How poor maintainability drains 2025 IT budgets in finance
In this article
Summary
Our Finance signals 2025 report looks at the impact of software maintainability on cost, efficiency, and innovation in the Financial Services Industry (FSI).
While modernization is a key priority, 36% of FSI systems fall below our recommended maintainability rating, leading to higher costs and operational inefficiencies. And the consequences of poor system quality are significant. A single system with poor system quality can drive up to €2.25 million in additional maintenance costs per year!
Meanwhile, organizations with 4-star maintainability systems can unlock 30% more innovation capacity, freeing up resources to focus on value-driven initiatives instead of just keeping systems running.
The takeaway? Prioritizing software maintainability is both a technical and strategic decision.
Read the full report to explore how FSI organizations can optimize costs and drive innovation.
Introduction
For financial institutions, cost optimization is a top strategic priority. Yet one major factor often goes overlooked: software maintainability.
When we talk about maintainability, we don’t just mean fixing bugs. We’re talking about the ease with which you can repair, improve, and understand the source code of your software. Why? Because poor maintainability leads to higher operational costs, slower innovation, and increased compliance risks.
This issue is particularly urgent as banks face mounting cost pressures. According to the World Retail Banking Report 2025, retail banks are prioritizing deposit growth and aiming to lower funding costs in response to reduced money supply and higher interest rates.
At the same time, financial institutions are ramping up investments in generative AI and digital transformation. Their 2024 report found that 70% of bank CXOs planned to increase digital transformation investments by up to 10% in 2024. But what happens when IT budgets are weighed down by inefficient legacy systems?
It may be surprising to learn that, according to Gartner, an average of 70% of IT budgets go toward maintenance rather than innovation. This means that while financial institutions are eager to modernize, the bulk of their IT resources are being drained by poorly structured, difficult-to-maintain software.
With customer expectations rising and digital banking taking over, financial institutions can’t afford to let maintainability issues slow them down. Addressing this challenge is the only way to build a more agile, secure, and future-proof IT foundation.
What is maintainability and why is it important?
As defined by ISO 25010, maintainability refers to “The degree of effectiveness and efficiency with which a product or system can be modified by the intended maintainers.”
A simpler way to think about it is to imagine a software system like a house. If it’s built with a solid foundation and straight, sturdy walls, making changes like hanging a painting, adding a window, or even building an extension is simple. You don’t need to reinforce weak spots or work around crooked structures because everything is well-constructed from the start.
Maintainability is what makes this possible. It determines how easy it is to fix, improve, and understand something. And the same principle applies to source code. Well-structured software is easier to modify, scale, and maintain over time.
This is why non-functional requirements like maintainability are so crucial to software quality. Focusing only on functional requirements addresses less than 10% of potential issues. Without maintainability built in, even well-functioning software can become costly and difficult to manage over time.
Over a third of FSI systems fall below our recommended maintainability rating
Our benchmark data shows that 36% of FSI systems fall below our recommended maintainability rating, leading to higher maintenance costs and lower operational efficiency.
Lower maintainability leads to higher costs and lower innovation capacity
In the FSI sector, a 3-star system requires 1 (0.7) more full-time equivalent (FTE) per system per year than a 4-star system, while a 2-star system demands 14 additional FTEs annually per system compared to a 4-star system. With an estimated yearly wage of €150,000 per FTE, these costs can skyrocket quickly.
For instance, consider an FSI organization with 100 systems rated 3 stars and 50 systems rated 2 stars:
- 100 3-star systems → 0.7 FTE x €150,000 x 100 = €10.5 million per year
- 50 2-star systems → 14 FTE x €150,000 x 50 = €105 million per year
That’s a total of €115.5 million annually in additional costs just due to poor maintainability.
For organizations managing hundreds of systems, poor maintainability can be a major financial burden, limiting innovation and driving up operational costs year after year.
Systems with a higher code quality score gain 30% extra capacity for innovation and improvement
FSI organizations with higher-maintainability software gain a 30% boost in innovation capacity. Why? Because when less time is spent fixing existing systems, more resources can be allocated to developing new products, enhancing customer experiences, and driving digital transformation.
Earlier research has shown that:
- Systems with a 4-star maintainability score gain 30% more capacity for innovation and improvement compared to 3-star systems.
- 2-star systems face a 40% capacity shortage, as teams spend more time firefighting issues rather than innovating.
Industry pressures on cost reduction
The financial industry is under mounting pressure to reduce costs while maintaining innovation and compliance. According to KPMG research, banks aim to achieve 10% cost efficiencies within 12 months, with targets increasing to 20-30% over the next three years.
But achieving these goals is easier said than done.
A survey by Infosys found that only one in four banks achieve the expected returns from their IT cost optimization programs. One of the biggest challenges? The complexity of IT environments. Many banks operate a patchwork of legacy systems that have evolved over decades without proper consolidation or modernization.
Beyond technical hurdles, cultural challenges also play a role. KPMG research highlights that 82% of banking leaders struggle with embedding a cost-conscious mindset throughout their organization, despite significant investments in technology. In many cases, cost-reduction efforts don’t align with broader strategic goals, making it difficult to sustain long-term efficiencies.
Barriers to cost optimization
So, what’s preventing banks from optimizing costs effectively?
1. Outdated systems create inefficiencies
Many banks still layer new systems on top of outdated ones, rather than replacing them. This increases complexity and makes cost-saving efforts harder to implement.
2. Short-term growth vs. long-term efficiency
Cost optimization often takes a backseat during periods of growth. With shifting economic conditions, financial institutions struggle to balance immediate expansion with the need for sustainable cost reductions.
3. Resistance to change
Many cost-cutting initiatives focus solely on reducing expenses rather than improving efficiency. However, real success requires a mindset shift: recognizing that modernization leads to long-term savings and a stronger return on investment.
Without addressing these barriers, banks will continue to struggle with cost pressures while missing opportunities to enhance innovation and efficiency.
Understanding the total cost of ownership (TCO) of software
Despite IT budgets being under scrutiny, quantifying the true Total Cost of Ownership (TCO) of software remains a challenge. Many organizations fail to account for the ongoing costs of maintaining and operating software long after its initial development.
Just like an iceberg, the visible cost of software is only a fraction of the total expense. Beneath the surface lie ongoing costs such as maintenance, feature enhancements, code refactoring, and opportunity costs, many of which are often overlooked in IT cost-reduction strategies.
According to Gartner, a staggering 70% of software costs are typically spent on Keeping the Lights On (KTLO): routine maintenance that doesn’t contribute to innovation or business growth.
Beyond maintenance, technical debt is another major contributor to software TCO. CIOs estimate that 20-40% of their IT budget is spent addressing technical debt, amounting to an estimated $1.52 trillion globally.
Cutting corners on non-functional requirements such as maintainability and security leads to fragile, inefficient systems that are costly to maintain and prone to security vulnerabilities.
The path toward sustainable cost optimization
To effectively lower TCO, FSI organizations need to adopt Software Quality Management (SQM), a structured approach to ensuring software is built to last.
By prioritizing high-quality, maintainable software, organizations can:
- Reduce long-term IT costs while increasing flexibility.
Accelerate time-to-market for new features and services. - Enhance developer efficiency and retention by eliminating the frustration of working with outdated systems.
- In short: High-quality, maintainable software is much more than just an IT best practice, it’s a financial imperative.
