Co-operative Financial Services (CFS) and building society Britannia could use technology to help them win business from struggling competitors.
The combination of disenchantment with the big banks and the addition of large number of branches gives the firm an opportunity to win customers.
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The technology CFS uses can help Britannia, while the additional branch coverage of Britannia can help CFS, said Bob McDowall, analyst at Towergroup.
"They must ensure that the technology that CFS has is integrated into the Britannia branch network," added McDowall.
With the major banks cutting costs and being hit hardest by the market turmoil there is an opportunity for smaller banks to move up the UK banking hierarchy. McDowall said while other banks hold back discretionary spending, this merged group, which has not been impacted by the credit crunch to the same extent as some major banks, can invest in new customer-facing technology.
"This is an opportunity to make changes in technology use to win business rather than cut costs," said McDowall. "There is an opportunity because people are nervous about working with some of the other major banks."
"I do not think they will have to invest in leading-edge technology, but rather add some features at the front end and benefit from the bigger branch network and customer disenchantment."
The coming together of the country's second biggest building society and CFS with its corporate banking, insurance and investment banking expertise will also save £60m in costs by the third year of the merger.
The merged bank is already billing itself up as a "super-mutual" offering itself as an alternative to shareholder- and government-owned banks. The combined business will have £70bn of assets, nine million customers, more than 12,000 employees and more than 300 branches.
CFS and Britannia have avoided the impact of the credit crunch because Britannia is a mutual and CFS is an ethical bank, which takes fewer risks.
Britannia said the talks were not taking place as a result of the economic turmoil, when the talks were first revealed. Britannia CEO Neville Richardson said unlike government brokered takeovers such as Lloyds TSB's acquisition of HBOS, or Santander's takeover of Bradford & Bingley, the companies do not need to merge.