Level Playing Field: How Regional Building Societies Can Compete With High-Street Banks Using Open Banking SaaS

The UK mortgage market has grown sharply. Lending reached £290.8 billion in 2025, a 20.2% year-on-year increase, and 84% of new mortgage sales are arranged through intermediaries rather than direct channels (FCA, 2025). Brokers are the primary distribution force, and the lenders winning their business are those that process cases quickly, give reliable answers and consistently handle the needs of non-standard borrowers.

For the UK's regional and mutual building societies, that creates a genuine strategic challenge. The technology infrastructure of large high-street lenders (Halifax, NatWest, Nationwide) has accelerated considerably. AI-assisted document processing, automated income verification and near-instant decisions in principle are becoming standard at scale. Without equivalent data capability, smaller lenders risk appearing slower and harder to work with, even when their product range and credit criteria offer real advantages.

The good news: open banking has fundamentally changed the economics of that investment. What previously required bespoke integration projects can now be delivered through SaaS platforms with API-first architectures. Several regional building societies have already moved, and the results are compelling enough that the question is no longer whether to act, but how quickly.

Why the technology gap is narrowing

Until recently, the capability gap between large and small lenders was largely structural. Major lenders could justify seven-figure investments in automated decisioning on the back of high application volumes. Regional building societies with smaller mortgage books could not reasonably make the same calculation.

That calculus has shifted. In November 2025, SBS, whose Mortgage and Savings Suite underpins one in five UK mortgages, released its Core MSS7 update, bringing open banking payments, digital onboarding and mortgage product switches to its building society clients as standard platform features. Clients including Newbury Building Society, Scottish Building Society, Swansea Building Society and Hinckley & Rugby Building Society gained open banking capability through a platform update rather than a development project.

This is what SaaS economics looks like in practice: the investment in open banking connectivity is amortised across hundreds of lender clients rather than borne by a single institution. The smallest building society on a modern platform gains the same underlying data capability as the largest, and with it, the ability to offer a decisioning experience that matches what brokers now expect from the high street.

What the case studies show

The most detailed public evidence on open banking in UK mortgage lending comes from Leeds Building Society, the fifth-largest building society in the UK with 900,000 customers. Working with Experian's Affordability Passport, Leeds launched a live pilot with a major broker partner in January 2025. The results, reported for the Open Banking Expo Awards 2025 (which the pilot won):

• 50% of sole applicants consented to share open banking data — five times the 10% the Society expected.
• 95% of those completed the process.
• Statement retrieval fell from four days to minutes.
• Decision in Principle turnaround dropped from 24 hours to 11 seconds for eligible cases, with 80% of the DIP journey now automated.
• Broker feedback: fewer document requests, faster case progression.

The figures are instructive not just for their scale, but for their competitive implications. A DIP from 24 hours to 11 seconds is not an incremental improvement; it changes broker behaviour. Cases that previously sat in a queue now return before the client meeting ends. Brokers who experience that response time route cases to that lender preferentially.

In November 2024, Hinckley & Rugby Building Society (HRBS) went live with LendingMetrics' OpenBankVision (OBV), replacing the manual paper bank statement review entirely. OBV connects to 99% of UK banks via secure APIs, delivering real-time, categorised transaction data that gives underwriters a structured, consistent view of each applicant's income and expenditure.

Laura Sneddon, Head of Sales and Distribution at HRBS, described the impact: "OpenBankVision empowers us to make faster and more informed lending decisions, which in turn benefits brokers by reducing application timeframes and enhancing overall service levels."

HRBS also cited fraud prevention as a material benefit. Open banking data enables undisclosed credit commitments to surface automatically, a category of application risk that is genuinely difficult to catch with manual review alone, and one the FCA has flagged as an ongoing concern in its Consumer Duty reviews of affordability practice.

The regulatory case: CP26/18 and Consumer Duty

The FCA's Consultation Paper CP26/18, published on 9 June 2026, is the regulator's most significant review of responsible lending rules in years. Its central objective: giving borrowers with variable or irregular incomes, older borrowers, and those with past credit difficulties a better chance of accessing an affordable mortgage.

These are precisely the borrower groups where regional building societies have traditionally been most active: specialist criteria, manual underwriting flexibility and a willingness to consider the full picture rather than just the credit file. The FCA is explicit: it supports the use of "alternative data from sources such as open banking to build a fully rounded picture of borrowers' circumstances."

