Issuu

I S S U E #19

THEPAYTECHMAGAZINE ● ISSUE 19

CROSS-BORDER

ABSTRACT THEORIES

How BoA’s protecting corporates from complexity ARTIFICIAL INTELLIGENCE

TRIPLE AGENTS

‘The biggest risk is not taking any risk’

Shopping, building, banking… the tireless rise of AI ECOSYSTEMS

PARTNERSHIPS WITH PURPOSE

Mambu and ClearBank share their tips ARCHITECTURE

STABLE SIGNS HSBC & Swift talk tokens

y Yes, DLT has finall m! gone mainstrea FFNEWS.COM

WITH TEMENOS ● G+D ● MASTERCARD ● CITI ● ABRIGO ● COINSPAID ● SBS ● AUTOREK ● MOORWAND

THE

PAYTECHMAGAZINE 6

ISSUE#19

LENDING

Power points

Community banks and credit unions are key to local economies in the States. Abrigo is helping to supercharge them with a new agentic experience

INTERNATIONAL PAYMENTS

Running every last mile

Bank of America’s Cross-border Real-time Payments Solution has proved it can sprint over legacy rails. Allison Shonerd explains the hurdles her industry faces to get all international transactions across the line in seconds

THEEDITOR’SVIEW

DIGITAL CURRENCIES

Out of the lab!

As HSBC prepares to launch a Hong Kong dollar-denominated stablecoin, Lewis Lei Sun says it’s not a case of when tokens will come into mainstream use – it’s which, where and what for?

PUBLIC POLICY

Banking on the Lloyd Review

Ron Delnevo, Chair of the UK’s Payment Choice Alliance, is sceptical that this latest review of branch closures will satisfy customers

CASS 15

The big reckoning

Regulators worldwide have been spooked by paytech failures. They’re watching how the UK FCA’s new regime for PSPs and EMIs plays out – and AutoRek stands ready to help

CROSS-BORDER

Making the global local

Bank of America wants a payment from Miami to Mumbai to feel no different to one made across town, with all the visibility, speed and safety you’d expect from domestic rails

17 20

14 AGENTIC FINANCE

We’ll take the AI road

One Scottish building society’s bold bet on AI with SBS is demonstrating how the technology could turn a minnow into a maneater

INNOVATION

Rethinking the route

Disruptive fintechs, by definition, will often rub up against the system. But they don’t always have to pick a fight with legacy, says Luc Gueriane, CEO of Moorwand FFNEWS.COM

So, after decades of false starts, fallouts and a faint suspicion that distributed ledger technology was somehow tainted by the crypto traffic that ran across it, DLT finally seems to have found its place. It’s no longer seen as a challenge to traditional finance, but as a tool to be used by it. It’s a sign of the trad-fi world shifting to accommodate tokenised assets, not as a parallel system of moving value, but as a way to improve and accelerate traditional settlement. It was inevitable. The question was when. But with major infrastructure players, from Swift to the Bank for International Settlements, now fully on board, and Project Agorá demonstrating that central banks don’t have to relinquish control or compromise compliance, those token pipes are now humming. Money 20/20 will be alive with talk not just of stablecoins being used for settlement, but also of the artificial intelligence that’s populating every layer of the payments system – from back office to consumer interface – and every vertical within it, from lending to wholesale banking. But I’d just like to draw your attention to a thoughtful piece by PayDo boss Serhii Zakharov on page 26. He reminds us where the real ‘super intelligence’ lies – with humans. Zakharov’s plea to avoid over-engineering risk screening so it damages the growth of countless businesses, is compelling and timely. Take a look. And enjoy the Vegas vibe! Sue Scott, Editor This issue’s spinetingler, ‘The biggest risk is not taking any risk’ is a quote from Facebook Co-Founder Mark Zuckerberg. ISSUE 19 THEPAYTECHMAGAZINE 3

PAYMENT RAILS

Rules Britannia: The great payments renewal As the key utility operator, Pay.UK must continue to keep systems running safely and efficiently while the country redesigns its payments infrastructure. David Crawford considers some of the difficult questions the future poses

KNOW YOUR BUSINESS

Why the payments industry needs to rethink ‘high risk’ Serhii Zakharov, CEO & Founder of payment ecosystem PayDo, makes a compelling case for recalibrating screening by applying some simple human intelligence to complex business cases

CRYPTOCURRENCY

Mainstream, but not as we know it

Big banks are getting serious about DLT and the tokenised assets it supports. So, what does that mean for merchants and consumers?

AGENTIC BANKING

Banking beyond the prompt

Would you trust your AI agent to instruct your bank? Maybe not yet. But NetXD is already planning for the day it becomes a reality. Then it will bring private banking to the masses

PAYMENT RAILS

Too much information!

HSBC’s Amber Henderson-Smart explains why the next era of payments will be defined by orchestration, simplicity and trust

PARTNERSHIPS

The infrastructure era

Partnerships with purpose define the current banking era. Mambu and ClearBank are a clear example of what that can achieve

REGULATION

The compliance gap

A change to regulations governing payment providers in the UK is more than a technology shift. It’s a fundamentally different way of working, says Kani

PARTNERSHIPS

What we build and what we buy

If you’re selling your latest altfi idea into a major bank, it’s as well to know what the boundaries are

ARCHITECTURE

The missing piece

Swift has moved fast to catch up with the future. Here Nick Kerigan discusses how it fits into the tokenised picture

CORE MODERNISATION

Plugging the great banking expectation gap A new Celent report with Temenos shows just how wide the chasm is between what customers want from their bank and how fast old-generation architecture can deliver it – if at all. Is there another way?

INNOVATION

The grandfather of payments

Securitech company Giesecke+Devrient (G+D) has been moving money in all its forms for 170 years. There’s a lot little fintechs can learn from it

AGENTIC COMMERCE

Agent of change

Mastercard is responding to the consumer-driven revolution in agentic commerce by building a new trust architecture

SAUDI ARABIA

Engineered at the centre, personal at the edge We go inside Saudi Arabia’s payments ecosystem with G+D

THEPAYTECHMAGAZINE2026 EXECUTIVE EDITOR Ali Paterson

EDITOR Sue Scott

GENERAL MANAGERS Tom Dickinson Chloe Butler

ART DIRECTOR Chris Swales

CHIEF REVENUE OFFICER Shaun Routledge

SUB EDITOR Frank Tennyson PHOTOGRAPHER Jordan Drew

PARTNERSHIP MANAGER Georgia Stubbs PRODUCTION TEAM Tom Dickinson Matthew Burls Dylan Young

ISSUE#19 ONLINE EDITOR Lauren Towner VIDEO TEAM Louis Jean La Grange David Hill Ethan Peck

FEATURE WRITERS Rebecca Clifton Hannah Duncan David Firth Tracy Fletcher James Grant Sue Scott Frank Tennyson

The Paytech Magazine is published by FF NEWS LTD. Pantiles Chambers 85 High Street Tunbridge Wells, TN1 1XP

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, photocopying or otherwise, without prior permission of the publisher and copyright owner. While every effort has been made to ensure the accuracy of the information in this publication, the publisher accepts no responsibility for errors or omissions. The products and services advertised are those of individual authors and are not necessarily endorsed by or connected with the publisher. The opinions expressed in the articles within this publication are those of individual authors and not necessarily those of the publisher.

4 THEPAYTECHMAGAZINE ISSUE 19

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LENDING

Community banks and credit unions are key to local economies in the States. Abrigo is helping to supercharge them with a new agentic experience Small Banks, Big Impact. That was the title of a report by the Federal Reserve Bank of St Louis on the impact that community banks and credit unions were having on the regional economy. It illustrated it with some key figures: in 2023, small business loans made up 12.6 per cent of assets held by local banks with $250million in assets or less. That compared to just 3.6 per cent at banks with more than $10billion on the books. The author concluded that was largely a reflection of the proximity of these smaller institutions to their customers – who are often, literally, just down the road – and how that allowed them to make a better judgement call than those more remote lenders. The previous year, according to the report, 82 per cent of small-business applicants were at least partially approved for loans from small banks. Just 68 per cent of small business applicants received at least 6 THEPAYTECHMAGAZINE ISSUE 19

partial loan approval from big banks. But there is a problem. Operating conditions are becoming increasingly difficult for community banks and credit unions in the U.S. due to mounting regulatory, technological, and competitive pressures. Their numbers are shrinking year on year. If they are to continue to be the flywheel for economic growth, they need to find more cost-effective models, without sacrificing the very thing that distinguishes them from their bigger rivals: local knowledge and strong relationships with the communities they serve. For that, they still need to rely on super intelligence of the human kind. That apparent paradox is at the heart of Abrigo's vision for the future of lending at community banks and credit unions. The U.S. fintech, whose technology is already deployed across more than 2,400 financial institutions, made its new Abrigo APX (Abrigo

Ravi Nemalikanti, Chief Product and Technology Officer at Abrigo

Agentic Platform Experience) generally available this autumn to automate and scale lending workflows at these institutions. Abrigo APX is capable not simply of helping a banker complete a task, but of understanding an objective, drawing together data, policies and context, and moving work across an entire lending process. Abrigo believes that by reducing the time that bankers spend on paperwork, admin and fragmented systems, AI can give them more time to understand customers, spot opportunities and become even better advisors, driving more ‘yeses’, more efficiently. In effect, it’s putting sophisticated technology that was once the preserve of the world’s biggest banks at the fingertips of local bankers, democratising lending capabilities and helping to get more capital to small businesses that are struggling to access it elsewhere. “J.P. Morgan might have 1,100 or so data scientists working day in, FFNEWS.COM

Plug and play: Abrigo Agentic Platform Experience (APX) puts big bank tech within reach of the little guys

day out. The institutions we work with, their entire workforce might be 200 or 300 people,” says Ravi Nemalikanti, Abrigo’s Chief Product and Technology Officer. He’s aware that when transformational technologies such as AI emerge, smaller organisations like this struggle to develop the expertise and keep pace with competitors whose IT budgets dwarf their own. “So, that’s why we bring it home, apply it and build on-ramps to new technologies for them,” says Nemalikanti. A 2026 survey by the American Bankers Association (ABA) found that technology limitations and integration gaps were among community institutions’ biggest barriers to growing commercial lending. Abrigo APX is ‘not about an AI feature that’s just bolted on to an existing platform’, says Nemalikanti. It paves the way for a step change in how these smaller banks operate. “Where conventional AI might extract information from documents, answer a policy question or generate a credit memo, the banker still determines what comes next and moves work between systems. With an agentic platform, you’re helping the entire FFNEWS.COM

institution complete an outcome. Think of that as an operating model shift.” Abrigo’s technology understands the desired outcome and surrounding context, breaks work into steps and coordinates specialist agents across the workflow. Nemalikanti describes these assistants as being closer to ‘digital humans’, and, just like humans, when a task goes beyond their pay grade, the system escalates it to a superior rather than improvise a solution.

Humans are getting elevated to a higher threshold of intelligence where they have to apply a level of judgement Ravi Nemalikanti, Abrigo

“Humans are getting elevated to a higher threshold of intelligence where they have to apply a level of judgement,” says Nemalikanti.

Agentic versus automation A surprisingly large proportion of modern lending remains administrative. Abrigo estimates that agentic AI could reduce manual

work in lending operations by more than 40 per cent. Nemalikanti himself estimates that 60 to 70 per cent of the time surrounding some lending decisions sits outside underwriting itself. “It is all around pushing digital paper from one screen to the next,” he says. He cites the example of a local manufacturer seeking financing for new equipment. An Abrigo agentic workflow could recognise the loan type, determine which financial documents are required, identify missing information and communicate with the borrower where authorised. Other agents could extract and reconcile data, calculate cash flows and ratios, examine existing relationships and lines of credit, incorporate relevant fraud, identity or sanctions information and test the case against the institution’s policies before assembling a credit package. In purely automated processes, small errors can cost big delays. Receiving the wrong year’s tax document is one example. Traditional automation can flag the problem and wait for somebody to intervene. An agent can identify it and immediately request the correct document, even at 7pm when the small business customer is still working but the branch has closed. “We don’t want to lose time,” says Nemalikanti. “We want the time between a loan application being submitted and cash being dispensed to be as little as possible.” ISSUE 19 THEPAYTECHMAGAZINE 7

That can be a lifeline for the kind of small businesses these banks and credit unions deal with. “Maybe the customer’s refrigerator is broken,” says Nemalikanti. “Which means their café is going to lose sales until it is replaced.” But the U.S. Federal Reserve’s 2026 Small Business Credit Survey found only 42 per cent of applicants received all the financing they sought, while 22 per cent received none. The proportion seeking finance from online fintech lenders, meanwhile, rose from 17 per cent in 2020 to 29 per cent in 2025, although applicants approaching small banks were more likely to receive all the financing they sought than those using any other type of lender. Bank and credit union borrowers also reported higher satisfaction than customers of online lenders and finance companies. Rather than diluting relationship banking, Nemalikanti believes that technology can remove the time-absorbing administration that prevents more of it from happening. “The relationship between our customer and their customer – it’s not the paperwork,” he says. “Our goal is that automation should strengthen and deepen that relationship.” Abrigo has already launched Ask Abrigo, which Nemalikanti describes as something akin to putting ChatGPT across an institution’s customer relationships. It can rapidly pull together a customer’s history, institutional data and industry context for a relationship manager.

This is where productivity potentially becomes innovation and opportunity. Rather than simply reducing headcount or processing the same loans more cheaply, institutions can redeploy capacity towards deepening relationships, identifying overlooked borrowers, developing products and pursuing growth. That gives community institutions competing against fintechs and national banks an opportunity not merely to automate, but also gain leverage they could never afford to build internally while at the same time freeing up their people to concentrate on what local institutions do best. There is, nevertheless, an uncomfortable other side to making lending faster. The National Credit Union Administration says

Community banking: Agents help strengthen relationships, says Abrigo

Maybe the customer’s refrigerator is broken, which means their café is going to lose sales until it is replaced... We want the time between a loan application being submitted and cash being dispensed to be as little as possible Ravi Nemalikanti, Abrigo “Maybe there’s a different way to structure the loan,” he says. “Or a different piece of collateral they need to bring to increase their chances of approval.” AI may allow institutions to act before borrowers even ask. If data reveals a recurring seasonal cash-flow squeeze, for example, a bank could proactively suggest a line of credit while the business is strong enough to obtain it, or find a better way to structure finance. “That is what a trusted advisor does,” says Nemalikanti. “Because you know the business so well that you can actually offer that line of credit even before the customer sees the issue.” 8 THEPAYTECHMAGAZINE ISSUE 19

if, as Nemalikanti says, 60 to 70 per cent of the work around it can be transformed, that is nevertheless an enormous prize. Every one of those steps in the process towards a decision is underpinned by strong governance, built into the APX platform. Policies must be translated into structured thresholds, evidence requirements, approval authorities, prohibited actions and exception paths. “You do not create reliable guardrails by just uploading a policy PDF and hoping that the platform got it right,” says Nemalikanti. And if information is missing or policies conflict, the agent must stop. “It shouldn’t manufacture any kind of facts just to bridge to a decision,” he says. “I would much rather float up 90 per cent of the decisions to the

overall delinquency and rolling 12-month loss rates are at their highest levels in more than a decade, which has made underwriting, credit administration and portfolio monitoring supervisory priorities for the NCUA in 2026. Importantly, Abrigo's agents get banks and credit unions to the point of decision-making, but no further. The most sensitive as well as the most impactful part of the lending process is so important, says Nemalikanti, that only human intelligence should have control over it. “We are purposefully staying away from the credit decision itself,” he says. While that remains governed by deterministic policies and accountable humans,

humans than try to get to a 90 per cent rate that’s straight through the agentic platform.”

Beyond lending Lending is only the beginning for Abrigo’s agentic platform. Nemalikanti ultimately sees the company becoming the ‘trusted intelligence and operating partner’ for banks and credit unions, also embedding AI across portfolio management, credit risk, financial crime and customer intelligence. It can potentially bring deposit data, lending relationships, fraud activity, anti-money laundering information and CRM data together around the same customer. Nemalikanti’s vision is for that connected view to become an intelligence layer, running through an institution. “We could be the main door into insights into their customer base,” he says. If that means viable small businesses are identified earlier, understood better and connected with capital more quickly, local institutions will continue to be the backbone of their local communities. FFNEWS.COM

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Every journey begins with a single step, but it’s the last mile that continues to frustrate the efficiency of cross-border payments.

customers, regardless of how they initiate payments or the value of their transactions.”

So, when Bank of America announced it had successfully completed an instant cross-border payment using Swift connectivity and domestic real-time rails, it represented a crucial waymark. Revealed at Sibos 2026 in Miami, the transfer was initiated by partner bank Bradesco in Mexico and arrived in the beneficiary’s account via Hong Kong’s Faster Payment System. An alternative way to initiate a payment using Bank of America’s CashPro platform will also be made available next year. The new Cross-border Real-Time Payments Solution is aimed first at clients that send large volumes of small amounts, such as payments to gig workers and e-commerce vendors. And it underlines BoA’s desire to build on what already exists to meet industry targets and customer expectations around international money flows. “We see an opportunity to make our correspondent banking infrastructure interoperable with our investments in domestic real-time payment schemes,” says Allison Shonerd, Global Head of Clearing at Bank of America. “We’re working to bring consistent, predictable 24/7 experiences to

The new service offers real-time tracking and delivers the full principal amount to the beneficiary. Configured to work with instant payment networks, including Faster Payments in the UK, SPEI in Mexico and India’s UPI, it avoids the need for clients to establish new connectivity or accounting processes. Bank of America’s Global Head of Payment Solutions, Mark Monaco, has argued this is crucial, since corporate treasurers ‘don’t want to manage a patchwork of domestic schemes market-by-market; they need banking partners to absorb that complexity’. The near-instant delivery of funds to the recipient in the pilot was significant, since globally it’s the release of funds by a beneficiary’s bank where friction exists and causes efficiency targets to be missed. Swift reported two years ago that 90 per cent of payments sent over its network were arriving at the beneficiary’s bank within one hour. But that isn’t the same as the funds being available for the beneficiary to spend. Regulatory and domestic processing issues mean their release can take days.

