The world of payments is evolving rapidly, with technology shaping how businesses and consumers interact financially. As payments become more embedded in everyday experiences, ensuring that systems are future-proof is critical for banks and financial institutions. Strategies for future-proof payments must address technological advancements, customer demands, and the increasing role of security and compliance.

At The Banking Scene BBQ Night 24, the discussions with industry leaders like:

• Alain Van Nieuwenhuyze, Delivery Manager of KBC Bank
• Astrid Coppens, Head of Technology Platform Readiness & Continuity of Swift
• Wim Grosemans, Global Product Manager – Payments and Receivables of BNP Paribas
• Serge Munten, Transformation Manager and Payments Innovation Lead of Banque Internationale a Luxembourg
• Peter Larsson, Director of Business Development - Europe, Tietoevry Banking
• Shantanu Talukdar, Chief Innovation Evangelist of TATA Consultancy Services

provided insights into the strategies that can shape the payment landscape of tomorrow.

Below are the key strategies for building future-proof payment systems.

Embedded Finance, Seamless Integration, and APIzation

Embedded finance is a growing trend in the payments industry, focusing on integrating financial services directly into non-financial customer journeys. Shantanu Talukdar emphasised how banks leverage embedded finance to enhance customer experiences by making payments invisible and frictionless. For example, embedded finance in mobility, where public transport users can travel using invisible tickets and payments, eliminates the need for hardware investments from public transport operators and simplifies customer experience.

At the heart of this transformation is APIsation. The use of APIs (Application Programming Interfaces) enables banks and financial institutions to create more agile, connected systems that allow third-party services to integrate seamlessly into their payment platforms. API-driven architectures make it easier for banks to deliver embedded finance solutions quickly and flexibly. APIs provide a standardised way for external partners—such as retailers, transport operators, and service providers—to plug into a bank's system, facilitating the real-time exchange of data and payments.

This approach also opens the door for non-traditional partnerships, allowing banks to integrate into various ecosystems beyond their traditional financial services. For instance, APIs can enable instant payments for mobility services or create personalised shopping experiences by integrating payment options directly into e-commerce platforms.

The underlying strategy is to integrate payments seamlessly into diverse services such as transportation, housing, or shopping. By embracing APIzation and embedded payments, banks can offer a frictionless customer journey while reducing transaction barriers. Furthermore, by ensuring their systems are API-first, financial institutions can scale rapidly and adapt to future technological demands, all while tapping into new revenue opportunities through partnerships with non-financial players.

Digital Wallets, sustainability and expanding services

Digital wallets are no longer just tools for simple transactions; they are evolving into comprehensive financial platforms that cater to a variety of customer needs. A prominent example is Vipps in Norway, which began as a peer-to-peer payment solution and has since expanded into a full-service digital wallet. By continually investing in new services and fostering strategic partnerships, Vipps has grown into a dominant player in the Nordics. Its merger with MobilePay further illustrates the importance of collaboration in expanding service offerings and market reach.

One critical aspect of future-proofing digital wallets is cross-industry collaboration. Banks can enhance their digital wallets by forming partnerships across industries, including retail, transportation, and telecom. These collaborations allow digital wallets to go beyond payments and offer services like loyalty programs, document management, and even cross-border transactions. By working together, companies from different sectors can integrate their services into a unified platform, offering consumers a seamless and comprehensive financial experience.

This cross-industry collaboration is also essential for advancing sustainability within the payments ecosystem. As sustainability becomes a key focus for businesses and consumers, payment solutions must evolve to support green initiatives. Shantanu highlighted an example where banks help farmers adopt sustainable practices, converting their carbon sequestration into carbon credits that can be traded on voluntary carbon markets.

Banks are uniquely positioned to create sustainable payment models by leveraging their trusted role in society and their expertise in handling complex financial transactions. Sustainability in payments not only helps financial institutions align with societal values but also creates new business opportunities in the evolving carbon markets.

