Weight of responsibility: But AI could relieve banks of a burden
Travelling light LEGACY DEBT
Fragmented and legacy systems are weighing down banks, undermining the innovation agility that modern payments now demand, according to Temenos
For all the noise around digital transformation, payments remain the most unforgiving test of whether banks are truly modernising, or merely updating the language they use to describe themselves.
Customers expect money to move instantly, securely and transparently. Consequently, regulators expect compliance in real time. And, in the already frantic race to modernise, financial institutions, still carrying decades of accumulated technology debt, are expected to deliver both of these often conflicting priorities at scale. It is against this backdrop that banking software provider Temenos chose SIBOS 2025 in Frankfurt to unveil Money Movement & Management, its intelligent, unified platform that brings together payments processing, account management, risk and treasury into a single operating layer. On the surface, it is simply another product launch. In context, it is a response to a deeper structural challenge facing the industry: innovation is accelerating faster than most banks’ infrastructures and governance models can comfortably keep up with. For Heman Daswani, Payments Specialist at Temenos, that tension defines the current moment. “Before we even talk about challenges,” he says, “we must all acknowledge that we are in this golden era for payments innovation.” He is acknowledging the fact that AI, open banking, blockchain and stablecoins are no longer theoretical. They are shaping 34 THEPAYTECHMAGAZINE ISSUE 18
customer expectations and competitive dynamics in real time. “The problem,” Daswani adds, “is that a lot of the critical mass of the banks is not able to move as fast and catch up with this innovation because of the legacy technology they have within their institutions.” That technology, he argues, is neither nimble nor designed for real-time finance, and it is increasingly acting as a brake on growth.
Innovation outpacing infrastructure This mismatch is most visible in payments, given their inherent challenges around customer expectations of speed and ease and sheer transactional volumes, fuelled by today’s always-on digital landscape. Instant payments have been live for years, yet many banks still lack 24/7 cores. Real-time fraud and sanctions checks are not universal, despite the rapidly accelerating volume and complexity of threats. “Even if they have these two things,” Daswani notes, “oftentimes they are lacking the capability to make use of the rich data that comes in the new ISO 20022 payment formats.” The result is a patchwork of systems, each performing a narrow function, none offering end-to-end visibility or control. “That legacy technology is like baggage that a lot of these institutions are carrying,” he says bluntly. “It’s stopping them from moving as fast as they should right now.” Those concerns resonate strongly with what Temenos hears at board and executive
level. According to Sairam Rangachari, Chief Product Officer at Temenos, the company’s conversations with banks echo that. “We hear three things from banks all the time,” he says. “Number one is how do they reduce risk and complexity. The second is that they’re worried about the spiralling cost of operations. The third is how can they enable growth and innovation from the point of view of core banking.” In other words, transformation is no longer about experimentation. It is about survival, efficiency and relevance all at once.
Cutting through the AI hype AI sits at the centre of this conversation, but not always comfortably. “There’s a lot of hype,” Rangachari acknowledges. “Banks get pitched AI quite a bit these days.” Yet when the conversation turns practical, priorities sharpen quickly. “What we consistently hear is: can we look at AI for security? Can we look at AI for fraud monitoring? Compliance efficiencies? And of course, how do we create hyper-personalised experiences for customers?” he says. These are not moonshot ambitions. They are grounded, operational demands, and they reflect a maturing attitude to AI across financial services. As the industry moves from pilots to production, AI is increasingly judged not on novelty, but on measurable impact. That shift is visible in payments and compliance, as volume rise, settlement windows shrink, and regulatory scrutiny FFNEWS.COM