Beneficiary blues Allison Shonerd, Managing Director, Global Head of Clearing at Bank of America

And while Swift measures the efficiency of transactions over its own network, there are many other global payment corridors beyond its reach. In an attempt to tackle liquidity bottlenecks caused by correspondent banking, the G20’s Financial Stability Board five years ago set banks global targets for 2027. The headlines were that 75 per cent of wholesale and retail payments must be credited within one hour of initiation, and the average cost of a cross-border retail payment must be no more than one per cent of the transaction value. This year, the FSB warned these targets would be missed since, for many people, costs remained too high (four per cent for peer-to-peer payments in sub-Saharan Africa, for example) and clearance was still measured in days. In 2024, Swift had said the final domestic stage of a payment journey – the crucial ‘last mile’ – could account for 80 per cent of total processing time. It warned ‘beneficiary-side crediting remains a key focus area... local regulatory requirements, FX controls, operating hours and manual

Running every last mile INTERNATIONAL PAYMENTS

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processes still account for a large share of end-to-end payment delays’.

Making everything 24/7 So, what is holding up progress for banks generally? Setting aside issues of national regulatory friction, Shonerd says that, at an operational level, achieving real-time cross-border payments involves more than the payment rails. “It’s about bringing the entire operating model that supports payments into the 24/7, seamless way of working that our customers expect in a global, always-on economy,” she explains. “That means extending it to compliance, operations and customer service, and doing that comprehensively can be a challenge. “Also, when you’re operating ‘always-on’, the experience is only as strong as the weakest link. Today you have applications with downtime or maintenance windows, and times when you can perform upgrades and release enhancements. All of that has to be rationalised: you need ways of maintaining and enhancing your capabilities while staying online all the time. And that extends across the entire operating model, people and technology. “So it’s a very interesting and exciting challenge to shed the buffers we’ve had around operating

Keeping pace: Cross-border payments must become seamless, predictable and always-on FFNEWS.COM

hours and cut-off times, but it does present a real challenge for staying resilient.” Shonerd adds that the global adoption of Swift’s messaging standard ISO 20022 means the foundation for automation has been laid, and the risk of fraud and errors is being tackled as a result. But she cautions there’s still ‘a long way to go’ before the standard’s full potential is achieved across the industry, due to regulatory friction on a national level. “ISO 20022 has given the industry a common language we can use to speak to each other,” she says. “But in reality, there are still many local dialects we have to take into account. “On the one hand, ISO 20022 has given us the opportunity to become more interoperable. As high-value payment schemes and domestic real-time payment schemes all move onto

It’s a very interesting and exciting challenge to shed the buffers we’ve had around operating hours and cut-off times, but it does present a real challenge for staying resilient

this common language, it opens up more opportunities to bridge between the two. “It’s also given us a vehicle for exchanging rich information in payment messages, and for finding ways to be more automated and optimised in how we process payments. “But there’s still a long way to go, and there’s still work to be done to realise the full value of ISO 20022.”

Running in parallel Bank of America’s new solution uses multiple international and domestic payment systems, and the bank isn’t alone in this approach. But it’s just one of many options for moving money internationally, with non-fiat digital alternatives being pursued across the industry. In a research paper by the Bank of America Institute last year, its authors said of stablecoins: “From cross-border to retail transactions, stablecoins can be a cheaper and more efficient option when compared to other consumer payment methods. However, they also introduce challenges, such as irreversible transactions and exposure to depegging [losing their ‘peg’ to the underlying currency or asset], which can impact scalability and stability.” So where does Shonerd believe tokenised money sits as a real-time cross-border payment solution? “We certainly see tokenised money as a complementary rail to those that exist today,” she says. “Our existing rails process enormous volumes of value every day, securely and efficiently. But tokenised money may have a really interesting role in extending those capabilities, especially after operating hours, or when we’re trying to rationalise cut-off times and availability. “So, we see an opportunity to meet customer needs for 24/7 liquidity movement, for example, by bringing tokenised money and traditional rails together into what can become a very seamless and predictable payment experience.” Ultimately, Bank of America, like many of its peers, is open to pragmatic solutions for getting money to pass through every ‘last mile’ without delay. Shonerd’s vision of where she wants the industry to be by the end of the decade is simple. “For us, we want cross-border payments to be consistent, transparent and predictable for our customers, across the board,” she says.

HEPAYTECHMAGAZINE 11

The big reckoning CASS 15

Regulators worldwide have been spooked by paytech failures. They’re watching how the UK FCA’s new regime for PSPs and EMIs plays out – and AutoRek stands ready to help If competitive demands haven’t already forced payments businesses to automate their reconciliation processes, it’s likely the actions of a regulator will. When the UK’s Financial Conduct Authority launched CASS 15 for payments and e-money providers in May, it pulled them into the scope of its Client Assets Sourcebook regime, which ensures customer money is ringfenced and fully accounted for. At a stroke, the era of safeguarding as a compliance ‘formality’ to be examined once a year was over. CASS 15 brought many payment service providers (PSPs) and electronic money institutions (EMIs) into line with banks, with more rigorous governance and record-keeping rules, and, crucially, the need to reconcile accounts every working day. For AutoRek, which offers an end-to-end financial data control platform, tailor-made for regulations such as CASS 15, the update provides a huge opportunity. “AutoRek has been geared up for CASS reporting for more than 10 years,” says the firm’s Vice President of Retail Banking and Payments, Nick Botha. “Now the payments landscape has moved into the FCA handbook [since it absorbed the duties of the Payment Systems Regulator], it’s been quite a seamless transition for us. We have by far the best safeguarding and CASS 15 reporting solution.” That leverages AutoRek’s long-standing strategic relationship with Microsoft Azure, on which its 12 THEPAYTECHMAGAZINE ISSUE 19

Nick Botha, Vice President of Retail Banking and Payments at AutoRek

financial reconciliation and data management platform runs natively. “Our solution works by automating data management, reconciliations, and Microsoft Power Business Intelligence and Management Intelligence, so data can be analysed. Each component part feeds the others,” says Botha.

High-profile failures E-money providers and payments firms – which aren’t part of the Financial Services Compensation Scheme, which protects client assets – had been subject to less-stringent regulation to allow the sector to grow. But with growth achieved, market risk increased. The safeguarding reforms follow a string of failures by e-money and payments firms to properly segregate customer funds. The 2019 collapse of UK-based multi-currency account provider Ipagoo was one high-profile case. When it entered administration due to a lack of working capital and subsequent FCA restrictions, it became clear that client cash had not been kept separate and could not be identified. The implosion of German PSP Wirecard, following fraud that involved 1.9 billion of ghost euros in its accounts, was another wake-up call, prompting the FCA to intervene in Wirecard UK to protect client cash. In its CASS 15 policy paper, the FCA noted that the proportion of consumers using payments firm accounts had grown from one per cent in 2017 to 12 per cent in 2024. Meanwhile, a tenth of

UK e-money users were using the accounts as their primary day-to-day transactional account. The FCA estimated that ‘payments institutions safeguarded £6billion in relevant funds on any given day in 2024’. It added: “The growth in the number of consumers and amount of relevant funds held by payments firms means more of the UK population is likely to be exposed to harm if a firm fails and there is a shortfall in relevant funds or a delay in their return to consumers. For firms that became insolvent between Q1 2018 and Q2 2023, there was an average shortfall of 65 per cent in funds owed to clients (the difference between funds owed and funds safeguarded).” With CASS 15 now in force, payments service providers and electronic money institutions must: ■ Reconcile customer funds at least once every business day ■ Segregate safeguarded funds from their own assets and hold them with an approved bank ■ Provide a monthly report for the FCA on how much and where safeguarded cash is held ■ Elevate safeguarding responsibility to boardroom level ■ Arrange annual independent audits of CASS 15 compliance AutoRek says those rules will put severe pressure on businesses that still rely heavily on manual spreadsheet processes and legacy systems for reconciliation processes. FFNEWS.COM

focusses on structuring data at the onboarding In an AutoRek survey of 250 senior finance stage so subsequent reconciliation and analysis managers, 69 per cent admitted that limited flows from a reliable source. automation was a pressure point for them as Data vital to a payments or e-money payment levels increased. Also, fragmented provider would include cashbook balances, data was a key problem for 80 per cent of cashbook transactions, bank balances across respondents, with 34 per cent reporting all accounts holding relevant funds, and ‘significant or severe disruption to client-specific balances, including seller wallet reconciliation and monitoring’. balances on digital accounts. AutoRek’s report said: “Payments data Botha says: “AutoRek is completely data remains distributed across formats, platforms agnostic – we can ingest data in any format and providers, making end-to-end visibility from any source, which allows us to work with difficult and real-time controls elusive.” many different payments organisations and However, one major positive for growing banks on different payment rails around the payments and e-money firms, says Botha, is world. We can support them with real-time that by modernising now to meet the FCA’s reconciliations because that is a requirement regulations, they will be ready for subsequent for the world that we live in today. updates that follow elsewhere. He considers “Under CASS 15, firms need to the FCA’s CASS regime to be demonstrate that safeguarding ‘best in class’ and one that is embedded in their daily will be replicated by the operations, not bolted EU and others. Canada’s Under CASS 15, firms on at month-end. That own regime, enshrined need to demonstrate that means they need by its Retail Payments safeguarding is embedded automated data Activities Act, already in their daily operations, not pipelines that are mirrors CASS and bolted on at month-end… capable of onboarding was introduced in Spreadsheet-driven and validating data September last year. reconciliation won’t across multiple sources By basing its keep pace in real time. Plus, they platform around the Nick Botha, need exception monitoring needs of CASS and the AutoRek that flags discrepancies FCA’s principles, AutoRek immediately, and audit trails believes only minor adaptations that capture every transaction decision will be needed for providers operating in automatically, not just retrospectively ahead foreign territories such as these. It will reduce of a regulatory review. Spreadsheet-driven the need for bespoke designs and therefore reconciliation won’t keep pace.” reduce delivery timelines. “We have a CASS 15-compliant safeguarding Providing solutions solution that is completely end-to-end and One of AutoRek’s high-profile clients is helps clients manage their data, plus internal ClearBank. Its legacy reconciliation and external reconciliation processes,” Botha tool, adopted in 2020 to meet says. “We’re now able to replicate that around soaring volumes of Faster the globe. We’re expecting to see new EU Payments during the safeguarding regulations come into play next COVID pandemic, could year, so we’re getting a lot of interest from the not support cash EU payments firms already. “Plus, we’re talking to people further afield, in Canada and Singapore, and we’re even seeing US organisations start to look at what best practice looks like when it comes to protecting client funds.”

reconciliation or balance substantiation. It also lacked the ability to manage approval or review processes. Peak transaction volume periods, such as month-ends and payroll weekends, pushed the system to breaking point, forcing staff to use a patchwork of tools and manual workarounds. Excel remained ClearBank’s default for multi-currency and EU reconciliations, while key processes around validation, sign-off and oversight existed outside of the reconciliation platform entirely. The setup could not scale in line with ClearBank’s rapid growth, with the company seeing total payment volumes increase by 55 per cent in 2024 to 167 million transactions. The adoption of AutoRek’s platform allowed ClearBank to unify reconciliation across its five payment schemes and core Bank of England accounts. The ‘no code’ design of the interface also reduced workload for the bank’s IT staff and sped up delivery. Continued development with partners, including Microsoft, is key to meeting the needs of sophisticated clients such as ClearBank, says Botha. He adds: “We’re working to ensure that we remain at the top end of the market when it comes to our technology.” AutoRek ARIA, a specialised AI agent which supports reconciliation with reasoning, decision-making, and anomaly detection, is already available. “I see AI increasingly becoming part of straight-through processing,” adds Botha. “We’ve put a lot of investment and time into making sure the software and the services that we offer reflect that.”

The global outlook: Regulators are looking for real-time reconciliation

Flowing from clean data Botha believes firms must embrace straight-through processing to cope with increased data levels and modern reconciliation demands. To that end, AutoRek’s platform FFNEWS.COM

ISSUE 19 THEPAYTECHMAGAZINE 13

Bank of America’s cross-border payments strategy boils down to one word: local. It’s been the holy grail since 2020, when the G20 nations set their roadmap for faster, cheaper and more transparent international payments. Whether your funds are going round the world or down the road, the experience should be the same. “With a local payment, our customers, whether consumers or corporates, expect it to get there pretty quickly. They expect to know when it’s arrived and to get a notification. And they expect the amount they sent to be the amount that arrives,” says AJ McCray, Head of Global Payments Product Management at Bank of America. “That’s easier in a local context. When you start sending money to a different country, in a different currency, potentially through more than one bank along the way, it gets more and more difficult. But our vision is to take away those difficulties and constraints as we move payments across countries and currencies, and make it feel like a local experience.”

Speed, certainty and full value. None of those is a radical demand. But anyone who has experience of a correspondent banking chain knows how rarely all three arrive together. From Q4 2026, Bank of America intends to meet those benchmarks, albeit incrementally, as it rolls out a cross-border real-time payments solution that will enable its corporate, commercial and financial institution clients to send and receive funds instantly through Swift or the bank’s flagship digital platform, CashPro. The offering will connect to several real-time payment networks, and clients will also be able to receive inbound real-time payments to the United States, where Bank of America serves approximately 70 million consumer and small-business clients. The first corridors – Mexico, India and the Philippines – will support high-volume, low-value international payments, including international remittances, gig worker payouts, and e-commerce marketplace vendor payments, among others. Big-ticket treasury transfers will come later, says McCray.

START WITH THE SMALL STUFF

AJ McCray, Head of Global Payments Product Management at Bank of America

“Whenever we develop a product or a strategy, we always start with a use case: our customers’ problems, especially the unsolved ones,” McCray adds. “We focussed on low-value cross-border payments because that’s what our clients were asking for. “They told us there was friction and difficulty in moving money cross-border, and they wanted it to feel more like a local experience.” For those Bank of America customers, seamless cross-border payments isn’t just about making things run smoothly in the back office; it adds value to their brand.

Bank of America wants a payment from Miami to Mumbai to feel no different to one made across town, with all the visibility, speed and safety you’d expect from domestic rails

Making the global local

CROSSBORDER

14 THEPAYTECHMAGAZINE ISSUE 19

FFNEWS.COM

“These are companies sending money to consumers or very small businesses overseas for whom the payment is part of their overall service and client experience. That includes financial institutions and technology, media and telecoms companies,” says McCray. “The smoother we can make it, the better their product and service looks to consumers.” That’s not to say corporate treasurers aren’t actively seeking better payment solutions. “Over the past couple of years there’s been a wave of treasurers updating their processes and technology systems,” says McCray. “Now they’re coming to us saying: we’re ready for more sophisticated applications and banking services. How can you help us optimise our treasury back end?”

GOODBYE, END-OF-DAY REPORT Two pieces of infrastructure allow the bank to deliver this more sophisticated client experience. One is ISO 20022, the richer messaging standard that Swift has made mandatory for cross-border payments. The other is CashPro, Bank of America’s digital platform for corporate and commercial clients, whose APIs let treasury systems pull data and push instructions directly. Treasurers have been promised the end of the end-of-day report before, of course, and McCray is careful not to promise to eliminate all the friction at once. But a good deal of it has been addressed. “We’re moving from an era of end-of-day reports, which you review to work out what to do the next day, to real-time ingestion of information that helps with treasury forecasting and optimising treasury structures,” he says.

Artificial intelligence also has a part to play on the journey, with Bank of America choosing to focus its AI efforts on reconciliation by connecting a customer’s treasury and accounting departments. “An accounting department and a treasury department might have a pile of invoices, some emails and some e-invoices. We’re using AI to tie together the information on the accounting desk with the payment information on the treasury desk,” explains McCray. “It helps to answer questions like ‘who do I need to pay, and when is the right time to pay them?’ And, on the receivables side, ‘which customers haven’t paid us yet, and how do I manage that? How do I manage what happens before and after the payment, such as invoice and remittance information?’.” Dull, perhaps. But the reconciliation pile is where the real cost of a payment hides. The bank also recently announced the launch of Payments Insights, a new CashPro capability for corporate and commercial clients, which provides information on payment efficiency, cross-border flows, and working-capital performance across clients’ U.S. accounts.

THE PUSH FOR PROGRESS CONTINUES

We focussed on low-value cross-border payments because that’s what our clients were asking for AJ McCray, Bank of America

Close at hand: The next generation of cross-border payments is taking shape FFNEWS.COM

The industry’s progress towards its cross-border improvement deadline has faltered. In March this year, the Financial Stability Board warned the G20 that it wouldn’t meet all the benchmarks it had set itself by 2027. Galvanising the industry for one final push, FSB Chairman and Bank of England Governor Andrew Bailey said: “We are not stopping until the job of making a genuine difference to the user experience of cross-border payments is done.” McCray says Bank of America isn’t stopping, either. Its launch markets for instant cross-border transactions are countries where real-time payments are no longer viewed as a premium service by consumers or corporates, but rather as a basic requirement. “Two years from now, we’ll have taken away a lot of the constraints of sending money in a different currency or to a different country, so it feels very much like a local experience,” says McCray. “We’ve shared our strategy with customers, and it’s really hitting the right notes.” ISSUE 19 THEPAYTECHMAGAZINE 15

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Money talks: Digital currencies are moving from experimentation to real-world use

DIGITAL CURRENCIES

Out of the lab! As HSBC prepares to launch a Hong Kong dollar-denominated stablecoin, Lewis Lei Sun says it’s not a case of when tokens will come into mainstream use – it’s which, where and what? This time last year, Lewis Lei Sun was HSBC’s Head of Emerging Payments and Domestic Payments. Digital currency was ‘on the side’ of his desk. Now it’s Sun’s sole focus. No longer ‘emerging’, it’s very much ‘now and present’, he says. THE PAYTECH MAGAZINE What should banks be doing right now to be ready for digital currencies like the digital euro coming into play? LEWIS LEI SUN There are a few key aspects, and, as banks, we need to be extremely mindful of them. The first is that commercial demand from the customer has to be the starting point. Digital money has been discussed for years, but what has changed over the past two years is that it’s come out of the labs; it’s going into production and being used day in, day out. The second is the role the bank plays around trust and confidence. Clients use us primarily because we’re trustworthy. So, clearly, from a risk management, compliance, governance and authentication and authorisation point of view, we have a very important role to play. FFNEWS.COM

Lastly, this is still a very nascent technology, so there are capabilities we need to develop, such as how to create a wallet, mint a token, transfer a token and redeem a token.

