But what’s less obvious is how much money banks waste on technology. The fact of the matter is that it’s easy for any company to overspend. That can come from buying the wrong software; buying new software when something in the current technology stack can already perform the same function; when multiple people across the bank buy the same software two, three, four or more times; or paying monthly or annual subscription fees for technology your bank doesn’t use anymore.
This can be particularly troublesome in the financial sector. According to a report from Upslide, 68% of investment banking IT leaders believe firms are wasting over a quarter of their remaining budget on underutilized and redundant software tools. Even worse, 17% of investment banking IT leaders in the U.S. with budgets of more than $10 million reported they are losing half of their budget to underused and redundant software.
At the same time, 94% of respondents were expecting budget cuts in 2025, with about one-third facing cuts of more than 20%. They’re not taking things lightly either: 35% said they think these cuts could affect business performance, and 43% said it could affect customer service.
While investment banks are not community banks, the same kind of overspending is still a problem. Here’s how community banks can get a better idea of what they have and what they’re spending, and rein both in.
1. Address overlapping spending
You won’t realize your community bank has a tech spending or overspending problem unless you look. The first step is to take stock of what you actually have and what you’re spending on it.
“A lot of banks just don’t know,” says Charles Potts, executive vice president and chief innovation officer for ICBA. That’s in part because spending problems can grow over time, especially for banks that have recently undergone a digital transformation, expanded or both, and that may not have centralized their software spending and vendor management. “As institutions get larger or more siloed or get more fragmented … it ends up being a challenge,” Potts says.
In 2022, when Christian Ruppe joined $3.11 billion-asset Colony Bank in Fitzgerald, Georgia, as chief innovation officer and SVP, he discovered that multiple different groups were paying for separate DocuSign agreements. Colony Bank wasn’t spending a “crazy amount” of money on those separate accounts, he says, but he still reached out to the vendor to make one account that could be used across the business.
In addition to a cost saving, it was a move toward greater efficiency. “It saved a bunch of time,” Ruppe says. “Everybody was uploading their own documents and creating templates.” With one contract, standard templates could be used across the bank.
Finding multiple DocuSign accounts may seem easy, but it isn’t unless someone goes and looks for it. The same goes for software-as-a-service products that aren’t being used. “Subscriptions are problematic for everyone, especially community banks,” says Potts. Just like you may sign up for a streaming service or gym and forget about those monthly payments, community banks can fall into that memory gap, too.
Community banks can also experience a kind of inertia with their core technology, Potts adds, especially with long-term contracts, where it’s easy to forget what you’re actually paying for. Over time, “you stop using a lot of features that are inside of these robust core accounting systems,” he notes. While overspending in one area, community banks may also be underusing technology they already have.
68%
of investment banking IT leaders believe firms are wasting over a quarter of their remaining budget on underutilized and redundant software tools.
Source: Upslide
2. Avoid the pitfalls of unfit software
Picking the wrong software can also lead to overspending and frustration. In 2019, $2.3 billion-asset Texas First Bank in Texas City, Texas, established an innovation plan. A major part of that project involved the bank’s initial investment in a software platform for loan products about 15 years ago. Chris Doyle, Texas First Bank’s president and CEO, says the bank chose a vendor and anticipated being able to launch and run the program with ease.
The exact opposite happened. “[The commercial side] was so complicated and confusing, and we didn’t approach it correctly,” he says. “We didn’t have change management then. We didn’t have a transformation officer and didn’t have a project management office.”
The community bank also didn’t include arguably the most important people in the software selection process: bank employees. The commercial program “failed miserably,” Doyle says. The bank moved along with the consumer loan platform but was unable to launch the commercial program. “We spun up the platform, and it didn’t work. So, we’d try it again, get a different team and different approach and try again and again—and it just never worked.”
It ended up being a five-year mistake, because that was the length of the contract Texas First Bank signed for something that didn’t achieve what it needed it to.
<1%
of bankers said they viewed the adoption of new or emerging technologies as “not at all important.”
Source: Conference of State Bank Supervisors
3. Conduct a software audit
An audit is a good way to spot problem areas. “Vendor management is a place where community banks can first understand and ascertain who they’re paying and what they’re paying them for,” says Potts.
An audit can also reveal what your bank might have bought and abandoned, Ruppe says. It’s not unusual for a leader to get excited about a product and buy it without having a plan for how it will be used and maintained. “Whenever that happens, the people who are expected to run the product are hearing different things from different leaders,” he says. “They don’t know what they’re supposed to be doing.”
An audit will also identify if your bank has subscriptions you aren’t using, multiple accounts with the same vendor, tech that has been abandoned and functionalities that your core system offers that you aren’t using.
“As monolithic vendor solutions grow over time, a lot of financial institutions just don’t see those features as functions they think they’re lacking,” Potts says. “They go look for something else, and maybe they go buy another product to do ‘X’ that’s already in an incumbent vendor’s solution offering.”
