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Banking tech upgrades: Why another investment delay would be costly

Mary Ellen Biery
July 9, 2025
0 min read
board members around a conference room table

What history shows about postponing technology improvements 

Delaying banking tech purchases can leave banks and credit unions flat-footed when operational demands or risks surge.

Key topics covered in this post: 

The bigger threat: Slowdown or old technology & processes? 

The U.S. economy may or may not enter a recession this year — economists are still divided. But for many banks and credit unions, the bigger threat isn’t a slowdown. It’s postponing banking tech upgrades yet again.

Financial institutions have been here before. Some paused technology investments during the pandemic and again amid recent interest rate swings. But delaying once more, especially when pressures on teams and systems are only growing, could leave banks and credit unions flat-footed when operational demands or risks surge.

Rather than being a cautious move, postponing tech improvements can risk a financial institution’s ability to drive value and strategic returns. History offers multiple warnings about what happens when organizations deprioritize critical tech infrastructure for too long.

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Outdated technology fails suddenly and publicly

Air traffic control issues, including delays and flight groundings, have made Newark Liberty International Airport “a beacon of serious, widespread issues in the U.S. network of aircraft communications and tracking technologies, which is decades behind the times,” Investor’s Business Daily recently reported.

The problems, which haven’t been limited to Newark, are the result of years of delayed upgrades to technology the FAA relies on daily to manage air traffic safely. Some of the FAA’s most essential systems still operate on legacy architecture, and breakdowns are occurring during heavy travel periods despite efforts to accelerate technology change now.

Old legacy systems are also a major source of vulnerability in health care, an industry that accounts for a quarter of data breaches across all industries, according to a study published in 2023. A lack of investment, legacy systems, and human error allow cybercriminals to exploit health care systems, access information, and sell it on the dark web.

These examples are powerful reminders for community financial institutions: Outdated systems might work today, but they may not survive the next stress, whether it’s a wave of demand, a fraudster, or a new credit risk. And when outdated tech systems fail, the consequences are felt immediately and publicly.

 

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Risks to growth from delayed tech investment

On the surface, it might seem reasonable to push out banking technology purchases for belt-tightening efforts when the economy looks uncertain in order to minimize risk to the bank or credit union. But consider how operational and financial risks can emerge once the outlook strengthens in that scenario.

For example, when interest rates drop, businesses that have postponed expansions may quickly return and be eager to borrow. A community bank or credit union could find itself flooded with loan requests. That would be a welcome opportunity, but that surge can create serious strain without a modern loan origination system that supports automated workflows and role-based access.

Borrowers expect fast answers. Teams need real-time visibility and banking intelligence across the pipeline. Institutions that rely on manual reviews, spreadsheets, or outdated lending platforms will struggle to keep up. The potential growth can quickly turn into a backlog or missed opportunities.

Similarly, as the loan portfolio grows quickly, it can be more difficult to track and uncover credit risks without efficient loan review or to balance funding needs and liquidity requirements without strategic asset/liability management systems.

According to Forrester data, firms pursuing technology-driven innovation grow three to four times faster than industry averages. Institutions that begin multi-year efforts and spending to make digital technology a priority recognize that digital acceleration is a way to:

  • Permanently reduce the cost of doing business
  • Improve customer and employee experience
  • Outperform competitors during a looming downturn

Why tech upgrades amid uncertainty make sense

Community financial institutions don’t need sweeping digital transformations. But investing in focused, scalable SaaS solutions — for lending, portfolio risk, asset/liability management, or anti-money laundering (AML/CFT) compliance — can reduce risk and drive efficiency right away.

Systems are bound to fail at the worst time, and even back-office failures can directly affect customer experiences. Viewing technology as a near-term cost instead of a longer-term investment that can drive growth will ultimately hurt the organization.

Selecting the right banking technology or technology upgrade can help:

Permanently reduce the cost of doing business.

Automated workflows cut down on repetitive tasks, freeing staff to focus on analysis and customer support without adding headcount.

Improve customer and employee experiences.

Faster loan decisioning, fewer touchpoints, and reduced internal friction bolster relationships on both sides of the desk.

Strengthen competitiveness during uncertainty.

Institutions that can pivot quickly — whether managing credit risk, adjusting interest rate strategy, fighting a new type of fraud, or scaling to meet new demand — are better positioned to outperform.

Position yourself to win.

Banks that embraced technology before COVID made more Paycheck Protection Program (PPP) loans and attracted more customers outside their core market, research shows. Implementing new processes to increase efficiency when activity is sluggish positions banks and credit unions to handle the surge in activity that accompanies an economic recovery – or the next crisis.

After all, executives and their staff may be so busy driving and executing deals or otherwise putting out figurative fires that they will lack time to vendors and initiate technology changes to help them manage at scale

Evaluating tech solutions

As financial institution leaders consider technology spending, remember the lessons from the FAA, healthcare, and other examples of delayed modernization. Leaders can also narrow their focus to concentrate on vendors set up to meet their needs and provide the appropriate return on investment.

Here are seven considerations when evaluating a new lending system:

  1.  Can it be implemented with limited internal resources? Smaller financial institutions often have small staffs, so implementation requirements are important in any decision.
  2.  Does the loan system make it easy for support staff with more generalized roles to perform different functions or to fill in when needed?
  3.  Can the financial institution use standard templates or reports immediately, or will it have to make substantial adjustments to get the solution up and running for its specific needs?
  4.  Will it support the institution’s loan categories, such as agriculture or CRE?
  5.  Can the lender maintain control of the relationship throughout the lending process? For example, many community financial institutions want the flexibility to either have a lender start a loan request in the branch or let the customer enter key information and documentation at their convenience. Or they may want the opportunity for staff to review loan applications kicked out by an automated decisioning solution.
  6.  Does the software give visibility across lending, credit, and compliance?
  7.  Will the lender outgrow the system or grow with the institution?

Continuing or pursuing technology investments regardless of the economy will ensure the community and financial institutions thrive.

Financial institutions and other types of companies or organizations never expect delayed technology spending to create vulnerabilities for them or their clients. But this happens when systems are repeatedly stretched past their limits and when customer expectations evolve.

Planning, budgeting, and proactive steps to invest in banking technology will protect banks and credit unions and allow them to serve their clients and communities regardless of what comes next, whether it’s a recession, a spike in loan demand, or changes in regulatory expectations.

Respond quickly and efficiently to the needs of customers.

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About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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