TPM What is the digital euro actually for, and where does it sit alongside stablecoins and tokenised deposits? LLS We broadly categorise digital forms of money into key types. The digital euro is a central bank digital currency. It’s backed by central bank money, so it’s completely trustworthy and compliant. Tokenised deposits are a tokenised form of commercial bank money. They’re trusted by that bank’s own clients, but, on a cross-bank basis, there are probably some limitations. Stablecoins are a tokenised form of private money. Because it’s private money, we’ve seen legislation and rulemaking processes emerge in many jurisdictions. These are all typical types of tokenised money, and we don’t believe any one of them will be the winner in the future. They all serve different purposes. TPM Is there a case for a more joined-up

European payments strategy, and where does the digital euro fit into that? LLS In many jurisdictions, including the EU, we’ve seen rapid development in domestic real-time payments, cross-border and cross-currency payments, and digital currency. In a lot of places we’ve seen new initiatives and new products being rolled out. All these payment rails must interoperate, so a cohesive payments strategy is important for any jurisdiction. The digital euro working together with existing systems, so they’re

mutually complementary, is the important design principle. TPM So, what is the priority for HSBC’s digital currencies approach? LLS To serve our clients’ emerging demand. That’s the guiding principle. As I said, we don’t see one winner among the different types of digital currency, so we’re looking at the right instrument for the right use case. Our tokenised deposits service has gone live in six markets, delivering very tangible benefits for clients’ treasury and funding movements. We’re looking at additional use cases, such as using tokenised deposits to settle digital assets, for example, letting a client subscribe to and redeem money market funds on a 24/7 basis.

We don’t believe any one of them will be the winner. They all serve different purposes Lewis Lei Sun, HSBC We also need to expand our footprint. We operate in many markets and, right now, tokenised deposits are only live in six. So you’ll potentially see more announcements from us as we expand to more locations. At the same time, we’re looking at wholesale digital currency, or wholesale CBDC, and whether it can act as an overarching connection on a cross-bank basis, so our tokenised deposits can interoperate with other banks’ tokenised deposits. And, lastly, we want to test out the right usage and the right issuance model for regulated stablecoins in Hong Kong. ISSUE 19 THEPAYTECHMAGAZINE 17

Banking on the Lloyd Review? PUBLIC POLICY

Ron Delnevo, Chair of the UK’s Payment Choice Alliance, is sceptical that this latest review of branch closures will satisfy customers

The Financial Services and Markets Bill 2026 was introduced in the House of Lords on 19 May 2026. Paragraph 3 of the Bill was of particular interest to those concerned about the diminution of access to banking services created by the closure of, on average, around a dozen bank branches every week since January 2015. That’s well over 7,000 branches, along with the ATMs that were located in them. Here is the relevant paragraph, in Part 1 of the Bill: 3. Access to banking services (1) The Treasury may by regulations make such provision as they consider appropriate in connection with providing access to banking services. (2) In making regulations, the Treasury must have regard to any recommendations of the independent review into in-person banking access, announced by the Economic Secretary to the Treasury in a statement to the House of Commons on 14 May 2026. There were a few more sub paragraphs to complete Paragraph 3 of the Bill, but the whole Paragraph took up less than half a page of a document that ran to 138 pages. Not much for an issue of such importance to so many members of the British public. 18 THEPAYTECHMAGAZINE ISSUE 19

In any event, the Chair appointed by HM Treasury to lead the independent review of access to banking services was Richard Lloyd OBE. Lloyd has an interesting CV, which includes, in addition to his current role as Chair of the Independent Parliamentary Standards Authority, serving as Executive Director of Which? and Head of Policy at Shelter. So we should have high hopes of Lloyd, given that he clearly has a keen interest in consumers in general and the neediest in particular. Of course, HM Treasury has a history of severely limiting the scope of the independent reviews it sponsors. Notoriously, in July 2023, Joe Garner, ex-CEO of Nationwide Building Society, was asked by then Chancellor Jeremy Hunt to Chair a Future of Payments Review – the only problem being that Garner was told that cash was ‘out of scope’ of his work. I spoke to Garner and told him he should have refused to carry out the Review on that basis – especially, as Garner was forced to admit, 30 per cent of submissions he had received included references to cash, but they couldn’t be included because of the limitation on scope imposed by the Treasury. Sadly, despite the colour of ties and scarves worn by Government ministers having changed since 2023, the desire of HM Treasury officials to limit the scope of Reviews has not. Here’s what Lloyd had to say about the scope of his Review in his first statement as Chair. “There may be several different types of groups, including those who are vulnerable or have specific needs, that rely on access to in-person banking services. There are also those who desire or prefer to have access to in-person

Ron Delnevo, Chair of the Payment Choice Alliance

banking; however, this Review is focussed on those who require access.” The Review’s scope creates a clear hierarchy of need: it isolates those who ‘require’ access – individuals who face total exclusion if a physical branch closes – from those who ‘rely’ on access, including vulnerable people who could be pushed into digital environments they neither want nor can safely navigate. And it completely ignores those who ‘desire or prefer’ in-person banking. Elsewhere, Lloyd has made reference to the focus being on those to whom access is ‘essential’. On reading about this proposed scope limitation, I immediately contacted FFNEWS.COM

Lloyd, sending him the findings of YouGov market research carried out in May 2026, the same month he was appointed to chair the Review. That research demonstrates quite vividly what the British public ‘desire’. To the question ‘How important, if at all, do you think it is to have access to a physical bank branch in your local area?’, 76 per cent of the adults responding confirmed that it was either very or fairly important to them to have local access to a physical bank branch. To the question ‘Thinking of the future of banking and the ways to bank, which of the following best reflects your view?’, 53 per cent

number of people and organisations for whom access to in-person banking services is absolutely essential. I hope that Lloyd finds the courage to recommend that the British public gets what they desire. One thing is certain: the Labour Government is well aware of what the public actually want. On 4 December 2023, I had a call with Tulip Siddiq, the Labour MP who in 2024 became Economic Secretary to the Treasury. I told her that the 350 Banking Hubs promised by 2029 to deliver community in-person banking services was a totally inadequate number.

The right path: Can the Government match its banking policy with what the public actually want?

of adults responded that it should be equally possible to use a physical bank branch and online banking for everything, with 36 per cent believing some online transactions should be capable of also being carried out at a physical bank branch. The YouGov research findings are broadly in line with research carried out in 2026 on behalf of the UK Post Office. This research found that 68 per cent of the public want face-to-face banking services close to home and 48 per cent use in-person banking at least once a month. So Lloyd is well aware of what the British public want – or ‘desire’ to use his own word. The question is, can he bring himself to ignore that and stick to the narrow focus the Treasury favours, on the surely relatively small FFNEWS.COM

HSBC, Lloyds Banking Group and NatWest) remains unchanged. One thing that Lloyd can take courage from is that a new Prime Minister is now in Downing Street. Andy Burnham seems ready to take strong decisions to give the British public what they want. It is clear from the research results that guaranteeing in-person local banking services would be hugely popular with the British public – aka voters. In our 20-page submission to the Richard Lloyd Review, the Payment Choice Alliance made the following recommendations in relation to access to banking services, including cash: ■ A new independent Cash and Community Banking Services Regulator is needed. ■ Changes to UK banking services have for many years been made to suit UK banks, with insufficient regard for the public interest. To rebalance this, funding for community banking services, including cash, should be provided via a levy on bank profits, with the new Regulator responsible for setting the level of the levy. ■ A minimum of 1,200 Full-Service Banking Hubs are required, so that every UK community with 5,000 or more residents that has previously enjoyed access to bank branch services can automatically have such a Hub. All Hubs should operate six days per week and provide a full range of advice services, along with 24/7 cash access. Other communities can apply to the new Regulator for a Hub. ■ The Cash and Community Banking Services Regulator should be tasked with giving consideration to facilitating new potential providers of access to community banking services, including branch services at community level.

Sadly, despite the colour of ties and scarves worn by Government ministers having changed since 2023, the desire of HM Treasury officials to limit the scope of reviews has not Instead, at least 1,200 are required, so that every UK community with 5,000 or more residents that has ever had a bank branch can automatically be given a Banking Hub. I was assured by Ms Siddiq and her colleague on the call that many more than 350 Banking Hubs would be provided. Nearly three years on, with the new Labour Government at the helm of the country for the last two years, the 350 promise, made by Cash Access UK (funded and owned by Barclays,

Lloyd is due to submit the results of his Review by the middle of this month (October 2026). MPs will only have been back from their summer holidays a few days and are also trying to find space to debate the new Financial Services and Markets Bill. We wouldn’t want the wishes of the British public in regard to access to in-person banking services to get overlooked. So, the Payment Choice Alliance recommendations were all sent in good time... directly to Number 10 Downing Street. ISSUE 19 THEPAYTECHMAGAZINE 19

WE’LL TAKE THE AI ROAD… AGENTIC FINANCE

One Scottish building society’s bold bet on AI with SBS is demonstrating how the technology could turn a minnow into a maneater

Think of the AI front runners in financial services and a small mutually owned building society in the Scottish lowlands doesn’t readily spring to mind. Established in 1848, it’s the oldest building society in the world. And, with less than £2billion under management, it’s certainly not the largest. And yet Scottish Building Society is the first institution to deploy SBS AI Foundation – a proprietary new offering from global financial technology provider SBS (formerly Sopra Banking Software), which provides a common layer across its products, so data from core lending, savings and digital engagement systems can be correlated natively. SBS entered the project with 30 preconfigured use cases for AI Foundation. Roughly 20 per cent were focussed on growth, another 20 per cent on risk and around half on improving back-office operations. Eric Bierry, CEO of SBS and Deputy CEO of 74Software, expected the building society to be cautious and begin by adopting risk modules. He was wrong. “They took a decision to start with growth,” he says. 20 THEPAYTECHMAGAZINE ISSUE 19

That says something important about the emerging AI divide in financial services. For smaller institutions, AI could provide access to analytical firepower previously associated with organisations possessing far greater technology budgets and workforces. “It’s not a question of the size of the institution,” says Bierry. “It’s really a question of agility of the executive.” Scottish Building Society has decided to use the technology for more sophisticated customer segmentation, correlating mortgages and savings with factors including age, geography and length of membership. That knowledge is particularly powerful where customers hold time-limited savings products or have mortgages approaching significant points in their lifecycle. SBS AI Foundation can bring those signals together: perhaps a customer is two months into a three-month promotional savings rate, has two years remaining on a mortgage, is under 40, lives in a particular region and prefers a particular comms channel. Generative AI can take those data points and use them to create a campaign around a personalised offer.

Eric Bierry, CEO of SBS and Deputy CEO of 74Software

There is currently a human at the end of that process approving the final action. But, says Bierry, the Society is already ‘close’ to saying ‘I’m comfortable enough to let the action [happen]’, without that final intervention. Such hyperpersonalisation could enhance customer attraction, experience, product holding and, ultimately, the bottom line – not just for Scottish Building Society, but also for any organisation previously too small to develop that level of insight. For Scottish Building Society, that means connecting previously fragmented signals to understand what an individual member might need, when they might need it and how best to approach them – while allowing its own people to investigate far more opportunities than their finite working hours once permitted. FFNEWS.COM

institutions need a semantic layer establishing what data means, where it came from and when it was accurate. SBS has designed its AI Foundation around that problem, combining a data platform and semantic layer with preconfigured use cases employing large language models, unlocking fresh growth potential for the organisation without a corresponding increase in organisational weight.

Moving up the food chain: AI could help institutions challenge much bigger rivals

And if that translates into faster growth without proportionately higher operating costs, the implications extend well beyond one Scottish mutual.

From weeks to seconds Of course, it’s possible to diligently research a customer and then carefully hone a campaign around them. But the advantage of AI is the speed at which it can do it. What required two full-time employees and potentially weeks of work can, says Bierry, be reduced to seconds. That does not simply mean doing the same work more cheaply. It changes what it is practical to find out. “Now they are able to select 10, 15 possible marketing initiatives,” Bierry says of Scottish Building Society. “They run all of them the same morning, and in the afternoon they decide the one they should be executing first. This is really impactful.”

The legacy challenge Legacy banking platforms were built to process data, not make it readily consumable by AI. Information held in separate systems may describe ostensibly identical concepts differently. Before AI can reason across it, FFNEWS.COM

Building societies have traditionally faced a relatively linear relationship between portfolio growth and the number of people required to administer it. Not any more, says Bierry: “We are starting to give the proof that Scottish Building Society could be increasing their portfolio by 20 per cent without increasing the team.” The implementation for Scottish Building Society only went live in July 2026, but if the

We are starting to give the proof that they could increase their portfolio by 20 per cent without increasing the team Eric Bierry, SBS and 74Software

thesis holds, the Society could grow substantially while remaining a relatively lean mutual – indeed, it’s already announced it is expanding its mortgage offering to the whole of England as well as Wales from this year. There is bravery in its strategy because the easier option was to wait for others to make the running. There are, after all, legitimate questions around the use of AI in regulated financial services such as the risk created by hallucination, explainability, data security

and regulatory compliance. Governance on the platform is therefore critical. “Explainability is mandatory,” says Bierry. Every action and decision can be traced. Bierry says bank executives routinely tell SBS they want to exploit AI but do not want to find themselves ‘front page [of] a newspaper because of a hallucination or another problem’. And that, he believes, is encouraging the market to separate into ‘two worlds’: institutions accelerating into AI and the ‘wait and sees’. The latter are effectively betting that technology will become sufficiently mature that they can catch up quickly later. But Bierry questions that assumption because the changes taking place at Scottish Building Society go way beyond a technology installation programme. “What we have seen there is that the learning curve on the ability to prompt on the system is also growing fast,” he says. “The need is not only a question of technology. It’s also about an organisation building its experience linked to using the technology as it evolves very rapidly.” Employees are learning what to ask, what is possible and where AI creates genuine value.

Banking’s two AI worlds Scottish Building Society is an intriguing test case, and it demonstrates that while large incumbents undoubtedly have greater resources, those advantages can reduce the urgency for change. As Bierry puts it, mortgage-heavy institutions can already see significant portions of their margins several years into the future: “So, they have to put themselves a bit in danger to move and drive the future growth.” A smaller organisation that’s prepared to do that could therefore find it’s punching well above its weight. In fact, Bierry believes institutions able to make the transition over the next four, five or six years could dramatically increase pressure on those that cannot. “The ones able to shift like this… they will put the others on the menu,” he says. “There will be a consolidation.” It’s far too early to know how much of the first-mover advantage Scottish Building Society’s experiment will reap. But what it’s already demonstrating is that AI leadership need not be determined by balance-sheet size. It may instead depend upon appetite, organisational agility and a willingness to learn while others wait. ISSUE 19 THEPAYTECHMAGAZINE 21

Find out more

Rethinking the Route INNOVATION

Disruptive fintechs, by definition, will often rub up against the system. But they don’t always have to pick a fight with legacy, says Luc Gueriane, CEO of Moorwand The last few years have marked a turning point for fintech – what might once have been considered blue-sky innovation is now thought of as mainstream. Nevertheless, some promising ideas have failed to become lasting businesses. Why is that? The sustainable fintechs, in my view, are the ones that clearly define what they have that’s unique and powerful: something that others can’t build themselves, can’t build quickly enough, or would involve them having to partner with organisations that they view as competitors. That must all be underpinned by the business having a strong focus on their target users, and, notably, understanding what valuable features and benefits they can offer through their solution. Fundamental to any fintech innovation is that they are able to bring that solution to life without having to build out the end-to-end ecosystem within which their solution operates. This concept is not always as easy to determine, let alone implement in practice, due to the complex interdependencies that are characteristic of the industry. It’s also important for fintechs to accept that they can’t replace everything – and those that try to will struggle. There are always going to be legacy systems. They’re not all necessarily causing pain to an organisation and they don’t need ripping out immediately in favour of a new implementation. Fintechs must unravel this ecosystem: identify the burning platforms for change, the systems that can be left FFNEWS.COM

in place, and find a way to integrate them. Otherwise, they’ll come to the end of their runway long before they can create a sustainable business. So, this is where Moorwand comes in. We’ve been around since the early days of fintech and we’re comfortable working with edge cases – bold innovation to improve payment flows that might, on the surface, look difficult to bring to market. If there’s a legitimate business case to be made for us supporting a particular type of product or use case, if we think it’s adding something valuable to the ecosystem, we’ll throw our hat in the ring. As a result, we’re proud to have developed a complex and diverse range of solutions that cater for a broad variety of specific requirements. This, in turn, creates a unique hub that allows each client to be connected with the best fit for a multitude of the core components that are needed to bring their vision to life. That includes finding the most strategic approach to use as much existing infrastructure as possible so they can focus efforts on their key innovations. The above is particularly relevant in terms of Moorwand bringing robust, experienced and scalable regulatory support. It’s an area that many fintechs would find an enormous distraction from their primary expertise, and one where there are noteworthy risks if they were unable to build up adequate expertise or resource to maintain pace with their core business. Many innovative fintechs are not always clear on how they fit within a regulatory framework, which

Luc Gueriane, Chief Executive Officer at Moorwand

means they could see goalposts move in time, in different scenarios or geographical markets. This further supports the business case for them to partner with more established and tested parts of the ecosystem (that they sit within and understand are not competitors). What we see on a regular basis is that it’s not always economically viable to implement a rule that has been designed for a big bank. In that case, we have to understand how to work to the spirit of the regulation in a way that can be demonstrated and audited, and fulfils what the regulators set out to achieve. We’ve seen this particularly in open banking, cross-border payments and APP fraud rules, when, during the consultation period, there’s probably not been a coherent message coming from fintechs. Often it’s left to the incumbent players to validate the regulators’ intentions and only then do we see solutions appearing from fintechs. We’ve built out a network of partners over the years who can help us interpret the rules so we can help businesses bring their solutions to the market safely. One thing we know for sure from working with so many solution providers to multiple payment processors and banks, is that if something’s a problem for one, it’s going to be a problem for others in similar situations. Moorwand will work with our peers in the industry, our clients and the most innovative fintechs to find that next niche solution. We won’t leave them dealing with a problem on their own. ISSUE 19 THEPAYTECHMAGAZINE 23

INFRASTRUCTURE

l a w e n re s t n e m y a p t a re Th e g As the key utility operator, Pay.UK must continue to keep systems running safely and efficiently while the country redesigns its payments infrastructure. David Crawford considers some of the difficult questions the future poses Payments infrastructure is at its most successful when nobody notices it. Salaries arrive, bills are collected and money moves between accounts in seconds, with the complex machinery underpinning those transactions largely invisible to the people and businesses relying on it. At the heart of that machinery in the United Kingdom sits Pay.UK. As the operator of the nation’s core retail interbank payment systems – including Faster Payments, Bacs and the Image Clearing System – the organisation occupies a critical position in one of the world’s most sophisticated payments markets. But its remit stretches beyond keeping the rails running. Pay.UK also 24 THEPAYTECHMAGAZINE ISSUE 19

operates fraud prevention services including Confirmation of Payee (CoP), which now reaches more than 99 per cent of organisations initiating Faster Payments where being sure who you are sending your money to is critical. According to recent UK Finance figures, UK losses from authorised push payment fraud reached £576.4million in 2025, up 19 per cent year-on-year, illustrating the reality that faster, more seamless payments must be accompanied by advances in security. That’s top of mind as Britain embarks on a major overhaul of its payments landscape. The government’s National Payments Vision and 2026 Payments Forward Plan have placed innovation, competition and security at the centre of the agenda, while the Retail Payments Infrastructure Board is helping shape the next generation of UK retail payments. For Pay.UK, that creates a balancing act: maintaining the resilience and security of systems used across the economy today while preparing for what comes next. We spoke to Pay.UK’s Chief Strategy and Transformation Officer, David Crawford, about modernising Britain’s payments infrastructure, tackling fraud, fostering innovation and what the next chapter of UK payments could look like.

