Why Most Small‑to‑Mid Financial‑Services Firms Resist Digital Transformation

There are many Owners of SMEs who are not going to shell out millions of dollars of their own capital for new digital systems and integrations to replace or connect to their existing legacy systems like :

• Windows XP

• Windows 7 or 10

• Cobol or linked based systems (more typical of larger SMEs)

These SME businesses are typically:

• Twenty or more years old and

• the owners are going to either sell outright  or 

• transfer their businesses to the next generation.

✅ The risk of replacing existing systems that work.

Owners of many SMEs are unlikely to invest the time, money and uncertainty to carry out digital transformation in the next 3 to 5 years.   

The risks of replacing legacy systems are well known and documented.  Large banks are still using legacy systems that are over forty years old.  

✅ Good returns are generated by legacy existing systems, so why change anything?

Computer and IT operations managers will say things like ‘Windows XP is a reliable and proven operating system. All bugs have been found and patched up, making windows XP resilient and reliable.’

🟧  The value of legacy existing systems is high.

These systems have fairly fixed costs, and are reliable systems which enable increased cashflows.

✅ Regulatory Clarity on digital securities, tokens and commodities.

• The U.S. is about to publish clarity on digital assets in August 2025.

• Restrictions have been removed preventing US banks from dealing in Crypto and digital assets.

The global financial system is on the verge of a step change when the U.S. introduces clarity and a digital assets framework. Financial institutions will have clear definitions on what digital tokens, commodities and securities are. Positive regulatory clarity will enable board with fiduciary duties to act on their clients bests interests.

✅  The uncertainty of digital integration projects.

During the period when British Airways Engineering had just transitioned into a privatized operation and was beginning to service third‑party customers, a typical maintenance workflow unfolded as follows:

A British Airways shift manager—often with three decades of experience—would first inspect the incoming aircraft. That initial inspection added to the ~100,000 job cards and tasks already anticipated for an airframe that had not undergone a check within the standard interval. Pricing for “maintainable contraband” (the catch‑all category covering parts, repairs, and discrepancies) was commonly estimated at approximately 150,000 job cards.

By the time the heavy maintenance check concluded six weeks later, the tally had risen to roughly 300,000 completed job cards. As the airframe was disassembled and engineers delved deeper into the project, additional work inevitably surfaced. British Airways—operating as a large, multinational carrier—was able to absorb the resulting cost overruns and negotiate contingency payments with customers to cover the expanded scope.

Owners of SMEs of cannot afford to deploy their hard earned capital into IT projects of unknown scope.

🟧 It is well known that all digital integrations are not the same.

As buyers of IT owners know, all IT systems are not created equal. All APIs are also not the same. Some banks have APIs that are connected to other APIs which are linked to another bank or Payment Service Provider (PSP). Some APIs have not had messaging implemented properly meaning digital payments and digital security functions will not work properly.

✅ The global financial system is a network of uncertain connections.

·      Banks are connected to banks by other intermediary banks

·      Some Fintechs are often directly connected to banks and other FIs

·      Some Fintechs connect to banks via APIs.

✅ The nature of banks with legacy existing systems that are more than twenty years old and new Fintech’s less than 7 years old

• There are many banks that have developers who do not have experience working with digital systems.

• There are many developers within Fintech’s and digital firms that don't have the right amount of experience with bank messaging protocols. 

What this means is that digital integration in financial services can yield uncertain or unexpected results. Owners of SMEs cannot afford to pay for unescorted outcomes driven by omissions of digital integration layers.

🟧 Low cost digital transformation for SMEs.

Owners of regulated financial services SMEs need digital transformation that is;

1. Low cost

2. Low risk 

3. Includes the capability to integrate with other Financial Institutions.

Owners of regulated financial services SMEs do not have large piles of cash to take on endless digital transformation projects that take years. SMEs need digital integration engines that;

• cap the uncertainty and project risk. 

• contain messaging layers that enable direct connection with banks.

• have been developed by people with experience of legacy and digital systems.

Whitenoise is a digital integration engine that has been designed and built specifically for SMEs. to avoid the risk posed by the typical large-scale approach to digital transformation (which is only suitable for larger, multinationals). Whitenoise can reduce the project risk and upfront cost of integrating legacy systems with digital platforms.