UK banks take an average of 65 days to update base rates

A recent study of 150 UK banks has found that it takes an average of 65 days to implement a base rate change and more than six months to introduce a new feature, highlighting a significant gap between ambition and operational reality in UK banking innovation.

The research, conducted by cloud native core banking provider SaaScada, examined the reasons behind the sector's slow pace of change and the challenges banks face in adapting to customer expectations and market pressures.

The study revealed that while many consumers expect instant changes in rates, banks' mortgage rate adjustments typically take effect only from the first of the month following a Bank of England announcement, often several weeks later. Among the banks surveyed, nearly a quarter (23%) reported taking up to three months or more to update all relevant offerings after a base rate change.

Pressure to innovate in the banking sector is intensifying. According to the study, 69% of innovation leaders stated that demands for faster innovation have increased over the past year, driven by evolving customer requirements, rising competition, and the desire for growth diversification. Despite this, 90% of respondents admitted that they are being held back by various obstacles that slow their ability to keep up.

One of the central findings is that testing delays, including issues with sandbox environments, are the principal obstacle to quick innovation. Furthermore, 71% of banking leaders said that a risk-averse culture and compliance-related red tape make experimentation almost impossible within their organisations.

Legacy core banking systems continue to be a major barrier. The report notes that 62% of those surveyed believe outdated core platforms are "choking" their business, inhibiting the pace at which they can deliver new features and respond to market changes. Almost three-quarters (73%) feel that, unless the industry addresses its innovation challenges, it will struggle to attract and retain the talent it needs.

A clear disconnect between strategic leadership and those involved in day-to-day product development was also identified. While strategy leaders, such as those in C-suite positions, estimate that launching a new product can take around 70 days, staff directly involved with product development say the process takes an average of 176 days. This disparity points to a lack of understanding at the senior level about the practical challenges and delays on the ground.

The study also underscored growing frustration with the speed of change. More than one in five banks (22%) can implement base rate changes in under a day, but for the majority, it still takes months. A third of banks (33%) can roll out new features or products in a matter of weeks, yet around 10% take over six months to do so.

This slow pace is perceived to be damaging for business. Eighty percent of respondents say sluggish innovation is hampering operations, leading to wasted resources, difficulty in attracting talent, and weakening competitive advantage. A total of 73% of participants believe the industry will not be able to attract the best talent unless its approach to innovation improves.

Steve Round, Co-Founder and President at SaaScada, commented, "The last few months have shown what a difference a day can make. In a world of tariff shocks, geopolitical turmoil and volatile rates, months-long innovation cycles are no longer acceptable. Slow movers don't just risk falling behind – they risk being dropped by customers and losing wallet share to more agile players."

The challenge of replacing legacy core banking platforms was also highlighted, with 63% expressing concern that full system replacement is prohibitively costly and risky. However, 79% agreed that the industry needs to reduce the risks associated with core migrations or risk being left behind. A majority (82%) want a safe and cost-effective avenue for experimentation and testing new products, while 61% support a transition to a pay-by-the-hour, consumption-based model for core banking services.

Nelson Wootton, Co-Founder and CEO at SaaScada, stated, "In every other facet of the financial services industry, solutions follow a consumption-based model, letting users test new products before diving in headfirst. It's time that core banking followed suit. By plugging in a truly cloud-native core that runs parallel to existing systems, banks can begin experimenting from day one, without committing to pointless RFPs or enduring months of delays from legacy technology. Without this shift, banks will quickly find themselves out of touch, out of time, and out of business."

The survey's data was collected in March 2025 from 150 UK-based business heads and C-suite staff at retail and business banks with balance sheets ranging from GBP £0.5 billion to GBP £100 billion, all of whom are responsible for product innovation in their institutions.