Community banks might also be missing built-in discounts, especially when it comes to cloud providers. According to a 2024 report by ProsperOps, which surveyed organizations representing more than $1.5 billion in annualized Amazon Web Services (AWS) computer usage, 53% of organizations do not use AWS Saving Plans or Reserved Instances, which can offer savings.
How to evaluate tech offerings
It’s easy to be dazzled by the latest and greatest technology offering. But if it’s not the right solution for your bank, it could be a waste of money at best or, at worst, complicate the jobs of the employees who are expected to use it. Here are four questions to ask when starting to evaluate a technology:
Is it easy to use?
If it’s overly complicated and not intuitive, employees won’t use it. And if it’s forced upon them, they might become frustrated and start to resent both the technology and those who are pushing it on them.Do any other community bankers use it?
You don’t necessarily need to be the guinea pig. Asking other bankers if they have experience with software or a vendor can tell you what has worked and what hasn’t before you invest.Does it offer a unique ability?
Many technologies do. But it’s also possible the same capabilities are already within your bank’s tech stack through an already-purchased product or your core vendor.Will this bring in revenue or cut down on costs?
If a technology brings in more money or makes processes more efficient to help the bank and employees work better, then it’s worth evaluating further. If not, it might not be the right fit.
17%
of investment banking IT leaders in the U.S. with budgets of more than $10 million reported that they are losing half of their budget to underused and redundant software.
Source: Upslide
4. Dedicate a team to oversee this work
Having both a software plan and a dedicated team to keep track of what is used and what is spent can help your bank stay in line. Any digital and vendor plan also needs executive buy-in to make sure the entire bank stays on target.
Colony Bank has taken a “top down” approach, with the CEO making it clear that “this is the path forward from now on. We’re going to use technology and we’re going to be modern,” says Ruppe. “When someone pushes back on something, the pushback can’t be, ‘I don’t want to use the technology.’” Instead, the conversation should be around how the team can find the best way to improve, Ruppe says.
To make sure Texas First Bank didn’t repeat the same problem it had with the previous loan platform, leadership improved their team internally and “sought out some external consultants to help us work through an innovation plan and get our team prepared for a lot of change,” Doyle says.
Community banks should also talk to other community bankers to see who helped them. Doyle says he reached out to bankers through ICBA and Independent Bankers Association of Texas (IBAT) when the community bank realized it had a major software problem. He got a recommendation for the first consultant the bank used through another IBAT member.
Doyle stresses that community banks shouldn’t be so vain as to think they can handle this work on their own. “This was a new frontier for us, and we just didn’t have the expertise to do what we’re going to do,” he says. “We needed someone who had done it before.”
Not only did outside consultants help the bank choose the technology; they also helped get employees ready to use it. “It didn’t happen overnight, but we started the journey in the right way,” Doyle says.
He notes that it’s also critical for employees to be involved in the technology process: “Be as honest and transparent as you possibly can be about how the projects are going.”
Wasted tech: a global problem
Community banks aren’t the only organizations to struggle with tech stack overspending. In a 2025 report, WalkMe, a digital adoption platform, surveyed nearly 4,000 enterprise leaders and employees and found that the average enterprise lost $104 million in 2024 due to underused technology, disjointed strategy and low adoption. Nearly half that loss—$50 million—stemmed from productivity declines caused by employee time spent grappling with technology frustrations and inefficient workflows.
WalkMe also found concerns about AI adoption and utility. The report found that 79% of executives express confidence in achieving AI transformation goals, but only 28% of employees feel adequately trained and just 25% feel they can use AI to work more efficiently.
57%
of surveyed bankers identified the adoption of new or emerging technologies as “extremely important” or “very important.”
Source: Conference of State Bank Supervisors
5. Innovate intelligently
Having concerns about overspending doesn’t mean that community banks shouldn’t be spending on new technology.
According to a 2024 study from the Conference of State Bank Supervisors, nearly all bankers surveyed identified the adoption of new or emerging technologies as important, with 12% viewing it as “extremely important” and 45% as “very important.”
Ryan Hildebrand, chief innovation officer at Bankwell in New Canaan, Connecticut, says investment is critical for staying competitive. The $3.2 billion-asset community bank takes the position that they “really have to invest in technology and not necessarily pull back,” Hildebrand says. “We can use technology to become more efficient.”
Instead of signing expensive, multiyear contracts with vendors before seeing if a technology really fits their needs, Bankwell is instead doing pilots with new technology. These pilots have “really short leashes,” says Hildebrand. They’re only trialed in limited use cases to make sure they work, bring in revenue or reduce costs.
One such pilot was with a company that uses AI to speed up small business loans for between $10,000 and $15,000 and shorten the time from application to decision from a few weeks to just a few hours. Another was with a marketing company to find potential new customers.
“[Pilots have] been really helpful to our innovation strategy,” Hildebrand says. “You’ve got to move quick and try new things.”
Throughout this process, it’s important to be in constant contact with the bank's board and to be honest with them, because no plan is going to run 100% smoothly, says Doyle. “You need to tell the board right up front you’re going to fail in certain areas of our plan and it could be costly,” he says, “but if we don’t do anything, it’s going to cost us more.”
