The Banking Transformation Debacle: A Billion-Pound Failure in Slow Motion
The banking industry’s so-called “digital transformation” is no longer just failing—it’s becoming a scandalous waste of money. Despite funnelling billions into modernisation efforts, most banks remain bogged down in outdated systems, bureaucratic stagnation, and culture wars that prevent meaningful progress. What’s worse, few in the industry seem willing to admit it.
For all the hype, the reality is grim: transformation efforts are often vanity projects—glossy apps and flashy announcements masking the same inefficient infrastructure underneath. Banks are still tied to ancient COBOL-based core systems that were never designed for real-time digital banking. Instead of ripping them out, banks keep piling new tech on top, creating Frankenstein-like IT architectures that are brittle, incoherent, and extremely expensive to maintain.
The numbers are damning. According to industry research, over 70% of banking transformation projects go over budget. Many double their original costs, with little in return. Banks now spend north of 10% of revenue on IT—yet most of this vanishes into sunk costs and consulting fees, not innovation. The dirty secret? Much of this transformation is little more than survival—patching holes, not leaping forward.
Part of the problem lies with leadership. Boards and executives are not always equipped with the technical insight needed to assess digital initiatives effectively, approving outsized budgets without understanding what they’re paying for—or what success even looks like. Meanwhile, digital teams are siloed, underfunded, or misaligned with the business strategy entirely. The result? Endless pilot programs, “innovation labs” that lead nowhere, and bloated vendor contracts with little oversight. It’s an org chart pretending to be a technology roadmap.
Fintech start-ups—scrappy, agile, and unencumbered—are running circles around traditional banks. They release new features in weeks, while legacy institutions take quarters just to approve a requirements document. Ironically, these giants spend more just updating legacy code than a fintech spends building an entire platform.
The bottom line: banking transformation isn’t just failing, it’s being mismanaged, misunderstood, and sold as something that it’s not. Until banks are forced to face the full extent of their dysfunction—from broken tech to failed leadership—this “transformation” will remain a monument to inertia, waste, and delusion.