Consumer Duty adds further weight. The FCA has already found poor practice in affordability assessments, including unrealistic expenditure assumptions and inadequate consideration of committed costs such as childcare. The Duty requires evidenced good outcomes, not just compliant processes. Open banking data provides, by design, a structured and auditable record of what was known about a borrower at the point of assessment, making the Consumer Duty case easier to demonstrate and harder to challenge.

For building societies processing a disproportionate share of complex cases, this is both a compliance signal and a commercial opportunity. Getting there first, while the regulatory expectation is being shaped rather than enforced, is materially better than retrofitting capability under pressure.

How to evaluate your options

For a building society technology team evaluating open banking in 2026, three broad paths exist:

1. Build a direct API integration with open banking providers. Highest flexibility, highest cost and time-to-market, requires internal capability to maintain long-term.
2. Use your core platform's native open banking features, as available now through SBS MSS7. Lowest marginal cost, but configuration may be limited. Best suited to standard use cases.
3. Integrate a specialist SaaS affordability layer via API alongside your existing case management system. Typically the right answer for lenders handling complex or non-standard cases who need configurable categorisation, lender-specific output formats, and a methodologically transparent approach that holds up under compliance review.

The third option deserves particular attention. A general-purpose platform module categorises transactions consistently, but may not flag the signals most relevant to your credit policy: gambling spend, undisclosed loan repayments, irregular income cycles. A purpose-built affordability tool can be configured to match your specific criteria and produce reports in exactly the format your underwriters need.

Questions worth asking any provider:

• How granularly does the system categorise income and expenditure?
• What consent rates do existing clients see in live deployments?
• How are non-consenting applicants handled in your process?
• What does the lender-facing output look like, and does it require manual interpretation?
• How long does integration actually take?

The window for competitive differentiation

The building societies that have moved earliest, Leeds, HRBS and others in the SBS network, are reaping real benefits: faster broker turnaround, fewer back-and-forth document requests and an affordability process that is more defensible under regulatory scrutiny.

The window for differentiation does not stay open indefinitely. As open banking becomes standard practice rather than a pilot project, the advantage shifts from early movers to those who have had the longest to refine their implementation. A building society that begins integration today will have a year or more of operational learning before the market catches up.

For smaller lenders competing in a market dominated by larger institutions, the most durable competitive advantage is not rate; rates can be matched in hours. It is the quality and speed of the decision process, and the experience brokers have when they place a case. Open banking changes both.

Join the broker pilot

Moxim collates a client's income, spending, credit, identity and property data into a clean affordability assessment the moment they share access, removing manual data entry and document chasing from case prep. We are currently onboarding pilot broker partners.

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The budget question every board will ask

For a building society with a mortgage book in the hundreds of millions rather than tens of billions, the honest question a board will ask is affordability, not of the borrower's case but of the technology itself. A bespoke integration with a major open banking data provider, scoped and built in-house, can run into six figures before it produces a single affordability report; that is precisely the calculation that priced smaller lenders out of this capability for years.

A SaaS affordability layer changes that calculation by design. Deployment measured in weeks rather than a multi-year IT roadmap, pricing that reflects case volume rather than a fixed enterprise licence, and a methodology that does not require a data science team to maintain internally; these are the terms on which a regional building society can genuinely compete on decision quality, not just on rate.

There is a member-facing dimension to this too, distinct from anything a national bank can credibly offer. A regional building society's existing member base tends to be locally concentrated, often known to branch staff, and disproportionately likely to include exactly the non-standard cases (self-employed tradespeople, local landlords, older members drawing a mix of pension and rental income) that benefit most from a fuller financial picture than a credit file alone provides. Serving that base well with faster, evidence-based decisions is not just a competitive response to the high street; it is a natural extension of the relationship-led lending regional societies already claim to offer.

Sources

1. FCA Mortgage Lending Statistics 2025 — gross mortgage lending £290.8bn (+20.2%); intermediaries arranging 84% of new mortgage sales.
2. FCA CP26/18: Mortgage rule review — supporting first-time buyers and underserved consumers, 9 June 2026.
3. Experian / Leeds Building Society, "How Open Banking is reshaping mortgage lending at Leeds Building Society", Open Banking Expo Awards 2025 winner.
4. Hinckley & Rugby Building Society, "Society adopts Open Banking to speed up mortgage application process", 13 November 2024.
5. SBS, "SBS Introduces Open Banking Capabilities to UK Building Societies and Banks" (Core MSS7), November 2025.
6. FCA, Consumer Duty focus areas and affordability review findings.
7. LendingMetrics, OpenBankVision product.