Hidden Costs of Legacy Tech: UK Banks Shelling Out £3.3bn Annually on Managing Core Systems

New SaaScada research shows core banking management and maintenance consumes nearly a quarter of banks’ IT budget – leaving little room for innovation

London, 18 September 2025 – Data-driven core banking engine, SaaScada, today released a new report – The Great Cloud Con: From Cloud-Washed Imitation to Cloud-Native Innovation – exposing the spiralling costs and failures of outdated core platforms.

Based on a survey of 150 UK banking innovation leaders, the research reveals that banks spend an average of 24% of their IT budget, equating to £3.3bn annually, just to maintain their core systems. More than half (53%) describe their core as a “bottomless pit” of wasted money and time, while 65% say core banking is riddled with hidden costs. A further 59% feel infuriated at having to pay third parties just to make minor feature changes to their own core banking system, with banks spending on average £1.5 million each year on third-party fees. 

Yet despite this significant expenditure, core systems are buckling under pressure. Nearly seven in ten banks (68%) say growing demand for digital services is putting a strain on their infrastructure, with half of banks admitting their core banking system simply can’t keep up. More than half (54%) say the “cracks are widening” as costs, failures and customer frustrations increase. Key issues include:

• Outages and downtime: 53% have experienced core-related outages and downtime, with 42% facing higher IT and recovery costs to fix system failures.
• Transaction failures: 38% report delays in customer transaction notifications, 33% have had transaction failures, and 28% have seen duplicated, lost or inaccurate transaction data, – leaving customers exposed to fraud.
• Regulatory scrutiny: Nearly a quarter (22%) have received warnings or fines from regulators for failing uptime and data protection requirements.

Steve Round, President and Co-Founder, SaaScada, added, “The ongoing costs of managing a core banking system are a severe drain on banks. For some, it could potentially be “game over” if the status quo continues. Legacy core systems are breaking, and things will only get worse. In extreme cases, the combined expense of managing staff and the technology stack have almost doubled the cost of core banking installation projects, at the same time as systems are creaking and breaking. Banks are right to be feeling angry and ripped off.”

Is core banking co-existence the answer?

To reduce the spiralling costs of managing core banking systems and minimise risks associated with core banking modernisation, most banks (82%) have now adopted a multi-core approach. By running a new core alongside the old, banks are finding they can modernise faster without exposing themselves to wholesale disruption. The research finds:

• 76% say a multi-core model eases regulatory reporting and simplifies operational management.
• 73% believe it’s the safest way to reduce reliance on legacy systems.
• 72% think it makes it easier to integrate technologies like AI without disrupting existing systems.

Steve Round continued, “With millions of customers relying on them, banks cannot afford to risk even a moment of disruption. Ripping out historical systems wholesale is like performing open-heart surgery while the patient is still walking about. The smarter route is dual-core co-existence – where banks can innovate and migrate in parallel without interrupting service or introducing new risk. But this only works if one of those cores is truly cloud-native. Otherwise, you’re not modernising, you’re just running two cores on different infrastructure, creating complexity with none of the benefits.”

If you’re interested in the full findings of this research, you can read the full report here.

Methodology

The data was gathered in March 2025 from 150 UK-based business heads/C-Suite staff at retail and business banks who are responsible for product innovation (e.g. Heads of Digital Transformation/CTOs/Chief Innovation Officers/Heads of Innovation/CEO). The banks had a balance sheet size of £0.5Bn – £100Bn.

About SaaScada

SaaScada is a data-driven core banking platform that uses cloud-native technology to make it easier, cheaper & faster to build all types of feature-rich financial products.

SaaScada’s architecture delivers lightning-fast data and reporting flexibility, and the Product Sequencer provides unrivalled product configurability. Together, they enable institutions to vastly reduce traditional development cycles, drive innovation, deliver exceptional customer experiences and stay ahead of the competition.