David Crawford, Chief Strategy & Transformation Officer at Pay.UK

artificial intelligence (AI) to make the payments system more resilient and potentially identify financial crime before it happens? DAVID CRAWFORD: First and foremost, given our priority to keep payments flowing no matter what, I think about resilience. How can AI help us be even more resilient than we are today? It’s something we place huge pride in;

Payments renewal: Why resilience, security and interoperability will shape the future of UK payments

THE PAYTECH MAGAZINE: AI is rapidly changing financial services. How can Pay.UK harness FFNEWS.COM

maintaining that resilient environment not just within Pay.UK, but across the entire ecosystem. Rather than learning about something once a week and then considering what it means, how can we scan the environment every minute of every day for signals and threats? Through analysing those signals, we could detect and prevent incidents before they even happen. And if we can’t prevent something, AI can help us scenario-plan virtually instantly, so that we already have the playbooks and mechanisms to respond. Then there’s the data within payments themselves. Should we start including information about whether a payment originated from AI, an agent or a human? What would that mean for how we authenticate or authorise that payment? TPM: Agentic commerce could fundamentally change not only who initiates payments, but how frequently transactions take place. Are today’s payment rails ready for AI agents – and who is responsible when an autonomous transaction goes wrong? DC: I think about whether the roads are wide enough. Do we have the motorways and the breadth to carry the traffic we expect to see over the next three to five years from agentic commerce? I think the answer is broadly yes. We’re not seeing that huge increase in volume right now, but we have to be ready. Consumers probably won’t spend much more money, but what they do spend could become increasingly fragmented. Instead of doing a weekly shop, your fridge might start ordering things itself, and you’re going to see more payments as a result. The other question is whether we need to change the rules of the road. If a payment was made by an agent, what does that mean for authorisation? What does it mean for liability? If an agent sends your life savings to a scammer, who’s liable? Is it you because you authorised the agent to act, or is it the AI company hosting that agent? These are really difficult questions we’re going to have to face. At the same time, we’re excited about capabilities such as programmable payments, programmable money and the linkage between new forms of money and new payments infrastructure. I can’t tell you what all those user journeys will look like, because I don’t think they’ve been invented yet. TPM: Interoperability sounds simple until you encounter decades of accumulated rules, standards and obligations FFNEWS.COM

underpinning different payment schemes. How can Pay.UK strip away that complexity and make payments genuinely interoperable? DC: When we think about cross-border, cross-scheme and cross-forms of money, enabling all of those to operate seamlessly is going to be huge. The challenge is that just about every scheme in the world has evolved over time and ended up with rulebooks that can contain thousands of obligations and rules. We’ve spent a lot of intellectual capital and energy looking at how we solve that problem. We’ve taken our own rulebooks, extracted the rules, deduplicated and simplified them, and we want to take that to the nth degree. We don’t know what good looks like yet. Is it half the number of rules we have today? Is it a tenth? But we want to get down to the bare minimum because that makes it much easier to establish the conditions for seamless transfers of value between countries, schemes and forms of money. We want to go further and move away from recording these things in documents. We want to digitise the rulebook so you could ask: which rules matter for me when onboarding? Which matter for cross-border payments? If I take a certain action, does that satisfy those rules? The complexity exists because these systems have evolved over many years. Bacs, for example, is almost 60 years old. As we’ve added things to keep payments safe, resilient and efficient, we’ve also built in complexity. We need to simplify that for everyone.

when, without cut-offs at various times of day, will be really important. Then there are new capabilities such as programmable payments and programmable money. I think those will unlock innovation for various parties – not just ourselves and banks, but third and fourth parties that can create new experiences for end users. That’s what I’m personally most excited about: seeing people grab those capabilities and develop ideas and innovations we haven’t even thought about today. If I go back 10 or 15 years, I don’t think anybody necessarily envisaged QR codes, splitting a bill digitally or sending somebody a request to pay you £10 for something you bought yesterday. People innovated on the existing infrastructure to make those things possible. I think the next generation of innovation is going to be really exciting – we just don’t know yet exactly what it will bring. TPM: Real-time, AI-driven payments also mean threats can emerge and spread at unprecedented speed. Does protecting the next generation of payments require the industry to become much more collaborative with its data? DC: Moving towards real-time environments fuelled by AI means we can no longer operate in our own individual silos. We need to collaborate, share information and share our understanding of threats – right down to the basics of sharing data with each other. One example is the Enhanced Data Exchange we’re exploring with our participants. It’s a little like Confirmation of Payee, which we already run: how can we share additional information that helps us detect and prevent fraud before it even happens? There’s a dual threat and opportunity that AI affords everyone – us, our participants and consumers. We’re already seeing AI being used across the ecosystem to protect against fraud, whether that’s by banks, ourselves or consumers using apps that can help keep them safe. The same applies to cyber. But we have to be alive to the fact that those same tools can be used against us. That means thinking about how we build our defences to manage that threat. Pay.UK cannot simply participate in that discussion. There are times when we really have to lead it – bringing people together and creating the conditions that allow the industry to solve these problems collectively.

As we’ve added things to keep payments safe, resilient and efficient, we’ve also built in complexity. We need to simplify that for everyone

TPM: The UK has an opportunity to build its next generation of payments infrastructure around needs that barely existed when today’s systems were created. What will modernisation actually change for consumers, merchants and businesses? DC: Building resilience by design is really important. Given our key role in keeping payments flowing all the time, I’m obviously going to be excited about that. But how we build fraud prevention in by design is also going to be critical. Modern infrastructure can take user journeys we’ve already started developing – things like account-to-account payments – and make them seamless, digital and straightforward, including bringing account-to-account payments to the checkout. It will also start to become a 24/7 capability. Being able to undertake payments no matter

ISSUE 19 THEPAYTECHMAGAZINE 25

KNOW YOUR BUSINESS

Why the payments industry needs to rethink ‘high-risk’

Serhii Zakharov, CEO & Founder of payment ecosystem PayDo, makes a compelling case for recalibrating screening by applying some simple human intelligence to complex business cases ‘High-risk’ is the laziest phrase in payments. One label, doing far too much work. It gets applied to problematic actors and to entirely legitimate, well-run, fast-growing businesses in the same breath, on the same basis, with the same outcome: a declined application and a closed account. The industry treats the phrase as a risk assessment. Most of the time it is the absence of one. The problem with ‘high-risk’ industries is usually not the risk. It is the label. The providers that get this right will be the ones that replace blanket categories with judgement, assessing businesses 26 THEPAYTECHMAGAZINE ISSUE 19

Serhii Zakharov, Chief Executive Officer and Founder of PayDo

on how they actually operate, not simply on the sector they belong to. The label is a shortcut, not a finding, and to understand why it persists, you have to understand how most payment platforms are built. Mass-market providers scale by standardising and automating everything, including risk. That model is genuinely good at what it was designed for: processing huge volumes of predictable, low-complexity transactions at low cost. As an engineering model, it’s a triumph. But an automated risk engine has one instinct when it meets something it does not recognise, and that is to decline. Complexity, to a system optimised for scale, reads as risk, because complexity is expensive to understand and cheap to reject. So a business gets classified not on the basis of what it actually does, but on the basis of a category its model happens to sit near. The label is applied, the shutter comes down, and no human ever asks whether the assessment was correct. This is not risk management. It is risk avoidance wearing the vocabulary of risk management, and avoiding a category has

never been the same thing as understanding a business.

What ‘complex’ really means Strip the word ‘risk’ away and look at what these industries have in common, and a different picture appears. What they share is operational complexity, not moral hazard. High transaction velocity. Multiple jurisdictions at once, each with its own rules. Refund or dispute patterns that are a feature of the business model rather than a warning sign. Newer structures that do not map onto frameworks written for a simpler era. These are operational characteristics. They describe how a business moves money, not whether it should be allowed to. Take a video games platform processing millions of small payments: in-game purchases, regional pricing, refunds, and chargebacks. The velocity and the refund pattern look alarming against a model built for one-off retail, but are simply the economics of the business. Or a skin marketplace for gamers where players buy, sell and trade in-game virtual cosmetic items at high volume, a flow that looks exotic to FFNEWS.COM

a category model but is just a functioning secondary market. Or even a travel platform, where customers pay months before they travel, leaving a long window of chargeback exposure on a business that is entirely legitimate and simply runs a long fulfilment cycle. Every one of those is operationally awkward. None of them is evidence of anything. But a model that cannot separate the awkwardness from the risk hands all three the same label. And the cost of that is not abstract. Legitimate businesses lose reliable access to payments, which is to say they lose the ability to operate. Meanwhile, the risk that the label was supposed to contain does not disappear. It migrates to whichever provider will take it on with the least scrutiny, which is precisely the outcome the label was meant to prevent.

More understanding, not less caution Here is where the framing gets backwards. You do not serve a complex industry by asking your compliance team to accept more exposure, any more than you serve it by asking the commercial team to accept every client. You serve it by understanding that exposure well enough to make a better decision. That is an infrastructure problem before it is a policy problem, and it is where modern electronic money institutions are quietly rebuilding the category. Start with where compliance sits. Treated as a paperwork layer bolted onto the product, it can only gate decisions after the fact. Built into the product architecture, it becomes the thing that makes the decision possible. Reserves, governance, anti-money-laundering controls, monitoring, reporting: these are not obstacles to serving complex industries. They are the capabilities that make it possible to serve them safely. Then be honest about what automation is measuring. The failure in most risk engines is not that they are automated. It is what they have been pointed at. They assess category membership rather than observed behaviour, comparing a refund pattern to a sector average instead of to what is normal for that particular operation. The output looks confident and contains very little information. So the fix is not less automation. What is missing is a correctly defined baseline for the machine to work against, and defining that baseline is where human expertise earns its cost. A specialist establishes what normal looks like for a specific business. Monitoring against that baseline is then a job for automation, because no human can watch transaction flow FFNEWS.COM

at volume and no one should try. Get the sequence right and you catch genuine anomalies that a category-average model would miss entirely, without flagging ordinary activity a hundred times a day. I have sat in enough of these reviews to know what actually settles them. It is rarely the sector. It is 12 months of transaction history and a straightforward question: which of these can you not explain to me? Businesses that can explain their own numbers are usually fine. The ones that can’t are going to be a problem in any sector, including the ones nobody calls high-risk. Human judgement, in this context, should not be confused with subjective judgement. It means experienced onboarding teams asking sharper questions before the automated monitoring starts, so that what the model is measuring is accurate in the first place. That work is expensive at the front end and cheap for years afterwards, which happens to invert the economics most platforms are built around.

Working from the same facts

A firm reselling someone else’s rails inherits someone else’s risk appetite, and that appetite is almost always ‘decline the complicated thing’.

Mind the gap The structural gap in payments is not where people assume. The problem is not that risky businesses cannot find providers. It is that complex, legitimate, high-growth businesses, the ones most likely to build something significant, are least well served by an industry optimised for the simple and the predictable. These are the companies for whom uninterrupted payment processing is the difference between scaling and collapsing, and they are the ones handed a blanket ‘no’ by systems that never looked closely enough to say anything else. Closing that gap is not a matter of being braver about risk. The requirement is to be better at it. The EMIs that understand this are building rails that are safe and scalable at the same time, having worked out that at sufficient depth of understanding, the trade-off between the two mostly dissolves.

This also changes the relationship between the compliance and commercial sides of the business. The two should not be working The next decade belongs to judgement towards opposing outcomes, with compliance The payments market is maturing, and the trying to minimise exposure and commercial automated, one-size-fits-all model is running trying to maximise revenue. into its own ceiling. The simple, predictable Both should be working from the same customers it was designed for are already understanding of the client. What does the spoken for. The growth now sits in the business do? How does money move through industries that require someone to understand it? Where is the real risk them properly. and what controls So my argument to the are in place to manage it? industry is simple. Retire The commercial team the phrase ‘high-risk’. It brings context into the tells you nothing about assessment; compliance a business, except that a brings the discipline system somewhere found to decide whether it inconvenient to assess. that business can be Replace it with the supported safely. When questions that matter. those perspectives come What does this business together, the result is do? How does its money neither a softer risk move? What controls standard nor a slower make it safe to support? sales process. It is Answer those, and Serhii Zakharov, PayDo a better decision. most of what the market This does not lower the bar. It raises the has been calling high-risk turns out to be quality of the decision about where the bar something far more useful: complex, should be set. underserved, and ready to scale with a provider The last piece is owning the infrastructure prepared to understand their needs. rather than renting it. Direct participation in the None of this work is quick, and it does not payment systems, real regulatory authorisation, fully automate. But the alternative is an industry direct connection to the card and banking rails that keeps declining businesses it never troubled – these are what give a provider the room to to understand and calling the decline a risk make a nuanced decision at all. policy. We have done that for long enough.

The simple, predictable businesses it was designed for are already spoken for. The growth now sits in the industries that require someone to understand them properly

ISSUE 19 THEPAYTECHMAGAZINE 27

Maınstream, but BLOCKCHAIN

not as we know it

Big banks are getting serious about DLT and the tokenised assets it supports. So, what does that mean for merchants and consumers?

For the best part of a decade, the question hanging over crypto payments was whether digital tokens would become the currency of the high street – whether we’d be using them to pay for a flat white. It turns out that was the wrong question. The puzzle now facing tier-one banks, card networks, and central banks is not how blockchain can be leveraged at the point of sale. Rather, it is how blockchain rails can be wired into the plumbing that already moves the world’s money, ideally so well that everyday users never notice the role it plays. “The conversation has moved from ‘Is crypto a legitimate payment method?’ to ‘Where does blockchain infrastructure deliver a measurable 28 THEPAYTECHMAGAZINE

Pavel Kashuba, Strategic Leader at Coinspaid Solutions

advantage?’” says Pavel Kashuba, Strategic Leader at Coinspaid Solutions, which provides the white-label infrastructure – wallets, custody, conversion and settlement technology, and compliance tooling – that banks, PSPs and platforms run under their own brand. “A few years ago, discussions were dominated by volatility, speculation and basic education. Today, it’s about stablecoin settlement, tokenised deposits, programmable treasury and interoperability with existing rails,” he says. In other words, crypto payments are increasingly being evaluated as financial infrastructure rather than as a separate industry, as the focus moves up the payments pipeline.

Making crypto invisible Coinspaid’s picture of mainstream adoption is comparatively unglamorous. The most significant industry announcements, Kashuba predicts, ‘will not be about adding another token; they will be about making digital assets operationally invisible to the merchant’. The spiky volatility and technical jargon that made most ordinary merchants suspicious of the crypto

universe for years are being engineered out of sight. Stablecoins and automatic conversion deal with price risk, while APIs, hosted checkouts and managed wallets remove the need to run crypto infrastructure in-house. Compliance screening, reconciliation and reporting are being folded into the same stack. Businesses can decide whether to hold a digital asset, convert it or settle in fiat, according to their own treasury needs. “Merchants should not have to become crypto experts to accept a blockchain payment,” says Kashuba. “The customer may want to pay with a digital asset, but the merchant should be able to receive the currency and reporting format that make sense for their business. That is how crypto adoption becomes a commercial decision rather than a technical experiment.” One of the most persistent myths of the crypto era is that a single chain will eventually win. Kashuba is unequivocal: “There is no universally ‘best’ blockchain; the right network depends on the asset, corridor, transaction size and risk profile.” It is the same logic that already governs fiat. After all, nobody sends a multimillion-pound property completion and a 50p app purchase down the same FFNEWS.COM

rail. The choice between CHAPS, Faster Payments and a card scheme depends on value, counterparties, geography and urgency. Kashuba sees Ethereum as the transaction ‘benchmark’ because of its ‘security, liquidity and mature ecosystem’; Layer 2 networks such as Base and Arbitrum as cheaper, faster options for higher volumes; Solana as ‘particularly compelling for high-throughput, low-value transactions’; and Tron as commercially relevant in ‘USDT-heavy international corridors, subject to enterprises satisfying themselves on governance and compliance’. Atomic settlement is a defining feature of distributed ledgers, and you’d be forgiven for thinking the physics-based moniker implies blistering speed. In reality, atomic means all-or-nothing, where both legs of a transaction complete together or neither does, rather than being a measure of velocity. Time to completion still varies considerably from network to network, which is why Kashuba lists it alongside issuer support, liquidity, operational resilience and compliance tooling as factors that matter as much as raw throughput. “In practice, the winning infrastructure will be multichain, with routing handled in the background,” he says. If the technology question has become one of routing, the regulatory one has become one of design. The EU’s Markets in Crypto-Assets regulation has applied in full since the end of 2024, the US passed the GENIUS Act for payment stablecoins in July 2025, and Hong Kong’s stablecoin licensing regime came into force the following month. Regulation is changing tokenisation from a largely experimental activity into an institutional one, says Kashuba. Banks and issuers can now build around identifiable licensing, reserve, redemption and governance requirements – but that also means ‘compliance is becoming part of the product architecture’. Providers must decide upfront where an asset can be offered, who may hold it and what happens when it crosses networks or borders. With global rules still fragmented, says Kashuba, ‘the next stage is therefore not only tokenisation, but compliant interoperability’.

Banks build the new rails Nowhere has that proposition been tested more rigorously than in Project Agorá, the Bank for International Settlements’ experiment in tokenised correspondent banking. It brought together seven central banks – the Bank of England, the Federal Reserve Bank of New York, the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank and the Banque FFNEWS.COM

de France on behalf of the Eurosystem – with more than 40 private firms, including Citi, HSBC, J.P. Morgan, BNP Paribas, Santander, Swift and Mastercard. The prototype results, published in May, undercut two long-held objections. The first was that central banks would have to cede control of their currencies to a shared platform. Agorá’s two-layer design keeps tokenised commercial bank deposits on a common ledger for coordination, while tokenised reserves stay on each central bank’s own ledger, under its own authority. The second was that compliance would be the bottleneck. But sanctions screening, anti-money laundering and fraud checks that typically run sequentially in correspondent banking ran in parallel, with transactions settling in seconds once liquidity was locked, around the clock. The project now moves on to real-value transactions, with the Bank of Canada joining. Agorá’s significance lies less in the speed than in who signed up. This was central banks and commercial banks designing the rails together, rather than a crypto-native challenger trying to route around them. As a model of public-private collaboration on shared infrastructure, it is hard to beat.

