Real-Time, Secure, and Smart: The New Standard for Payments Can Legacy Systems Keep Up With The Future of Payments?
Across Europe and beyond, consumer expectations around payments are rising - whether it’s wages arriving at midnight, benefits being processed in seconds, or biometric authorisation replacing passwords. To the end user, these moments feel seamless. That’s the goal.
But while these moments may feel effortless to the customer, they rest on an architecture that’s increasingly under strain.
While fintech front ends have become slick and rapid, many institutions are still limited by decades-old back-end systems. That’s where the modernisation journey really begins.
AI Wants In, But Legacy Is Holding It Back
AI has become a defining theme in payments. When implemented successfully, AI can flag fraudulent behaviour and patterns, predict changing customer demands, and personalise services with precision. However, deployment remains uneven, and far from universal. According to Kyndryl’s latest Payments Modernisation report, 74% of financial services leaders identify fraud prevention as the leading use case for AI, with 63% highlighting customer support. Yet those same leaders also express doubt about their organisations’ ability to realise the benefits of AI, citing one consistent barrier: outdated infrastructure.
AI needs access to clean, well-structured data, delivered at speed. It needs systems that can process behavioural signals in real time, spot anomalies before they do harm, and interact seamlessly across channels. Without modernised back-end systems, all of that remains aspirational.
Data Is Valuable and Vulnerable
As payment systems evolve and absorb more personal data from biometric verification, keystroke rhythms and behavioural analytics, the exposure to risk grows.
Yet protections vary widely. Europe’s GDPR remains the benchmark, however many jurisdictions, especially in parts of Asia and Africa, are still building legal frameworks. And even within Europe, the pace of AI and open banking development is testing the limits of existing regulatory frameworks.
Kyndryl’s Payments Modernisation report also highlights the rising threat of synthetic identity fraud, where attackers blend legitimate and fake data to create convincing digital profiles. These can pass traditional checks, establish credit histories, and remain undetected until fraud is committed. Legacy fraud systems aren’t built for this kind of deception, which makes modernisation a security imperative as much as a technological one.
Standards, Structure, and the 2025 Deadline
One step toward interoperability is ISO 20022, the global messaging standard set to become mandatory for cross-border SWIFT payments in November 2025. It offers richer data, better reconciliation, and a foundation for machine-readable processing.
Yet standards alone don’t modernise systems. Banks need to align infrastructure with cybersecurity frameworks, cloud capabilities, and a modular architecture that allows rapid iteration. As the Kyndryl Payments modernisation report notes, 58% of financial leaders highlighted APIs as a major operational challenge. This isn’t just a matter for banks. Public sector bodies – from HMRC to NHS payment processes – face similar expectations for speed, transparency, and trust. Interaoperabipity between public and private systems will be critical to ensuring the UK’s payment infrastructure is ready for the future. Without robust systems that can scale, adapt, and defend against attack, institutions risk falling behind, not just competitively, but regulatorily.
Getting It Right from the Inside Out
The most meaningful change in payments isn’t happening in the app. It’s happening in the decisions that institutions make about how payments are processed, secured, and scaled at the system level.
From cloud-native designs to phased adoption of AI, success depends on seeing payments modernisation not as a technology refresh, however as part of a broader shift in how banks operate. Those who lead will not just meet demands; they’ll help shape it.
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Meet the team
James Challinor
Head of Financial Services, techUK
James leads our financial services programme of activity. He works closely with member firms from across the sector to ensure innovation and technology are fully harnessed and embraced by both industry and regulators.
Prior to joining us James worked at other business organisations including TheCityUK and the Confederation of British Industry (CBI) in roles focused on supporting the financial & related professional services eco-system, with a particular focus on financial technology and market infrastructure.
He holds degrees from King's College London and Oxford Brookes University, and outside of work enjoys socialising, exercising, and travelling to new locations.
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Chris Davis
Managing Director, Kyndryl Ireland
