The world of payments has never been more complex that it is today. What was ‘nice to have’ five years ago is now essential for consumers; a plethora of payment options is the expectation. To meet these demands, financial institutions need to adapt to new
payment rails, the shift towards instant, and increasing demand for alternative payment methods like wallets, request-to-pay (RTP), crypto, or stablecoin-backed solutions.
Yet in an environment often still burdened by inflexible infrastructure, staying agile enough to easily adapt to new rails and configure new payment workflows as they emerge is a challenge for financial decision-makers across the board.
So, how can financial institutions leverage flexible payment hubs to not only cater to the needs of today, but stay adaptable for the innovations of tomorrow? Finextra spoke to Mukundan ATM, vice president, head of large enterprise, payments at Finastra,
about how institutions can adopt scalable, resilient payment solutions and how banks can start looking at payments as a revenue generator rather than a cost centre.
The explosion of payment methods and expansion of cross-border payments
Long gone are the days where banks only needed to manage single or dual payment rails. With multiple real-time, batch, and high value rails to manage, today’s world of payments is more diverse and complex than ever before, even before accounting for modern
payments alternatives. Digital wallets are booming—Juniper Research projects over two thirds of the
global population will own a digital wallet by 2029—and stablecoin-backed solutions are increasingly gaining traction. Stablecoin transaction volume has risen sharply over the last two years, exceeding $27 trillion per year according to
McKinsey.
In this abundance of choice, financial institutions need to grapple with which new payment methods to invest in—and which to leave be. The end user is less interested in whether their FI labels it as RTP or batch; all they care about is a seamless real-time
payments experience and their ability to access funds 24/7.
ATM highlighted that the complexity lies in the fact that each of these payment methods has a unique protocol or its own compliance, settlement, and liquidity requirements. A rise in cross-border, cross-currency, multi-context transactions further complicates
the day-to-day for operations, technology and business stakeholders in today’s financial institutions.
“For example, with real-time rails, FedNow in the US, or SEPA that’s mandated in Europe now, you need to ensure your operational liquidity is high. The expectation is 24/7 processing, so intra-day liquidity needs to be maintained properly,” ATM stated. “Liquidity
management across multiple rails and currencies is a big factor when it comes to expansion.”
On top of ensuring the right capabilities to facilitate a plethora of payment methods, banks need to ensure their systems are not only resilient, compliant, and secure, but easily scalable as well.
Today, it is often the role of payment solution providers to help financial institutions find the right forward-looking solutions that help FIs simplify this complexity and integrate the right solutions to offer seamless real-time experiences to their customers.
Leveraging configurable payment flows to capture growth opportunities
In order to juggle payments in 2025 and beyond, ATM commented that banks are increasingly shifting to API-first models and “moving from a rail-centric to an outcome-centric base.” Institutions can hedge revenue by shifting towards centralised, modular, cloud-based
payment hubs as opposed to rail-based solutions.
In this context, ATM emphasised that in the past, it used to take financial institutions years to build new products, which has become quarters, and now the expectation has become months or even weeks. “The way we are building the rails itself has changed
now,” he pointed out. “It's more about adaptability and configurability. We like to think about building adaptability as a core functionality. That means you can reuse those functionalities across geographies and business needs.”
Leveraging domain-based microservices allows exactly this: creating a centralised hub which is event-driven and API-based, to change the momentum and allow banks to execute faster payments and enable connectivity between dependent functions. The reusable
nature of these microservices will help banks further to accelerate time-to-value and extend core functionalities across their systems, further minimising costs and risks.
ATM highlighted that there are three key branches in organisations that benefit from a centralised payments hub:
- Technology: When it comes to building the product, the technology teams are concerned with the reliability, scalability, interoperability, and multi-cloud readiness of payment solutions. How can the engineering and the platform teams help
to bring payments to the next level?
- Operations: The operations teams look at how payment workflows impact their day-to-day, and their focus is often the straight-through processing (STP) rates, lowering the infrastructure complexity, and building operational contingency.