Merchants should not have to become crypto experts to accept a blockchain… [they] should be able to receive the currency and reporting format that make sense for their business Pavel Kashuba, Coinspaid Solutions But it’s far from being alone. In July, Swift declared its blockchain-based shared ledger ready for use, with 17 banks including UBS, BNY, Citi and Wells Fargo lined up to pioneer 24/7 tokenised deposit payments. And in September, the ECB switched on Pontes, which links DLT platforms to the Eurosystem’s TARGET services so that tokenised wholesale transactions can settle in central bank money. Today, companies across the crypto industry are expanding into one another’s areas of expertise. Custody providers are moving into payments, payments companies into custody, consumer exchanges are developing payment acceptance solutions for businesses. “This is neither good nor bad; it is simply where the industry stands,” says Kashuba. “At the same time, I’d like to see more collaboration. For example, Coinspaid and Coinbase could launch a joint initiative offering cashback to

customers who pay for purchases using blockchain technology. They could also create loyalty programmes for retailers that process their first 1,000 blockchain-based transactions. “The entire industry would benefit. Coinspaid is open to partnerships of this kind. Strong initiatives that encourage adoption would also give traditional financial institutions more reason to use blockchain infrastructure across a wider range of payments.” What is already happening is more targeted. For always-on, cross-border sectors such as digital entertainment, e-commerce and egaming, stablecoin rails are replacing parts of the correspondent chain in merchant settlement, treasury transfers, supplier payments and payouts, where settling in minutes rather than waiting for banking windows frees up working capital. “The likely future is coexistence,” says Kashuba. “Over time, merchants may not know which rail was used; they will simply receive the fastest compliant route.” The same invisibility is emerging at the frontier. x402, now stewarded by the x402 Foundation under the Linux Foundation, revives the long-dormant HTTP 402 ‘Payment Required’ status code, letting a server quote a price and an AI agent pay it without a checkout page or account. “The stablecoin is the money, the blockchain is the settlement rail, and x402 is the communication and authorisation layer,” says Kashuba, who sees paid APIs, data and compute as the obvious early markets. Further ahead lie tokenised accounts offered by banking proper. If tier-one banks offered native BTC- and ETH-denominated accounts, corporates could run fiat and digital assets from a single treasury – though Kashuba expects stablecoins and tokenised deposits to get there first, given unresolved questions over capital treatment and valuation. He is candid that this would reshape his own market. “Basic access to digital assets would become commoditised. The value would move toward orchestration,” he says. Kashuba also expects a ‘true crypto bank’, combining regulated deposits, lending, custody, exchange and payments with blockchain settlement built into its core, to appear in selected areas before the end of the decade. “The decisive factor will be regulatory integration, not technology,” he says. When that happens, whether anyone buys their Starbucks with Bitcoin will be beside the point. The rail beneath the transaction may well be a blockchain. The measure of success will be that nobody notices. ISSUE 19 THEPAYTECHMAGAZINE 29

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Passing the test: Trust will determine how far consumers are prepared to let AI into their financial lives

BANKING BEYOND THE PROMPT BANKING BEYOND

AGENTIC BANKING

Would you trust your AI agent to instruct your bank? Maybe not yet. But NetXD is already planning for the day it becomes a reality. Then it will bring private banking to the masses

Many of us are wary of delegating financial decisions to AI agents, but the picture is changing fast. Research from Experian and Forrester Consulting published in July found that, of 6,247 credit-active consumers across 13 markets in EMEA and Asia Pacific, 82 per cent already trust AI to compare loans across providers and 54 per cent are comfortable with an agent applying for credit on their behalf. Twenty-three per cent said they would let an agent act under pre-agreed rules, and five per cent would give it full autonomy. A trusted intelligence that could FFNEWS.COM

monitor our accounts, notice that one pays nothing while another pays four per cent and put the transfer in front of us to approve, would be useful to almost anyone. Building such a solution that a bank and a regulator would accept is another matter. Many consumers aren’t waiting for it to happen, though. “They are starting to say, ‘Why can’t my bank do these things for me, if I can get Claude or ChatGPT to do it?’. We’re already seeing individuals give their bank account passwords to these agents, which I’m not so sure is a wise move,” says investor and fintech entrepreneur Lon Huffman. Huffman’s last venture, SavvyMoney, put credit scores and money-saving offers inside the online banking of roughly 2,000 US banks and credit unions. So, a solution that makes it easy for consumers to act on advice that could improve their financial wellbeing is clearly in his ballpark. The problem, as he sees it, is less about the AI than the

Suresh Ramamurthi is Chairman and Founder of NetXD

Lon Huffman is Managing Partner, CEO at LJ Huffman Ventures

plumbing underneath it. Banks run their core systems, online banking, loan origination and payment engines as separate vehicles ‘with a lot of walls in between them’, he says. “All that long-term memory data frankly doesn’t exist in one place at any financial institution. The larger institutions are spending tremendous amounts of money today trying to get that data into one place so they can use AI, or even just do analytics.” Which is why a new encrypted, customer-held, long-term memory layer that works with whichever AI agent the customer chooses would be a game-changer in Huffman’s opinion. LIAM is just that. A Large Intelligent Agentic Memory, it’s been built by NetXD, a banking infrastructure provider whose programmable ledger, payments hub and AI tools are already embedded in banks, credit unions, neobanks and fintechs in the U.S. and India. It addresses Huffman’s security concerns from the start. ISSUE 19 THEPAYTECHMAGAZINE 31

That has a lot to do with NetXD Chairman and Founder Suresh Ramamurthi’s previous banking-as-a-service venture. Built on 500 microservices, it taught him that trust, compliance, risk and reconciliation must be locked down ‘before the money moves’. His next platform, NetXD, was therefore zero trust at the outset. Its first use case was institutional, ‘banking the customers of customers of customers’, where a client might need a million virtual accounts. Business and retail banking followed. When generative AI arrived, the obvious move was to build a model. “We were very tempted to start post-training or pre-training LLMs, and, given my background, it wasn’t hard to figure out how to do that,” says Ramamurthi. “Then we realised that LLMs are probabilistic, and banking is a deterministic business. So we needed to build long-term memory that was deterministic.”

stays there. “The bank has no awareness, just as today it doesn’t know when you upload your CSV file into a frontier model,” Ramamurthi adds. And the agent never instructs the bank. It sends its suggestion to the customer, where it appears in their mobile or online banking as an action they can take if they choose to. Nothing reaches the bank until they do, and no transaction can be processed unless it is signed with the customer’s private key. “The bank only honours [the customer’s] signature. It doesn’t honour the AI’s request,” says Ramamurthi. “The agents never have direct access to the bank’s APIs.” Customers can switch off the suggestions or revoke an agent’s access to their data at any time, and every action carries an immutable audit trail. In fact, NetXD says it is the only

We’ve noticed that not all legacy banks want you to have an easy way to move money… that is going to change Suresh Ramamurthi, NetXD

LIAM isn’t just a banking product. NetXD also pitches it to hospitality, travel, retail and fitness brands that want their agents to remember customers. Banks are the hardest audience, though, because it is in finance that a memory with access to so much of a customer’s data raises the sharpest questions about security and liability. “I’m also chairman of a bank, and this is the biggest question in my mind,” says Ramamurthi. “I didn’t want to wake up in the middle of the night worrying about it. So we addressed it in the design.” LIAM stores preferences alongside data from customers’ accounts, and it belongs to the customer, not the agent or bank, says Ramamurthi. As consumers increasingly trust AI with their finances, LIAM ensures they stay in control. In a real-world scenario that means the bank continues to do what it has always done, which is give customers their own data. It’s just the vehicle that’s changed. “Thirty years ago I gave your data to you in a passbook. Ten years ago I gave it to you as a CSV or PDF file in online banking. Today, I’m giving it to you via an API,” says Ramamurthi. The customer connects that data to an agent of their choice, with LIAM supplying the context. Whatever passes between customer and agent 32 THEPAYTECHMAGAZINE ISSUE 19

Power with permission: AI advises, but the customer stays in control

platform offering zero-trust security on this banking data pipe. Huffman’s view is that this is the only order in which agentic banking can work. “At the point at which the transaction actually happens, you need the permissions and the audit trail,” he says. “It can’t happen afterwards, where you check at night to see what’s gone on. You can’t have the consumer’s desire to do it without the trust and permissions set up appropriately on the back end.” Data from every account the customer holds at every bank is mirrored for them through the platform, and the memory stays with them if they change agents. They could even run two agents side by side, Ramamurthi suggests, and ‘make them fight it out’ for who gives better advice, before choosing which of the recommendations to act on, at their own pace. For banks, that is uncomfortable. If customers’

agents are free to move their money wherever it earns most, the bank becomes, in Ramamurthi’s words, ‘an execution utility for your transactions’. “We’ve noticed that not all legacy banks want you to have an easy way to move money out, or bring money in,” he says. “That is going to change in the industry, and the first movers have an advantage today.” Huffman agrees. His experience at SavvyMoney is that banks adopt customer-facing tools as ‘a defensive play’. “They want to maintain the relationship with their customer. They don’t want to lose it to the Credit Karmas of the world,” he says. He predicts banks will start small, with moves that stay ‘inside the four walls’, such as shifting spare savings into a high-interest account. Ramamurthi rests his case for embracing it on what banks will have left once payments are commoditised. “In the next few years, maybe banks offer APIs or MCPs [Model Context Protocol servers] and agentic access to data that lets the customer move quickly. Maybe that creates a switching cost, like it did 40 years ago when banks offered VPNs for large enterprise customers to connect into the banking system. “But what we’ve built into the substrate is programmability. So it’s not a dumb utility, because enterprise customers and consumers alike need programmability. And the bank will plug into the customer’s agent with the highest form of quantum-safe security.”

Banks want to maintain the relationship with their customer. They don’t want to lose it to the Credit Karmas of the world Lon Huffman, LJ Huffman Ventures

Banks can connect NetXD’s agentic layer to their existing APIs or run the whole stack as a sidecar or a new digital bank. Ultimately, Ramamurthi’s aim is to bring private banking to the masses. “What does a private banking customer get? A human being who gives them options to make more money with their money and safeguard it. Those are just programmable scripts today,” says Ramamurthi. “Henry Ford made sure the car was affordable to everyone. I believe a successful bank five years from now will make private banking available to everybody. Meeting a human will be a quaint experience. The reality is your agent is going to connect to your bank, and every account will be run like a private bank’s.” FFNEWS.COM

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Overload: Payments choices don’t have to be complicated

TOO MUCH INFORMATION! PAYMENT RAILS

HSBC’s Amber Henderson-Smart explains why the next era of payments will be defined by orchestration, simplicity and trust for corporate customers Corporates face an expanding range of ways to move cash. Alongside established domestic and cross-border infrastructure are instant payment schemes and emerging forms of digital money, including tokenised deposits. But the more sophisticated these rails become, the less HSBC believes its customers should have to think about them. That principle is at the heart of HSBCnio, an API-first proposition unveiled at Sibos 2026 in Miami, that’s an API to rule them all. “No one logs on to say ‘I want to make a real-time payment today’ or ‘I want to do a CHAPS payment today’,” says Amber Henderson-Smart, Global Head of Client Connectivity, Global Payment Solutions at HSBC. “They just know they need to pay 34 THEPAYTECHMAGAZINE ISSUE 19

someone, and it needs to go at a particular time. “In the past, many of our clients were accustomed to having to understand different rails and different payloads. We’re trying to hide that complexity from them. “With HSBCnio, they don’t need to know what type of payment it is or which API to call. They have just one.” Henderson-Smart has held clients’ hands through a decade of payments transformation. In 2016, she started HSBC’s real-time payments programme, as regulators and clearing operators accelerated efforts to modernise domestic payment rails. “We saw a big rise in regulators and clearing operators wanting to modernise the underlying rails,” she recalls. “But it went

Amber HendersonSmart, Global Head of Client Connectivity, Global Payment Solutions at HSBC

beyond that, into value-added services: paying to mobile numbers, direct debits and so on.” Open banking followed, ‘which I don’t think has taken off as consistently across markets’, she says, alongside ISO 20022 and the push towards richer data and greater interoperability. “So, over the last 10 years it’s all been about modernising the underlying rails to achieve more speed, visibility, confidence and interoperability. Digital assets and currencies are the new tipping point,” says Henderson-Smart. “What matters now is how we design our digital experiences, whether that’s web and mobile, embedded in a platform or AI interfaces. We need to take away the complexity of clients having to understand all the different rails.” FFNEWS.COM

This reflects a broader rethink of how banks present themselves. “Historically, banks have been proud of their product capabilities – and we should be. But now it’s about stepping back and asking how the client looks at things and how their systems operate.” For Henderson-Smart, connectivity is becoming an abstraction layer between complex financial infrastructure and a client who simply wants an outcome. “If I can make connectivity simpler, with less effort and cost, I can deploy more new capability to clients over the same API or rail,” she explains. It’s worth noting that in some of these relationships, speed of transaction is not the winner-takes-all metric. Real-time information around the transaction can be gold dust. While the treasurer does not have to be bothered about which mechanism delivered the information or payment, knowing a live balance can affect liquidity and funding decisions. “It really comes down to the use case and the client: where does speed actually add value?” Henderson-Smart adds. Businesses are undertaking treasury transformations and replacing legacy systems. Cloud has changed what ERP (enterprise resource planning), treasury management and accounting platforms can deliver, while APIs are moving banking services into the environments where clients already work. “More clients want to operate in their own systems,” Henderson-Smart says. “That’s grown over the last two or three years.” AI could accelerate that shift again. “Plugging APIs into an AI agent to deliver information will be foundational,” she adds.

FROM PROCESSING TO ORCHESTRATION If hiding the rails is the objective, orchestration is how HSBC intends to get there. “Processing is really about taking an instruction, validating it, then storing and forwarding it,” Henderson-Smart says. “Orchestration lets us take an instruction in and make more decisions based on the information, do enrichment and multiple processes, and hide that complexity from the client.” Tokenised deposits provide a useful illustration. HSBC has already developed APIs around tokenised deposits, but interacting with them can require clients to initiate token creation, transfer and destruction. “Many client systems, ERPs and TMSs (treasury management systems), haven’t caught up with how to integrate these new forms of digital money,” Henderson-Smart says. FFNEWS.COM

HSBC’s answer is to move that complexity back into the bank. A simplified API for account-to-account tokenised deposit transfers is designed to let the customer request the transaction, while HSBC orchestrates the token activity behind it. It is a glimpse of where conventional payments could go, too. When HSBC introduces payment initiation through this architecture, Henderson-Smart says clients should not need to understand different payment types to select one. “They just need to know who they’re paying, from which account, in which currency and when it needs to arrive, and then we either offer options or route it automatically on their behalf.” The customer specifies the outcome; the bank determines the optimal way of achieving it. And that might prompt a more profound choice of options for the bank than simply making an existing rail faster.

AI MEETS THE TRUST PROBLEM The same philosophy is beginning to extend beyond payments into the interface itself. Henderson-Smart describes an evolution from ‘human-to-bank’ – customers logging into bank portals and mobile tools – towards ‘system-to-bank’, with services embedded directly into corporate technology. Now comes the third model. “We’ve gone from human-to-bank, to system-to-bank, and now agent-to-bank is coming,” says Henderson-Smart.

We need to take away the complexity of clients having to understand all the different rails

Amber Henderson-Smart, HSBC HSBCnio includes model context protocol (MCP) connectivity, designed to allow authorised AI tools to query banking information. For now, Henderson-Smart sees the technology playing more of an advisory than a transactional role. “We’re seeing more of an appetite to use AI to process information, interpret it and do forecasting,” she says. Whether businesses are ready to allow an autonomous agent to move money is another question. “It’s really mixed,” she says, with attitudes varying according to technology readiness, risk appetite and operating models. But Henderson-Smart nevertheless expects AI

to progress from interpretation towards execution. “We’ll see AI mature and agents actually taking action,” she says. That brings the conversation back to a concept banking understands well: trust. “The key thing for banks and payment providers will be agent trust: how do we know the agent, tie it back to an accountable human and make sure everyone feels safe – that it’s operating with the right permissions and access to the right data?” The challenge is in establishing an identity and permission framework that’s capable of proving who – or what – is acting, what it is allowed to do and which human is accountable for it. “For us, connectivity is what makes that safe,” she says.

BUILDING FOR CONSTANT CHANGE For capabilities core to the business or providing differentiation, HSBC wants to own the architecture. Elsewhere, Henderson-Smart says partnership and co-creation can accelerate delivery. Either way, the infrastructure has to be composable. “That goes back to how we’ve built HSBCnio: API-first, so we can expose services through different channels in a composable way, and evolve and deploy them quickly.” That shift is changing the bank’s development cycle. “A big focus this year has been shifting from quarterly releases on our digital channels to near-daily tech releases. I think 30 days out of a 31-day month is where we’re at.” In a 24/7 payments environment where upgrading one service cannot mean taking an entire platform offline, that’s a critical timeframe. It also hints at the broader change HSBC is attempting. For the first phase of the payments revolution, banks built faster rails. The second connected those rails through APIs and embedded them inside corporate systems. The next may be about making the underlying choice almost invisible. That does not make infrastructure less important. Real-time payments, richer data, APIs, tokenised deposits and eventually agentic transactions create an increasingly sophisticated engine beneath the surface. But the measure of success changes. The client should not have to know how complicated that engine has become. They should simply be able to say who needs paying, how much, in which currency and when the money needs to arrive. The rest is the bank’s problem. ISSUE 19 THEPAYTECHMAGAZINE 35

Partnerships with purpose define the current banking era. Mambu and ClearBank are a clear example of what that can achieve

infrastructu r PARTNERSHIPS

For much of the past decade, fintech’s defining narrative centred on disruption. Challenger banks promised to unseat incumbents. Startups set out to replace legacy technology. New entrants questioned whether traditional banking, burdened by decades-old systems and complex regulation, could keep pace with the expectations of digital-first customers. Today, that narrative is changing. Rather than replacing banks, fintech is increasingly helping them evolve. The industry’s next phase is being shaped not by consumer-facing apps alone, but by the technology platforms, regulated infrastructure and strategic partnerships operating behind the scenes. The organisations defining the future of financial services are the ones customers never see. Among them are Mambu and ClearBank. One has become synonymous with Cloud-native, modular core banking, enabling financial institutions to modernise products without replacing entire technology estates. The other has established itself as one of the UK’s 36 THEPAYTECHMAGAZINE ISSUE 19

leading Cloud-native clearing banks, providing the regulated infrastructure that allows payments, accounts and embedded banking services to operate securely and at scale. Individually, they occupy different layers of the financial ecosystem. Together, they illustrate one of fintech’s biggest shifts: from disruption to collaboration. It is a partnership built not simply on complementary technology, but on a shared philosophy about how modern financial services should be delivered. “We’re quite careful about who we choose to partner with,” explains Emma Hagan, CEO of ClearBank UK. “It’s really important to us that we’ve got something that’s valuable, that we go to market in a way that aligns not just with our commercial aims but actually, from a cultural perspective, our values and what we’re looking to achieve.” In an industry where partnerships are often announced with little more than a technical integration, Hagan’s emphasis on culture is telling. For ClearBank, resilience, regulatory confidence and long-term thinking are not simply product features; they underpin every commercial relationship.