Mainframe Modernization, Cloud Adoption and the Rise of AI

Both Alain Van Nieuwenhuyze from KBC and Serge Munten emphasised the importance of a structured, phased approach to modernisation. KBC Bank has maintained a robust three-layered architecture that separates the front-end, mid-tier, and back-end systems, which allows them to continue innovating while relying on the mainframe for back-end stability.

Alain pointed out that KBC still processes 80% of its transactions through its mainframe, which provides the necessary scalability and security, especially when combined with APIs to facilitate integration with modern applications. This approach allows KBC to introduce innovations like AI without compromising on the reliability of their core systems​.

Similarly, Serge Munten discussed how Banque Internationale à Luxembourg (BIL) modernised its core banking system by first stabilising its infrastructure and improving scalability before gradually transitioning to a cloud-based solution. This phased approach allowed BIL to manage high volumes and innovate without the operational risks associated with an abrupt shift to new technologies​. Both institutions recognise that modernisation requires balancing innovation with legacy systems to ensure stability while introducing new technologies like cloud computing and AI for improved operational efficiency.

Standardisation, collaboration and scalability

As instant payments become the norm, banks are increasingly challenged with managing real-time liquidity while scaling their payment systems to handle growing transaction volumes. The removal of the SEPA cap on instant payments will amplify the pressure on financial institutions to ensure that their infrastructure can support both high-frequency and high-value transactions. Wim Grosemans pointed out that instant payments, though currently niche, are poised to become mainstream, requiring banks to invest in robust infrastructure and treasury systems to avoid bottlenecks during peak periods. Effective liquidity management becomes critical in such an environment where real-time payment execution demands instantaneous availability of funds.

Peter Larsson highlighted the transformative power of real-time payments: “Real-time payments have been a game changer, moving us from batch orientation to immediate processing. However, it’s critical to understand that banks are unique, and the full value of real-time can only be unlocked when the entire payment chain is real-time and seamless, not just the transaction.”

His insights underscore that real-time success requires the entire payment ecosystem to adapt, including fraud detection, compliance, and liquidity management systems, which are essential to keep operations efficient as transaction volumes increase.

At the same time, collaboration and standardisation are essential for future-proofing payment systems. As Serge Munten explained, collaboration can help reduce costs and enhance operational efficiency, particularly in areas of non-competitive business functions like KYC, fraud detection, and regulatory compliance. By pooling resources, banks could reduce the burden of high costs associated with regulatory developments and infrastructure investments.

Astrid Coppens of SWIFT also emphasised that standardisation efforts like the adoption of ISO 20022 are pivotal in enabling smoother cross-border payments and creating a common language across financial systems. This standardisation facilitates interoperability and allows for innovation to be built on a unified foundation.

Conclusion: Building a Resilient Payment Future

As financial institutions strive to future-proof their payment systems, it's clear that technology alone is not enough. The discussions from industry leaders underscore the importance of maintaining a human-centered approach, adapting technology to meet specific institutional and market contexts.

Every innovation must balance the strengths of existing infrastructure, such as mainframes, with new technologies like AI and cloud computing. This phased, structured approach ensures stability while enabling ongoing transformation.

Moreover, future-proofing payments isn't just about adopting the latest technologies—it's about collaborating across industries to create seamless, integrated customer experiences. Standardisation plays a crucial role in facilitating this collaboration. By leveraging standards like ISO 20022, banks can ensure smoother cross-border payments and create unified systems that foster innovation.

In an increasingly complex regulatory environment, collaboration and shared resources—particularly in non-competitive areas like KYC and fraud detection—are essential for managing costs and operational efficiency.

By embracing this integrated approach, financial institutions can navigate the evolving landscape of payments with confidence, ensuring they meet both the technological demands of the future and the enduring trust of their customers.

(Be sure to secure your seat today for The Banking Scene Art Night 24, for more thought-provoking discussions with banking industry leaders as we explore "The Waterworks of Money".)