A good customer experience (CX) and user interface (UI) is also crucial, with payment hubs allowing to improve both through consolidated dashboards.
- Business: The business decision-makers in any organisation are concerned about how any technology decision will affect their bottom line. A microservices architecture will help boost the cost efficiency and thus improving the revenue, either
by scalability and the increase of business or by reducing operating cost to improve net revenue—or ideally, both simultaneously.
ATM emphasised that these stakeholders are increasingly leveraging payment hubs for consolidation of rails. “Can we merge ACH and wire transfers into a single rail? Why do we need to have two different rails? This combination would reduce the complexity
and the maintenance from cost perspective and other aspects.”
Which is where smart routing comes into play. ATM highlighted that routing allows banks to pick and choose which payment method will be used at what time—and what rail should be switched too should one payment method fail.
“Smart routing is becoming key in all banks,” he commented. “For example, in Australia, lot of our inward Swift payments are being increasingly settled via NPP, the instant payments scheme. So, although a payment arrives either through an international rail
or domestic RTGS, it is increasingly routed via instant payment schemes.”
Payment orchestration in an instant era
As instant payments are projected to
surpass $58 trillion globally by 2028 (a 161% growth rate from 2024), a financial institution’s success increasingly hinges on their ability to quickly and seamlessly integrate different instant payment schemes and rails.
“With instant payments, the business remains the same, but the regional requirements change because of the regulatory and other factors,” explained ATM. This is why configurable payment flows via centralised payment hubs are crucial in modern banking. With
this setup, as a bank, “I can reuse 30% to 40% of my real-time payments functionalities. Reusability of the code is becoming a need, so that my time-to-market is meeting today’s and tomorrow’s expectations. The only way to meet those expectations is to rethink
the engineering in product itself.”
Juniper Research additionally projects that by 2028, over a quarter of all instant payment
spend will come from cross-border transactions, further underscoring the need to modernise payment systems to better facilitate cross-border functionality.
Liquidity is the other side of the coin when it comes to instant payments. Financial institutions need a system that helps them effectively monitor and manage their payment flows. Per rail, they need to know “what is the latency and how many rejects are
occurring? How is my liquidity utilised in real-time? Is it more available or less available?” ATM stated. “Because there are going to be peaks, [real-time payments volume] is not going to be high 24/7. There are going to be ups and downs. So how you are going
to handle all those aspects will have a big implication on your customers and their end-user experience.”
Speaking of end-user experience, fraud is another aspect that banks need to consider in an instant era. Because real-time payments are irrevocable in nature, fraudsters are taking advantage of these rails to scam their victims though increasingly sophisticated
scams.
In the UK alone,
consumers lost £450.7m through authorised push payment (APP) fraud in 2024.
1 in 4 UK customers additionally say they are unsure whether RTP processes include enough security checks. For financial institutions, even a single failure can tarnish the image built over years, so they need to ensure robust fraud prevention measures
are part of their core payment operations to stop fraudulent attempts before they can inflict any damage.
These are implications that banks need to start working on today in order to keep up with modern payment demands. “In the future, instant is going to be the most dominant payment method. It might take a decade, but nobody will want to wait to batch process.
We are moving towards an instant world with 24/7, 365 days availability,” added ATM.
Modernising for multi-channel capabilities
The bottom line of all these trends and developments is that financial institutions no longer have the luxury of time. Today’s diverse world of payments needs efficient orchestration methods, or banks risk falling behind and missing opportunities.
ATM highlighted that the good news is that banks don’t need to re-invent the wheel—the best kind of innovation often lies in simplification. “Banks are looking at a future where designing and implementing more systems is not going to solve the problem,”
he concluded.
“Instead, it’s about implementing one system that can do more for you—whether it's your existing rails or stablecoin-backed payments. Eventually, the important part is to ensure that the solution or partnerships that they are leveraging are not only helping
them solve their current business needs, but also address the future business needs.”
Streamlining payments orchestration through centralised solutions will offer multi-channel capabilities to keep up with today’s complex market demands. Simplifying the customer experience based on region, payments volume, cost, and settlement preferences
will be key going forward.