Posted on: February 3, 2026
The Five Hidden Costs of Legacy Finance Systems in Building Societies and Banks
Legacy finance systems are often the silent obstacles to progress in building societies and banks, particularly where finance, risk and regulatory reporting rely on disconnected processes. While they may seem to function “well enough,” these systems quietly generate operational inefficiencies, increase risk, and drive up costs. Many of these expenses are not immediately visible—they accumulate over time, making them easy to overlook.
As the financial services sector faces ongoing regulatory changes, tighter margins, and a growing demand for rapid, accurate insights, modernising finance systems is becoming increasingly unavoidable. Below are five hidden costs that every CFO, CRO, and COO should recognise.
- The Cost of Manual Workarounds
Legacy systems frequently require staff to use spreadsheets, manual reconciliations, and journal entries to compensate for system limitations. These workarounds result in:
- Significant staff hours lost each month.
- Increased overtime during reporting cycles.
- Greater reliance on individuals with unique system knowledge.
- Single points of failure when key staff depart.
Manual processes, while sometimes necessary, become a costly substitute for modern automation—especially in already stretched teams.
- Reduced Data Quality and Regulatory Risk
Outdated systems often struggle to integrate data across finance, risk and treasury functions, creating challenges for regulatory reporting and internal management information (MI). This fragmentation leads to:
- Higher reconciliation risk.
- Discrepancies between regulatory and internal management information.
- Challenges explaining data movements to regulators and auditors.
- Limited transparency over data lineage.
With regulatory demands increasing—from Basel 3.1 and associated regulatory reporting to more granular data submissions—poor data quality becomes a significant, if silent, compliance risk.
- Slower Decision-Making and Opportunity Cost
Modern finance teams are expected to deliver actionable insights, not just numbers. When systems cannot provide timely, coherent information, decision-makers must rely on:
- Outdated data
- Lagging indicators
- Incomplete visibility of risk and liquidity positions
The opportunity cost of delayed insight is substantial. Institutions may miss chances to respond to market changes, optimise balance sheets, or improve profitability—gradually eroding competitiveness, especially against agile challenger banks.
- Higher Maintenance and Support Overheads
Older systems rarely offer predictable costs. IT teams often spend considerable resources:
- Maintaining bespoke integrations
- Patching ageing code
- Supporting outdated databases
- Managing on-premise hardware
- Retaining legacy skillsets
Even if licensing costs appear low, the total cost of ownership rises sharply when factoring in maintenance, support, and end-of-life risks—often underestimated until a failure occurs.
- Inhibiting Innovation and Future Growth
Perhaps the most significant hidden cost is the limitation on innovation. Legacy systems make it difficult to:
- Adopt new regulatory frameworks.
- Deploy new products or services.
- Respond quickly to customer expectations.
- Leverage advanced analytics or AI.
Modern finance and risk architectures are built for evolution. In contrast, legacy systems lock organisations into outdated processes and restrict strategic change.
Moving Forward: The Case for Modern, Integrated Technology
The cost of inaction is rising. Building societies and banks that modernise their finance, risk, and integrated regulatory reporting systems benefit from:
- Consistent, high-quality data
- Automation that reduces manual workload
- Lower operational risk
- Faster, more accurate decision-making
- A platform ready for future regulatory and commercial change
Institutions making the greatest progress are those replacing legacy systems with integrated, purpose-built solutions. Vendor partnerships—grounded in sector expertise and ongoing collaboration—are proving critical to successful transformation.
Discover more: Turning insight into action
Recognising the hidden costs of legacy finance systems is the first step. The next is understanding how better integration across finance, risk and treasury can improve regulatory reporting and internal management information (MI).
At Whistlebrook, we support building societies and banks in modernising finance, risk and regulatory reporting through an integrated software platform designed specifically for regulated financial services.
If you would like to explore how this approach could help address the challenges outlined in this article, we would welcome an initial conversation.
Get in touch:
enquiries@whistlebrook.co.uk | +44 (0)1480 309550.