remortgage process, and a preference for low-hassle refinancing.

For mutuals, this presents both a challenge and an opportunity. As one CTO put it, “Retention is vitally important – even more so in such a competitive rate market.” Beyond immediate cost savings, retention plays a vital role in maintaining balance sheet strength, which in turn helps mutuals remain independent in an era of increasing consolidation.
 

Tech barriers and investment dilemmas

Despite the appetite for change, the report identifies six core challenges mutuals face when trying to modernise their origination and servicing platforms:

• Legacy systems
• High upfront investment costs
• Integration risk
• Fragmented data and security concerns
• Growth pressure
• Uncertain ROI from technology investment

This complexity leads many to delay transformation efforts, or opt for partial upgrades that may create further inefficiencies down the line. As one executive noted, “Sorting out legacy data is a nightmare… If you don’t do it first, you won’t be able to transition at all”.
 

What customers really want

The research reveals a crucial nuance: mutuals aren’t simply chasing tech for its own sake. Many are actively balancing digital investment with the member-first ethos that defines the sector.

While younger savers increasingly prefer fully digital journeys, mortgage customers are more mixed. Lenders told us they’re seeing strong demand for flexible retention options—including online product switching journeys that don’t compromise access to broker advice or phone-based support.
 

Why now?

There’s growing consensus that we’ve reached a tipping point. With more sophisticated cloud platforms available, Consumer Duty bringing “fair value” into sharp focus, and borrower expectations rising, mutuals are accelerating plans to modernise—particularly around customer retention technology.

And they’re right to. Retention isn’t just a lever for cost reduction—it’s a vital foundation for long-term independence, customer trust, and digital growth.
 

Download the full report

To explore the full insights, challenges, and technology strategies mutuals are adopting to future-proof their retention journeys, download the whitepaper here:

Download: Retentions & Technology