Victor Mithouard, Senior Strategy and Delivery Director at Mambu

Emma Hagan, Chief Executive Officer at ClearBank UK

“A big part of that on the ClearBank side is stability, resilience and built-in compliance, and with a view to future-proofing,” she adds. “Things like new ISO standards, digital assets or stablecoins – that interoperability is something we look to build in. It’s part of our DNA rather than an extra thing we’re trying to be.” Those priorities have become increasingly important as financial institutions navigate one of the most significant periods of technological change since digital banking emerged. The rapid growth of embedded finance, real-time payments, AI-powered financial services and tokenised assets is reshaping customer expectations just as regulators introduce new standards designed to improve transparency, interoperability and resilience. For banks, fintechs and payment providers alike, the challenge is no longer whether innovation is necessary. It is how to innovate without compromising trust. That balancing act lies at the heart of the Mambu and ClearBank partnership. While Mambu provides the flexible, Cloud-native core banking platform on which new products can be built, FFNEWS.COM

u re

ClearBank delivers the regulated infrastructure that allows those products to operate in the real world. Together, they enable financial institutions to accelerate development while relying on infrastructure engineered for compliance, scalability and resilience. It is also a model that reflects a broader trend across financial services. The first generation of fintech asked whether technology companies could become banks. The current generation asks whether banks need to build everything themselves. Increasingly, the answer is no. Instead, financial institutions are assembling ecosystems of specialist partners, each responsible for a distinct layer of the banking stack. Core banking, payments, compliance, identity, fraud prevention and customer experience are becoming modular capabilities delivered through trusted partnerships. For Hagan, that shift changes how organisations should think about regulation. Too often, she argues, compliance is viewed solely as a cost of doing business. Instead, she sees it as an opportunity. “People often look at regulation or change as a hurdle – something you have to do,” she says. “But if we look at it through a different lens, it’s actually an opportunity to deliver something better for consumers, better compliance standards, less friction and less burden.” FFNEWS.COM

History, she believes, supports that argument. When the UK’s Faster Payments Service was introduced, many institutions saw it as another expensive technology programme. Within a few years it fundamentally changed how consumers expected money to move. “What seemed like a major change at the time has become completely embedded in people’s expectations,” Hagan says. “Today, payments are expected to happen immediately.” The next major transformation, she believes, will be no different. As financial institutions work through the last stages of ISO 20022’s phased adaptation, many are understandably focussed on migration programmes and regulatory deadlines. Yet beneath the messaging standard lies a much broader opportunity to rethink financial infrastructure. Victor Mithouard, Mambu’s Senior Strategy and Delivery Director, believes the industry risks underestimating the scale of that change. “ISO 20022 is a fantastic opportunity to harmonise the language of payments while providing the instant infrastructure that can fully leverage that language,” he says. For many organisations, however, the project is mistakenly viewed as a payments initiative. “We’re not talking about just payments transformation,” he explains. “We’re talking about fundamental financial operating model transformation.” Legacy banking systems were designed for a world dominated by overnight processing, batch files and end-of-day reconciliation. Instant payments overturn those assumptions.

We’re not talking about just payments transformation. We’re talking about fundamental financial operating model transformation Victor Mithouard, Senior Strategy and Delivery Director, Mambu Every process surrounding payments – from fraud detection and anti-money laundering to compliance screening and customer servicing – must increasingly operate in real time. At the same time, ISO 20022 introduces significantly richer data into payment messages, creating opportunities that extend well beyond settlement. “That structured data allows the financial system as a whole – banks and fintechs alike – to build better customer experiences,” Mithouard says. “At the same time, those

experiences become safer because institutions know more, in a more consistent way, about the payment and the customer.” Better structured payment data can improve fraud prevention, reduce operational friction, automate compliance and unlock services that were simply not possible under previous messaging standards. For infrastructure providers such as Mambu and ClearBank, the challenge is ensuring clients can access those capabilities without rebuilding their technology stacks from scratch. That, perhaps more than anything else, explains why infrastructure has become fintech’s newest competitive advantage.

Invisible by design If regulation provides the catalyst for transformation, infrastructure determines whether that transformation succeeds. For many financial institutions, particularly smaller banks, building societies and fast-growing fintechs, the greatest challenge is not understanding where the industry is heading. It is finding the capacity to get there. Years of accumulated technology, multiple payment rails and ever-evolving regulatory obligations have created increasingly complex operating environments. Innovation now competes directly with compliance programmes, resilience requirements and technology maintenance. Mithouard sees that challenge repeatedly in conversations with clients. “There was a time when large banking conglomerates dominated the market because they had the resources to remain compliant and adopt new payment methods,” he says. “But they weren’t necessarily the organisations driving the consumer agenda.” That opportunity was seized by fintechs, whose modern technology stacks enabled them to innovate faster and deliver the experiences customers increasingly expected. Today, however, both groups face the same problem. “When we speak to banks and fintechs, we regularly hear that more than 40 per cent of IT budgets are being spent on compliance,” Mithouard says. “That’s outlay that stops innovation.” For smaller institutions, the trade-off can be particularly acute. Every pound spent maintaining regulatory obligations is a pound unavailable for improving customer journeys, developing products or expanding into new markets. Mithouard believes infrastructure partnerships offer a powerful way to rebalance that equation. ISSUE 19 THEPAYTECHMAGAZINE 37

“Organisations need trusted partners that continually evolve their platforms as regulation changes,” he explains. “You invest once with trusted partners, and those partners continually evolve the platform as regulation changes.” The emphasis is not on outsourcing responsibility, but removing unnecessary complexity. That philosophy resonates strongly with Hagan. For her, the best infrastructure is almost invisible. “I call it the invisibility layer,” she says. “You don’t really know it’s there, but you know somebody is taking care of it every single day.” Whether regulation evolves, payment schemes introduce new requirements or best practice changes, clients should not have to rebuild their operating model each time. Those changes should happen beneath the surface. “It allows organisations to focus on servicing customers, moving money and delivering a great digital experience,” Hagan says. “The infrastructure partners take care of the difficult part.” It is perhaps the clearest illustration of how banking itself is changing. Customers increasingly differentiate financial institutions through experience. Banks increasingly differentiate themselves through partnerships.

Building for growth before growth arrives That invisible infrastructure becomes even more important when businesses begin to scale. Few events expose weaknesses in financial systems more quickly than rapid customer growth. While product launches generate headlines, operational resilience determines whether organisations successfully move from challenger to established institution. For ClearBank, Hagan says, scalability has never been treated as a future consideration. “We don’t actually look at it as a growing pain,” she explains. “Growth and scalability have always been part of our DNA.” That philosophy reflects ClearBank’s journey. Since launching in 2017, it has evolved into a significant component of the UK’s payments ecosystem, while many of its clients have scaled at extraordinary speed. Those clients, Hagan argues, should never have to question whether the infrastructure underpinning them is up to the task. “When they’re growing, the last thing they want is to worry about whether their supporting infrastructure can keep pace,” she says. “If we have an outage, they’re taking calls from consumers and SMEs. That’s real damage.” Rather than reacting to growth, ClearBank plans for it: “We’re always asking what we need 38 THEPAYTECHMAGAZINE ISSUE 19

to do today to stay ahead of where our clients will be tomorrow.” That forward planning extends beyond capacity. Every new product, regulatory requirement and operational process is assessed not simply on whether it works today, but whether it will continue working as transaction volumes and customer expectations evolve. The same thinking underpins Mambu’s approach to Cloud-native banking. Modern banking platforms are no longer static software deployments but continuously evolving services. New regulation, payment standards and customer expectations become incremental improvements rather than major transformation programmes.

That interoperability is becoming even more valuable as financial institutions prepare for developments such as digital assets, tokenisation and programmable money. For Hagan, these technologies are no longer theoretical. “As they’ve moved beyond theory and headlines to become something real, we’ve been looking at how we integrate them into our infrastructure,” she says. Rather than expecting every institution to develop specialist expertise independently, ClearBank’s objective remains the same: absorb complexity centrally so that clients can focus on serving customers. “The research, the thought and the build has already been done,” Hagan explains. “Clients can concentrate on serving their customers while we take care of the complexity beneath the surface.” It is the same principle that defines the partnership itself: not replacing banks, but enabling them.

The next chapter

Clients can concentrate on serving their customers while we take care of the complexity beneath the surface Emma Hagan, CEO, ClearBank UK Together, Mambu and ClearBank embody a broader shift across enterprise technology – from periodic change programmes to continuous modernisation.

Collaboration becomes an advantage Collaboration, according to both Hagan and Mithouard, is the way to service the needs of an increasingly sophisticated client base. “If you went back a few years, everyone tried to do everything themselves,” Hagan reflects. “The world’s changing. The expectation now is that you do something really well – and partner with people who are really good at what they do.” Mithouard concurs: “Clients don’t want lock-in anymore,” he says. “They want the best clearing partner, the best payments platform and the best core banking engine – but they also want those partners to work together.”

Financial services have always evolved through successive waves of infrastructure. Card networks transformed retail commerce. Faster Payments redefined domestic money movement. Cloud computing reshaped technology delivery. Now, real-time finance, ISO 20022, embedded banking and digital assets are converging to create another inflection point. What distinguishes this transition is that no single institution can deliver it alone. Banks require technology partners. Technology companies require regulated banking infrastructure. Infrastructure providers rely on open ecosystems capable of integrating seamlessly with one another. For Mambu and ClearBank, that future is already taking shape. One provides the flexible banking platform. The other delivers access to regulated rails. Together, they remove much of the operational complexity that has historically constrained innovation, allowing banks and fintechs alike to focus on where they create the greatest value: understanding customers, developing products and building trust. As regulatory expectations continue to rise and technology cycles accelerate, infrastructure itself is becoming a source of competitive advantage. The winners will not necessarily be those with the largest balance sheets or the most recognisable consumer brands. They will be the organisations capable of combining resilience with agility, compliance with innovation, and partnership with purpose. FFNEWS.COM

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The Compli REGULATION

A change to regulations governing payment providers in the UK is more than a technology shift. It’s a fundamentally different way of working, says Kani

When new safeguarding rules to better protect UK consumers using payment firms came into effect in May this year, it was reasonable to assume the industry would be ready for them. It had been given nine months to adjust its processes, after all. And it wasn’t as if the writing hadn’t been on the wall long before that. Payment firms that went bust between Q1 2018 and Q2 2023 couldn’t repay 65 per cent of their customers’ funds, according to data from the UK’s Financial Conduct Authority (FCA). It was just a question of whether consumer trust ran out before the regulator’s did. And yet, in the days leading up to the FCA’s stricter CASS (Client Assets Sourcebook) 15 rules going live, 90 per cent of businesses still weren’t compliant with at least one key aspect of the new requirements, according to a study commissioned by the 40 THEPAYTECHMAGAZINE ISSUE 19

reconciliation and reporting platform Kani. It was a statistic even it found shocking. The new rules are not dissimilar to those that apply to other, traditionally more heavily regulated areas of financial services, and are designed to ensure that consumer cash is ringfenced and protected should the worst happen. The principal way to keep on top of that is through daily reconciliations – a key requirement of CASS 15. “We expected to see a higher level of operational readiness,” says Roger Binks, Managing Director at Kani. “A number of firms believed they were aligned with the new CASS 15 requirements, but when we looked more closely at their ability to explain, evidence and test specific parts of the reconciliation process, the confidence levels dropped. “The biggest surprise was the gap around daily reconciliations. Given how central they are to the new regime, we expected more firms to have that process firmly embedded.”

Roger Binks, Managing Director at Kani

The FCA’s zero tolerance for breaches doesn’t bode well for any organisation found lacking. Failure to comply with CASS 15 risks hefty fines and personal liability for managers overseeing the processes. And you can see why the FCA is taking such a hard line. In 2017, as little as one per cent of consumers used Payment Services Providers (PSPs) and Electronic Money Institutions (EMIs) to complete transactions. By 2024, that had risen to 12 per cent, and today they are responsible for more than £2trillion of payments. Moreover, one in 10 people now holds an e-money account and uses it as their main day-to-day transaction account. Failing to bring these providers more in line with the rest of the banking industry would eventually present a systemic risk to the UK’s financial system. Tellingly, 32 per cent of respondents to the Kani survey believed they were FFNEWS.COM

liance Gap already compliant with updated CASS 15 requirements, and yet just 13 per cent were performing the daily reconciliations those rules demand. What Kani revealed was how big a gap existed between what companies should have been doing and how well they thought they were doing it. Which is, arguably, a bigger problem to solve than a technology gap. Binks explains: “We were hearing a lot of conversations across the industry that suggested some firms still viewed safeguarding readiness as a one-off compliance project. That is not how the new regime works. CASS 15 requires an embedded operating model, with the right controls, reconciliations and evidence in place every day.” In other words, if companies continue to see safeguarding as a tick-box reporting obligation that comes up at the time of an annual audit, they’ve not only missed the point, but are leaving themselves wide open to sanctions. Kani describes the introduction of CASS 15 as a major operational shift for firms – one that it has been encouraging payment providers to address for some time by reducing their reliance on manual processes in favour of automated or semi-automated ones. And not just because it will keep them on the right side of the regulator, but because Kani believes it’s far more cost-effective in the long run. While spreadsheets remain a cornerstone of compliance operations, semi-automation FFNEWS.COM

or full automation can take the burden off teams. Kani’s study showed that 66 per cent of users who relied on spreadsheets needed at least six hours to produce an evidence pack for the FCA under CASS 15 rules. In comparison, almost half of firms using a fully automated model have real-time access to one. These packs are required to help insolvency practitioners quickly identify, transfer, and return client

Compliance needs to be an embedded process, something that happens daily Roger Binks, Kani money and safe-custody assets if a firm fails. The FCA’s CASS resolution pack requirement has a 48-hour retrieval expectation, so firms that build their records on an as-and-when basis are unlikely to meet this requirement. Kani believes evidence readiness should be a structured aspect of the reporting workflows, not an afterthought that is only created when it is requested, and safeguarding should now be rooted in the day-to-day financial operations. That’s clearly not happening if many businesses are still conducting reconciliation processes monthly or weekly. Those companies, according to the Kani survey, were much more likely to be dependent on traditional spreadsheet-driven processes

and 22 per cent of them weren’t confident that their teams could explain the calculations in their firm’s report to an auditor or pass an audit. That compared with 59 per cent of fully automated users who believed every member of the team would be able to explain the audit. While there was general unease about audits among the 75 finance chiefs who took part in the survey, users who relied on spreadsheets certainly felt more pressure than those who had implemented automated or semi-automated systems. While it clearly made a big difference, the point of the survey, though, wasn’t to grandstand the technology. Rather, it was a genuine desire to see how the biggest operational shift in UK payment service providers’ history was impacting the sector that Kani serves.

Mind the gap So, for those still worried about stressful audits, Binks offers this advice: “The most practical first step is to map the process as it works today, then identify where the weak points sit. That could be system limitations, gaps between data sources, manual workarounds, or areas where too much knowledge sits with one person or one team. “Those single points of failure are where firms should focus their attention. The aim should be to reduce operational risk before it becomes a compliance issue. “Automation has an important role to play, but the mindset matters just as much. Firms need confidence in the process, in the controls and in the evidence they can produce. That is the real shift CASS 15 requires.” As firms get used to the new processes and expectations of the CASS 15 regime, there will likely be a boost in confidence. But, in the meantime, the big takeaway from Kani’s survey is that firms that have implemented automated processes are benefiting from a more streamlined workflow and less pressure. For those feeling under-confident about compliance and audits, automation could be the lifeline they are searching for. ISSUE 19 THEPAYTECHMAGAZINE 41

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What we

PARTNERSHIPS

build and what we buy If you’re selling your latest altfi idea into a major bank, it’s as well to know what the boundaries are Banks have argued over build-or-buy for as long as there have been fintechs to buy from, and digital assets have succeeded in throwing up a whole host of new considerations. A bank can buy in a stablecoin on-ramp, a blockchain connector or a wallet. But the compliance obligations that come with moving money on those rails tend to stay with the bank, whoever wrote the code, says Biswarup Chatterjee, who runs Partnerships and Innovation at Citi Services. That bank division is also responsible for new products and new business development, which makes Chatterjee the person most fintechs engage with when looking to work with Citi. “Operational, design and technology choices are the firm’s decision [depending on] what we get from a fintech,” says Chatterjee. “But when it comes to compliance risk, AML risk and complying with the Bank Secrecy Act, that’s completely on the bank. That’s why most of our clients bring business to Citi or any other regulated institution: they want that trust and that capability, and it’s also what our regulators expect. So yes, fintechs may help us on the technology side. But the risk, the AML, the obligations around safety and soundness, that’s completely on us.” The same goes for the client relationship and the know-your-customer (KYC) record, whatever technology sits underneath. “Traditional or blockchain, the client relationship is always with Citi,” emphasises Chatterjee. Citi has its own tooling for the job. The bank runs KYC through CitiKYC, a proprietary single repository for client due diligence data, under a OneKYC programme that applies ‘one policy, one client risk scoring model, unified FFNEWS.COM

governance‘ across the 100-plus countries where the bank has a presence. A fintech might supply a stablecoin rail – it does not get to run Citi’s client risk scoring. Chatterjee has an idiom for the buy-or-build question. “I call it, ‘BoB’,” he says. But the answer is never his alone. “We make the decision together with the business, based on the client’s needs, and with our technology teams,” he says. And BoB, it turns out, has rules. “When we’re exploring a new market, when we need speed to get into a certain area, or when the use case is still nascent but a small number of customers are asking for it, we’ll typically go towards a partnership model,” says Chatterjee. “There are times when we’re working with partners and creating critical intellectual property together. That’s where we’ll also invest in them from an equity capital perspective, so we can guide them, help them and shape that intellectual property with them. For scalable, large-volume, high-client-impact use cases, we will always build it ourselves.” In October 2025, for example, Citi Ventures invested in BVNK, the London-based stablecoin infrastructure provider whose clients include Worldpay, Flywire and dLocal. Arvind Purushotham, head of Citi Ventures, said at the time that the bank had been impressed by BVNK’s ‘enterprise-grade infrastructure’ and its track record. The clearest recent case of partnership winning out under BoB is Coinbase. The two firms first said in 2025 that they would explore stablecoin payout options for Citi’s institutional clients. In September this year they expanded the arrangement in two directions, launching first in the US.

Biswarup Chatterjee, Global Head of Partnerships & Innovation at Citi Services

ISSUE 19 THEPAYTECHMAGAZINE 43

Coinbase has picked Citi’s Virtual Account Wallet, a banking-as-a-service product, to give its payments customers bank-account-style functionality, with incoming fiat automatically converted into stablecoins. In the other direction, Citi’s institutional clients will be able to accept stablecoins at checkout through Spring by Citi, its e-commerce payments platform, with Coinbase Payments handling the digital side, converting the coins to fiat with Citi settling the cash. “That was clearly a case where partnership won,” says Chatterjee. “We worked with Coinbase, an external provider with much better expertise and knowledge of that market than us.” The division of labour was visible in Alec Lovett’s, Coinbase’s Head of Infrastructure Product, announcement that Coinbase was ‘powering its Virtual Accounts with Citi’s regulated banking infrastructure’. Coinbase brings the stablecoin know-how. Citi brings the bank, and its regulatory purview. BoB isn’t always an easy choice. Asked what he wishes Citi had built instead of buying, Chatterjee chooses data capability. “In hindsight, looking at the AI revolution coming into financial services, much more structured and standardised data sets, not just within Citi but across the industry, is something I think we should really have spent much more time building,” he says. What may come as a painful blow to

I IS FOR INTEROPERABILITY Getting private blockchains like this to work nicely with other major infrastructures is never easy. Citi Token Services is one network; bank consortia, Swift, clearing houses and central banks all run, or are building, others. “That’s the big ‘I-word’ everyone uses now: interoperability,” says Chatterjee. He is careful not to let it mean only one thing. “You need data interoperability, technology and network interoperability, and liquidity interoperability. Most of the solutions we’ve seen from fintechs try to solve one of these. But to work truly on a wholesale basis, you need a solution that works across all of them. That’s why we’ve created interoperability within Citi’s own systems, between blockchain

Not so simple: Wholesale market solutions are not an easy sell

Wholesale banking and wholesale capital markets are far more complicated under the hood than most people realise. So we often see pitches for very simplistic solutions that probably aren’t ready for prime time engineers, is how little a service’s underlying technology matters to the client paying for it. That became apparent to Chatterjee while rolling out Citi Token Services and the bank’s other blockchain products. Citi Token Services moves tokenised deposits over a private permissioned blockchain, giving corporate clients 24/7 liquidity movements across Citi’s network. In September 2026, the bank added Japan and the UAE, taking it to seven markets alongside the US, UK, Ireland, Singapore and Hong Kong. “We’ve seen that clients really care about the service, the benefit they get and the experience,” says Chatterjee. “Very few of them really care what technology components were used. They just want the service to work, to be priced efficiently and for us to take care of all the risks and controls.” 44 THEPAYTECHMAGAZINE ISSUE 19

including the move from physical to electronic money, and says the test has not changed. “Trust and reliability are always very important, because with corporate and wholesale clients you’re talking about large sums of money and we act as a fiduciary,” he says. “Cost and efficiency obviously matter, too, but knowing that a bank like us operates in a highly regulated environment, using regulated products, is an element of safety and soundness that clients care a lot about.” As for the fintechs themselves, Chatterjee credits them with fresh perspectives, an appetite for experimenting with new technology and a habit of sharing the results. Where they fall short is in understanding the businesses they are selling into.

and non-blockchain. The next step is working with partners like Swift, clearing houses and even central banks to make sure interoperability works across the wider wholesale ecosystem.” The internal step he describes is already in production. In 2025 Citi linked Citi Token Services to its 24/7 USD Clearing service, so tokenised balances in one market can be paid out as conventional US dollar payments around the clock, starting in the UK and US. It is the kind of work Citi keeps in-house: high volume, high client impact and sitting directly on its clearing infrastructure. None of this moves real volume until a corporate treasurer is prepared to put serious money through a new rail, of course. Chatterjee places blockchain-based money in a line of transitions Citi has taken clients through,

“Wholesale banking and wholesale capital markets are far more complicated under the hood than most people realise,” he says. “So we often see pitches for very simplistic solutions that probably aren’t ready for prime time, which is why we spend a lot of time in our partnership effort getting them ready.” The good news is that ‘more and more fintechs have people on their management teams with wholesale financial industry experience’. “That’s been a big benefit we’ve seen recently,” Chatterjee adds. Three years out, he expects the arguments the industry is currently having, from traditional versus decentralised finance to which form of digital money wins, to have largely gone away. “The worlds will merge, as they have across many other ecosystems in the past,” he says. “Clients just care about the benefit; they want the underlying complexity to be invisible.” If he is right, clients will stop asking what their money runs on, while BoB continues to help make the right calls in the background. FFNEWS.COM

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THE ARCHITECTURE

MISSING PIECE

Swift has moved fast to meet the needs of the future. Swift’s Nick Kerigan discusses how it fits into the tokenised picture

Just over 12 months ago, Swift announced it was going to build a blockchain-based ledger on top of its financial messaging network. As of Sibos, it’s being used by 13 banks for five currencies in eight markets.

“We actually got it technically live within nine months,” says Nick Kerigan, Managing Director, Head of Innovation at Swift, “and six more banks have committed to go live by the end of this year.” It’s an impressively fast timescale for a co-operative that answers to more than 2,000 shareholding financial institutions. And Kerigan is clear about why that happened. “We’ve been able to move so quickly because we homed in on a very focussed core use case: wholesale cross-border payments,” he says. “That let us put together a design that the banks could get comfortable with very quickly, and then start putting transactions and volume across it.” Sceptics will note that 13 banks is a small fraction of the 12,500-strong community of financial institutions that use the network worldwide to facilitate the movement of the equivalent of trillions of dollars

46 THEPAYTECHMAGAZINE ISSUE 19

Nick Kerigan, Managing Director, Head of Innovation at Swift

in value every day. But that’s to miss the point, believes Kerigan. “We have a model that’s now proven: we’ve seen interbank transactions, corporate treasury transactions and out-of-hours, weekend transactions. A range of currencies are flowing 24/7,” he says. And it stands up an argument that he has been making for some time. “We believe in a future that will be multi-rail, multi-asset and multi-chain,” says Kerigan. “As we look at tokenised deposits, CBDCs and stablecoins – all of this emerging, exciting world of digital money – we think they will each find their own use cases and their place in the new financial system that’s emerging. “So for us, it’s really not about whether financial institutions should bet on any one of these instruments. What we’re focussed on is how to avoid fragmentation as they come into play.” The industry has spent the best part of three decades converging on a single messaging standard, after all, and a proliferation of digital assets, each using its own chain, could upset the carefully stacked apple cart. “If they’re all going to be used, in combination with the existing forms of

fiat money that we’re all familiar with, they have to be made to work together,” says Kerigan. “That’s the role, the challenge and the opportunity we take on as an infrastructure.” The new ledger is not a rail in itself. It’s more accurately described as an orchestration layer, which bridges the gap between the tokenised payment network and the traditional correspondent banking system that largely relies on Swift for cross-border transactions. But it’s only one of three ways that Swift says it will keep that old and new money moving side by side. The second is the messaging network itself, where ‘we’ll keep updating the standards so they’re fit for purpose’, says Kerigan. And the last, announced at the Sibos conference in Miami last month, is a new digital assets standards platform. “It will let the community bring standards for digital assets, particularly business standards, onto the platform and publish them openly for others to use,” explains Kerigan. “We think that will be an important way of supporting the adoption of digital assets and digital money across the entire Swift community.”

FFNEWS.COM

Not one, but all In the run-up to Sibos, a cluster of technology vendors announced support for the Swift ledger: ACI, IBM, Oracle and Chainlink. “That matters because it means connectivity to the ledger can be embedded within the technology solutions banks already use, which eases adoption for financial institutions,” says Kerigan. And it reflects a step change he’s seen in institutions’ willingness to adopt digital assets over the past 12 months. “That’s the key difference,” he adds. Kerigan puts it down to three things: regulatory clarity around digital money, the technology itself maturing, and ‘the catalytic effect of stablecoins’ growing utility’, which has also spurred developments in tokenised deposits and CBDCs among a much wider set of digital assets. “So, you see, it’s not about one specific aspect, one instrument or one use case any more. It’s really about how we think about a tokenised financial system. “It’s essentially about programmability: how do you programme and automate money? Putting programmability into the token and the smart contract means you can achieve different things – things

that may be more challenging with the existing financial system.” And here’s where it gets really interesting. Because once that programmability is achieved, says Kerigan, you can add agentic AI on top. “The intelligence layer, if you like. That layer can take advantage of the programmability, but the programmability can also constrain the agents, because those smart contracts

It’s really not about whether financial institutions should bet on any one of these instruments. What we’re focussed on is how to avoid fragmentation as they come into play Nick Kerigan, Swift

make it hard for agents to do things outside their mandate. I find that quite reassuring,” says Kerigan.

A future architecture None of this happens in isolation from the central banks; in fact, for optimal execution, the ledger relies on them. “A number of existing settlement systems face constraints, such as operating hours,” says Kerigan. “So innovations like Pontes from the European Central Bank, which will eventually start to move settlement into that tokenised, 24/7 model, are really important.” Swift is also a participant in Project Agorá, the Bank for International Settlements’ experiment with tokenised cross-border payments, which Kerigan calls ‘a very important global public-private collaboration’. “I think many of these initiatives are starting to create what you might call the jigsaw pieces of the future financial architecture, so we very much welcome them,” he says. A year ago, Swift’s blockchain-based ledger was a missing piece in that jigsaw. Now it’s in place, the picture of future tokenised transactions is becoming clearer.

One connected future: Swift is helping banks navigate a multi-chain financial system

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ISSUE 19 THEPAYTECHMAGAZINE 47

Time to modernise: Legacy technology is making it harder for banks to deliver the services customers demand

Pluggıng the great bankıng expectatıon gap CORE MODERNISATION

A new Celent report with Temenos shows just how wide the chasm is between what customers want from their bank and how fast old-generation architecture can deliver it – if at all. Is there another way?

For years, core modernisation has occupied a peculiar position on the banking agenda. Its importance isn’t disputed, yet much of the industry remains dependent on legacy technology. There are good reasons for that. Replacing technology responsible for deposits, lending, payments and other mission-critical processes is fundamentally different from refreshing a customer-facing application. Banks operate within demanding regulatory environments, carry sensitive data and are expected to provide services continuously and reliably. System migration is high risk. But standing still carries risks of its own. And new 48 THEPAYTECHMAGAZINE ISSUE 19

research by Celent on behalf of Temenos illustrates just how significant they’ve become. The Banking Expectation Gap report looks at the chasm that’s opened between the experience consumers look to their bank to provide and the technology foundations that financial institutions have in place to deliver it. The dissatisfaction has been there for a while. What’s changed is customers’ willingness to do something about it. The report revealed that nearly three-quarters of customers who are still with their banks are open to moving if a competitor better meets their needs. Importantly, the battle for this large ‘switchable middle’ isn’t just being fought on rates, fees and pricing. Customers also want personalisation, relevant products and services, speed, convenience and security. Temenos says addressing all this simply isn’t possible on legacy infrastructure that wasn’t built for the challenge. Rip and replace, increasingly, is not the answer, either. Instead, many banks are now choosing progressive modernisation: a composable approach that allows institutions to tackle particular areas of friction first and introduce capabilities incrementally.

Will Moroney, Chief Revenue Officer at Temenos

“Progressive modernisation reduces risk by allowing banks to modernise in stages, preserving operational stability while introducing new capabilities,” says Will Moroney, Chief Revenue Officer at Temenos. “They can move at their own pace, maintain control, and realise value sooner.” It changes the business case for transformation. Rather than waiting years for the benefits of a vast infrastructure programme, Temenos says institutions taking this route are seeing rapid payback in priority areas, giving them confidence to address the remainder of their IT estates. “Our priority is helping them modernise with confidence,” says Moroney. “Banks need to balance innovation with resilience and regulatory compliance.” Importantly, those customer boxes get ticked quicker, closing the Banking Expectation Gap. Given the diminishing levels of loyalty among customers, the fact that a quarter of banks told researchers that enhancements to CX were not a priority for them is somewhat surprising. But behind that was a wide variation of investment strategies across regions and types of banks. Banks in APAC gave CX investment the highest priority, while FFNEWS.COM

medium-sized banks struggled to move it up the agenda. In Europe, only 29 per cent of medium-sized banks placed product innovation in their top three technology investment priorities, compared to 63 per cent of larger banks and 50 per cent of the smallest. “Clearly, mid-sized banks are challenged to prioritise many of the features customers say are factors in choosing a primary bank,” the report said. But one thing they were all agreed on. Across the piece, banks cited legacy platforms as a big constraint on their ability to enhance CX quickly and cost effectively. There was an imperative, the report said, for ‘legacy modernisation and platform replacement’. Cloud infrastructure could help rebalance the equation between what customers want, what banks can deliver and what they can afford. But the report identified AI and its ability to offer banks capabilities ranging from operational automation to personalised financial guidance and conversational customer experiences as the most powerful force. Temenos believes, however, that AI has also exposed a fundamental constraint. “AI is helping move the legacy conversation forward because it highlights the growing gap between what banks want to deliver and what their technology foundations can support,” says Moroney. It’s straightforward, says Moroney: “You cannot deliver next-generation customer experiences on last-generation banking infrastructure.”

AI raises the stakes Banks haven’t suddenly rediscovered the customer, but there is an argument to say they’ve been overlooked as regulatory change, operational resilience, cyber security and legacy modernisation all compete for capital and executive attention. Temenos believes that’s the wrong approach. “The banks that succeed will be those that view modernisation not as a technology project, but as the foundation for delivering the personalised, intelligent experiences customers increasingly expect,” says Moroney. Bank executives understandably want evidence that AI investment can reduce costs, improve productivity, generate revenue or materially improve customer outcomes. And preferably all four. The best way to validate that is to narrow the problem rather than expand the ambition, says Moroney: “The biggest benefits are coming from identifying very specific pain points and use cases and then building agentic AI capabilities to solve these.” FFNEWS.COM

He points to Temenos Financial Crime Mitigation AI Agent, developed with a Tier 1 European banking client and designed to reduce false positives during sanctions screening. Every unnecessary alert can require human investigation. Reducing false positives allows compliance professionals to spend less time clearing routine alerts and more time investigating higher-risk cases. It also illustrates a broader principle: automation does not necessarily mean removing humans from the process. Consumers also appear reluctant to embrace an exclusively AI-driven financial future. So, as AI assumes more tasks, where should people remain in control? Temenos sees the dividing line in terms of risk, complexity and judgement. “AI works best for clear, repeatable tasks where the rules are well understood, access is controlled, and there is a clear route to escalate when needed,” says Moroney. Higher-risk decisions are another matter. “People still need to make the call on higherrisk decisions, exceptions, customer-impacting actions and anything with regulatory, financial or reputational implications,” he adds. That potentially reshapes rather than shrinks the banking workforce. By delegating repetitive processes to AI, employees can devote more attention to judgement, advice and relationships – areas where human trust remains particularly important.

The banks that succeed will be those that view modernisation not as a technology project, but as the foundation for delivering the personalised, intelligent experiences customers increasingly expect Will Moroney, Temenos It also places governance at the centre of agentic banking. Giving an AI agent the ability to act is fundamentally different from asking a chatbot to generate text. As systems gain agency, permissions, escalation, auditability and accountability become increasingly important. For Temenos, successful AI adoption therefore requires modern core platforms and Cloud infrastructure alongside strong governance and organisational readiness. Speed cannot come at the expense of trust or resilience.

Cloud – without surrendering control The same tension is seen in Cloud adoption. Banks increasingly depend on external

technology and Cloud providers while regulators scrutinise cyber resilience, third-party risk and concentration across critical technology services. Temenos continues to offer on-premise, software-as-a-service (SaaS) and hybrid solutions. Working across AWS and Microsoft Azure, it allows institutions to select infrastructure according to their strategic and regulatory requirements. Choice is an important part of the proposition. “And not just offering choice but helping banks use that choice to modernise with confidence,” says Moroney. “Banks want the foundation and freedom to evolve and scale on their terms.” Composable banking theoretically makes it easier for institutions to replace individual technology components rather than commit to monolithic platforms for decades. For established core providers, that creates an intriguing challenge: the architecture giving customers greater flexibility also makes changing suppliers a feature rather than a threat to be engineered away. For Temenos, the best providers going forward will compete on outcomes rather than client lock-in. It points to its combination of mission-critical technology, open architecture and expertise spanning core banking, digital, payments and wealth as key differentiators. “Banks ultimately want technology that helps them grow, serve customers better, launch faster, reduce cost-to-serve and strengthen resilience,” says Moroney. “By consistently delivering those outcomes, we sustain the relationship.” We could be looking at a very different kind of financial institution over the next three to five years, with the distinction between banks bolting on AI and those using it to drive a different technology approach becoming increasingly important. Adding a copilot to an existing workflow is relatively straightforward, after all. Embedding intelligence throughout an organisation – while ensuring decisions remain governed, explainable and auditable – is a much larger undertaking. AI is already fundamentally changing how customers interact with banks and how employees execute processes, but these intelligent experiences still need reliable systems underneath. That is the new architecture that Temenos is building and the one it’s confident will close the Banking Expectation Gap. https://www.temenos.com/resource/ the-banking-expectation-gap-global-edition/ ISSUE 19 THEPAYTECHMAGAZINE 49

Securitech company Giesecke+Devrient (G+D) has been moving money in all its forms for 170 years. There’s a lot little fintechs can learn from it Fintech is an industry in thrall to youth. Its heroes are the disruptors: ambitious founders who believed they could rebuild finance from the ground up. They move quickly, challenge incumbents and promise to replace legacy systems with something leaner, smarter and entirely digital. For a while, that was enough, but every ambitious youngster eventually discovers they need someone older and wiser in the room. Someone who understands regulation, knows where complexity hides and can tell the difference between a passing fad and the next big thing. As payments become more fragmented and digital identity converges with financial services, that’s exactly the role Giesecke+Devrient (G+D) has come to occupy. With more than 170 years behind it, G+D is something of a mentor of modern payments. But don’t picture an institution dwelling on the past. Think instead of the cool grandad every fintech would choose: endlessly curious, well-connected and still rolling up his sleeves when someone arrives with another impossible idea.

The

Because while fintechs excel at imagining what’s next, somebody still has to help those ideas navigate regulation, security, infrastructure and global scale. Innovation, ultimately, is only half the story. Philippe Serres, Chief Sales Officer at ePayments, G+D, has spent years working alongside fast-growing fintechs, processors, banks and payment providers. As such, he has learned that success isn’t about slowing innovators down, but rather moving at their pace while bringing the experience needed to help ambitious ideas become a commercial reality. “Today, we have hundreds of fintechs working with us,” he says. “What really stands out is that they require two things – agility and the ability to adapt to the way they are organised. Sometimes they’ll work with processors. Sometimes they’ll work directly. “At the same time, fintechs are the ones that come up with crazy ideas. What we need at G+D is the ability to be very agile in our answers because some of those ideas will work, some won’t, but we need to be in a position where we’re always able to support them on those journeys.”

Rather than dismissing bold notions and ambitious concepts, G+D brings decades of experience to making the best of them work. That attitude has helped forge long-term partnerships and relationships that extend far beyond an initial product launch. “What comes out of that in the end is a very good sense of partnership and loyalty,” says Serres. “We started working with some fintechs that were extremely small at the beginning and have now grown to really substantial numbers.

“I think it’s because we were there from day one that we’re still able to support them today as they’ve continued to grow.” Consumers now move effortlessly between physical cards, mobile wallets, QR codes, account-to-account payments and wearable devices, rarely stopping to think about the technology making those transactions possible. For providers, however, every additional payment method introduces another layer of complexity.

INNOVATION

grandfather of payments 50 THEPAYTECHMAGAZINE ISSUE 19

FFNEWS.COM

“What we’ve seen is really two things,” says Serres. “The first is acceleration – acceleration in the forms of payments that people use and, secondly, the multiple payment rails that now exist. “I was in Asia last week, and you see QR codes, aggregators of QR codes and all these different funding sources. There’s a very strong development of different payment methods. The result of all that is a real need for integration between those different rails and different forms of payment.” Real-time payments, digital wallets, stablecoins and CBDCs only add complexity. Success will belong to providers capable of connecting them seamlessly. That is where experience starts to matter because it helps innovators avoid spending months solving problems somebody else encountered years ago.

Supremely well-connected Everyone’s grandad seems to know somebody useful. G+D’s equivalent is a network that stretches across almost every corner of the financial ecosystem. Those relationships provide an unusually broad perspective on where the industry is heading. Increasingly, payments are becoming intertwined with digital identity, authentication and trust, and behind every frictionless experience sits an increasingly sophisticated combination of identity verification, authentication, compliance and infrastructure. “We’re seeing quite a strong convergence between identities and payments,” says Serres. “There is new regulation, for example, coming through around the European Digital Identity Wallet, where digital identities become part of the payment journey. “G+D works with more than 100 central banks. We issue money for them. We work with governments issuing biometric passports and identity documents. Then we work with more than 5,000 banks. The convergence of those means we’re really well-placed to capture that journey.”

A grown-up approach Fintech once defined itself by rejecting legacy, but as the industry matures, FFNEWS.COM

experience has become a competitive advantage. The companies building tomorrow’s financial services need partners that understand both where payments have come from and where they’re heading. G+D’s own journey reflects that evolution. From securing physical cash to manufacturing payment cards, enabling tokenised credentials, supporting digital wallets and helping shape digital identity, the company has repeatedly reinvented itself while remaining rooted in trust. “I think one of the things that makes G+D pretty unique is the ability to have a foot in both the manufacturing world and in the digital world,” says Serres. “The combination has become absolutely critical today. I’ve worked for 20 years in purely digital companies, and having the ability to deliver real products is an absolutely key asset. “If you think about areas like the Internet of Things, which is developing very fast, how do you combine the ability to deliver something physical with something that’s digital? Those are the things becoming increasingly important.”

One of the things that makes G+D pretty unique is the ability to have a foot both in the manufacturing world and in the digital world Philippe Serres, Chief Sales Officer at ePayments, G+D

Having decades of experience means recognising patterns, understanding where complexity hides and knowing which ambitious ideas are worth pursuing. That perspective is increasingly valuable when today’s startup can become tomorrow’s global payments brand almost overnight. Because G+D operates in more than 40 countries, it helps fintechs understand not only the technology required to scale, but also the commercial and regulatory realities of different markets. The company even invests directly in

promising young businesses through G+D Ventures, as Serres explains. “We have a venture arm which invests in startups. That helps us take very early ideas and bring them to market through our distribution channels in more than 40 countries. It helps us develop those ideas,” he says. It’s another example of G+D playing a role beyond technology supplier – helping young companies turn promising ideas into global businesses. Perhaps his most thought-provoking observation, though, isn’t about technology at all. It’s about people. “We talk a lot about premium as being related to wealth,” says Serres. “That a premium client simply means a wealthy client. I think that definition has evolved over the past 18 months. “Premium is becoming much more about lifestyle and the values a customer chooses and how a provider can support those customers on their particular journey. “That’s what we’re trying to do at G+D, whether it’s through digital or physical experiences – helping our clients create something for customers that genuinely differentiates them from the competition.” The industry’s boldest ideas continue to come from entrepreneurs prepared to question convention, invent new customer experiences and imagine entirely new ways of moving money. But ideas alone rarely change an industry. Making them secure enough for regulators, robust enough for banks, scalable enough for millions of customers, and trusted enough that people are willing to move their money through them every day – that takes a different kind of expertise. Having evolved through every major chapter of modern payments (from cash and cards to tokenisation, digital identity and the next generation of secure financial infrastructure), G+D has developed something that cannot be built overnight: perspective. Every family has someone who stays calm, never dismisses ambitious ideas and encourages the next generation to succeed. In an industry obsessed with what’s next, G+D has become the grandad every fintech wishes it had.

Philippe Serres, Chief Sales Officer at ePayments, G+D

ISSUE 19 THEPAYTECHMAGAZINE 51

Agent of AGENTIC COMMERCE

change

Mastercard is responding to the consumer-driven revolution in agentic commerce by building a new trust architecture

As consumers, we’re used to having our identity checked at the point of sale (POS). An entire regulatory system and the technology that supports it have been built around POS and know-your-customer (KYC), be it online, on the phone or in person. But, in future, merchants and their payment processors won’t be asking who is behind the payment, so much as what. And, by extension, did it have the authority to make a transaction? “We are entering an incredible moment in payments when we move from point-of-sale to point-of-intent,” says Eimear Creaven, President of Global Partnerships at Mastercard. Mastercard revealed earlier this year that it had been working with Google on creating a Verifiable Intent Architecture, including a cryptographic audit trail linking user identity, AI agent instructions, and transaction outcomes in preparation for a new era in non-human and agent-to-agent payments.

Consumers leading the trend Almost one in two (45 per cent) of consumers already use AI for at least part of their shopping experience, according to IBM research from January 2026. But with the rapid pace of change, today’s figure is likely to be much higher… and higher still tomorrow. Amazon’s July 31 2026 earnings call revealed that 350 million customers were using Alexa For Shopping’s personalised recommendations, product comparisons, price history and automated shopping features, like price alerts and auto-buy. Engagement had almost doubled during the previous quarter alone. That figure wouldn’t surprise Creaven. She says consumers feel more comfortable 52 THEPAYTECHMAGAZINE ISSUE 19

Michele Centemero, Executive Vice President, Services, Europe at Mastercard

Eimear Creaven, President of Global Partnerships at Mastercard

using agents with transactions that are repeatable, ‘where they can really build confidence’. This makes restocks or auto-buys the perfect vehicle for trust-building, priming customers to hand over more of the reins of their purchasing decisions. The pace of mindset change is truly fascinating, and perhaps unprecedented in the fintech world. Ingrid Lommer, Co-Founder of Marketplace Universe, uncovered that the number of people in Germany willing to let AI agents take over their shopping jumped from 10 per cent in December 2025 to 35 per cent in March. More than a three-fold leap in as many months. Another June 2026 study by Accenture revealed that 74 per cent of us would trust an AI agent to buy for us over our best friend.

Convenience wins out “Consumers are always looking for something that simplifies their journey,” says Mastercard’s Executive Vice President, Services, Europe, Michele Centemero. “AI and the agentic era really free up time for people. Usage and adoption will be fast and huge.” We’ve seen consumers lean towards simplification time and time again. From the rise of the supermarket over family-run grocers or butchers, to the success of e-marketplaces over shopping malls. Why should e-commerce be any different? Bain & Company estimates that AI agents will be behind 15-25 per cent of all US e-commerce sales by 2030, creating a market opportunity worth $300-$500billion. But while consumer demand rockets, evidence shows merchants are not keeping pace: 45 per cent of customers use AI to help them shop, yet Salesforce found just 28 per cent of FFNEWS.COM

merchants had implemented AI into their processes. This creates a huge gap, funnelling customers to better-adapted competitors. To thrive in a generative AI shopping world, merchants must be more than simply online. They need to be plugged in to agentic commerce infrastructures, data-rich and with catalogues that can speak the language of AI shopping agents. Creaven believes businesses that have pre-existing AI capabilities will find it ‘a very easy move from AI-assisted to fully autonomous’. In turn, this is likely to lead to ‘an opportunity to really run at scale’.

Investments over the past years in AI tools, hyper-personalisation and data security should pay for themselves in gains of visibility, agility and efficiency. But merchants that don’t make the investment will feel the hit. We’ve seen how sudden the fallout can be for those slow to adapt to new shopping trends, methods or channels. The early noughties are littered with examples of seemingly indestructible companies that failed to adapt for e-commerce. Borders bookstore paid the price for its lacklustre reaction to the internet. It’s the same story for the likes of Toys R Us and

Blockbuster. Agentic commerce looks like the next retailing revolution and SMEs need support. That’s what Mastercard is mustering. Take Shopify, one of the biggest and most dominant e-commerce platforms in the world, powering more than 4.6 million active websites and handling hundreds of billions of dollars in yearly sales. It is one of Mastercard’s many integrated platforms, allowing merchants to benefit from its agentic payment capabilities. Most (95 to 98 per cent) of Shopify’s customers are small to medium businesses, with fewer than 10 employees. The e-commerce platform is committed to future-proofing its B2B clients for agentic commerce, and one of its initiatives is the creation of a merchant data protocol, designed to help AI agents read product and service catalogues accurately. While merchants will still have plenty of work to do to stay relevant, projects like the merchant data protocol give them a sporting chance to be seen and compete in the agentic commerce world. As Creaven explains: “We have to ensure that all consumers and all merchants, big and small, are included in this journey.” “We need to grant visibility to small businesses in this arena,” agrees Centemero, ‘to avoid four marketplaces taking over everything.” When retailers invest in agentic shopping technology, it’s a very smart move. May 2026 research, also from Bain & Company, found US shoppers are 3.5 times more likely to trust a retail-owned AI tool than an AI platform like ChatGPT (25 per cent v 7 per cent) to make a purchase.

Opportunity knocks for banks

The next payment frontier: Mastercard is building trust into a world of AI-led e-commerce FFNEWS.COM

Consumers are even more likely to trust their incumbent bank, which provides a unique window for institutions to reclaim relevance. In a showstopping live demo at Money20/20 Europe in June, Mastercard, Worldline and ING demonstrated how that was possible, using Mastercard’s Agent Pay to make an end-to-end agentic transaction, direct from a banking app. Within the ING app, a consumer instructed the AI agent to find tickets for a romantic concert in Amsterdam. The agent quickly came back with some options and prices. From there, the customer gave permission for the agent to purchase two concert tickets. It was a glimpse of the future and, as account-to-account payments increase, it’s an outright opportunity for banks to support the agentic shopping trend. ISSUE 19 THEPAYTECHMAGAZINE 53

But what happens when things don’t go as smoothly? Who is responsible for issuing refunds or chargebacks in a scenario where AI agents may be interacting with other AI agents? And how do we know an agent didn’t go on a rogue shopping spree? Those are the questions around trust and accountability that Mastercard’s Verifiable Intent infrastructure, which underpins its agentic payments systems, including Agent Pay, is designed to address. Using tokenisation and blockchain principles, Verifiable Intent creates an immutable record of what interactions and authorisations took place, when and by whom. The infrastructure establishes a shared source of truth across the whole ecosystem, tracking cryptographic proof of authorisation, which could be relied on by consumers, merchants and issuers in the event of a dispute.

It’s not only a matter of knowing your agent. It’s more the moment in which you know the intent

not all intents will be adequately ascertainable, and price this into their strategy!

Interoperability is urgently needed Verifiable Intent helps to build confidence in agentic commerce. “Trust is a critical factor to help us scale agentic,” says Creaven. “But married to that, to ensure that the user experience is smooth, we need interoperability.” This allows consumers to stay on the platforms they love and trust, while also benefitting from the same seamless service that will hopefully become standard across the industry, integrating through open APIs. There are already several open standards in development, notably the Agentic Commerce Protocol and the Universal Commerce Protocol, launched by Google. These allow any business or AI platform to implement a code so they can participate in some degree of agentic commerce – for example, allowing buyers to find the merchant’s products with an AI search.

Another scenario looked at criminals training their own agents to perform requests using hidden HTML metadata or spam tags. The rise of internet shopping, especially that assisted by AI, has also already seen a spike in returns fraud. Clearly, agentic commerce could open new avenues for bad actors. “We need to all work together to share information, knowledge and capability in order to be two steps ahead of the bad guys,” says Centemero. “Our focus in security is to assess the transaction, to protect consumers and merchants, and to prepare the market. Preparing the market means also talking to government, corporates and consumers because one of the advantages we have as an industry is that we can talk to each other – the fraudsters can’t.”

Agents and tokenisation What Creaven describes as ‘a huge shift in how consumers think about entering the payment cycle’ has come at a time of another significant – but synergistic – disruption.

Michele Centemero, Mastercard

“It’s not only a matter of knowing your agent,” says Centemero. “It’s more the moment in which you know the intent.” Mastercard’s Verifiable Intent gets us to establishing dependable permissions and accountability for agentic commerce. But it cannot solve every issue, because intent is inherently subjective and humans are irrational. The consumer who instructed their agent to ‘Buy me two Sting concert tickets in London’, might have forgotten to add, ‘anytime except August, because I am on holiday then’. Or ‘only if the seats are together because I don’t want to be sitting on the other side of the stadium from my teenage granddaughter’. Or ‘Did I say Sting? I meant the frontman from Dire Straits, I always confuse them!’. This is where hyper-personalisation and rich data elegantly collide. Blended with technology like Verifiable Intent, merchant data can plug much-needed gaps. It means AI agents will need to know their human better than the relatives who realise that when grandpa says ‘Sting’ he means ‘Mark Knopfler’. Compliant access to calendars, previous purchases, tastes and preferences can help to reduce mistakes and accountability issues, by at least throwing up a query. That said, all ecosystem players should acknowledge that 54 THEPAYTECHMAGAZINE ISSUE 19

Point of entry: Agentic commerce could give criminals new ways in

Some payment service providers have already integrated these codes, including Stripe, which has partnered with the Agentic Commerce Protocol, automatically giving its business customers more visibility. As we move into the next era of AI agents speaking to other AI agents, sharing a common language will become business-critical.

Potential for increased cyber risk Centemero also wants to see the industry share more knowledge in order to stifle fraud. Palo Alto Networks has anticipated some ways that criminals may commit fraud using agentic commerce. In one scenario, it imagines a shopping agent visiting the criminal’s site to check for discounts, and an indirect prompt injection reprogrammes its memory. This could instruct the agent to send funds to the criminal.

Mastercard Verifiable Intent helps to build confidence in agentic commerce. Trust is a critical factor to help us scale it Eimear Creaven, Mastercard

“We’re also seeing the global expansion of tokenisation, particularly of digital currencies and stablecoins,” she says. “When you think about how consumers or small businesses are going to engage in commerce at the front end and how those transactions are going to settle at the back end, the opportunities of bringing these trends together are going to be huge.” FFNEWS.COM

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SAUDI ARABIA

We go inside Saudi Arabia’s payments ecosystem with G+D

Few countries have changed the way their citizens pay as quickly or as deliberately as Saudi Arabia.

According to the Saudi Central Bank (SAMA), electronic payments accounted for 85 per cent of all retail transactions in 2025, up from 79 per cent a year earlier and from 70 per cent in 2023. It was a milestone it wasn’t expecting to pass until 2030. Last year, around 14.6 billion electronic transactions ran through the national payment systems, which are planned and directed by SAMA, closely aligned with national strategy, and delivered with a network of technology partners. One of those is Giesecke+Devrient (G+D), the German security technology group, whose work in Saudi Arabia spans card issuance, identity and security infrastructure, and premium card design. Hussam Nasser, G+D’s VP of Sales for the Middle East, and Bassel El Sabban, Regional Sales Manager for Saudi Arabia, are both bullish about the market’s significance. “Saudi Arabia, without doubt, is one of the world’s most dynamic payment markets,” says Nasser, adding that the kingdom

‘is no longer following global payment trends, it’s helping define them’. “Saudi started more than 25 years ago with its own domestic scheme, and this is what differentiates the country from others in the market,” Nasser says. “It was one of a very small number of countries with a central bank that had that vision at such an early stage.”

Saudi Arabia today, without any doubt, is one of the most dynamic payment markets in the world Hussam Nasser, G+D

The scheme, mada, carries domestic debit card transactions across the kingdom, keeping costs down for merchants and keeping control of the rail inside the country.

Around it sits a stack of national infrastructure: SADAD for bill payments, the Sarie instant payment system, and the real-time gross settlement system for high-value and interbank settlement. SAMA both regulates the market and builds and operates much of this infrastructure, which Ahmed K. Alhassan, SAMA’s General Director of Payments Business Development, has described as a national strategic asset.

Hussam Nasser, VP of Sales for the Middle East at G+D

Early adopters New technology has been rolled out across that infrastructure in a coordinated way. Nasser points to the kingdom’s early completion of EMV migration, followed by the move to contactless and dual-interface cards, and then mass digitisation for Apple Pay, Google Pay and Samsung Pay. He describes a country ‘applying new technology in a considered, synchronised way’.

Bassel El Sabban, Regional Sales Manager for Saudi Arabia at G+D

Card carrying: Saudi Arabia’s payments ecosystem combines national infrastructure with rapid digital adoption FFNEWS.COM

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That centrally directed model, closely tied to the kingdom’s economic plan, Vision 2030, and with a push by Saudi Arabia’s Public Investment Fund to build national capabilities in-country, shapes what financial institutions need from their technology partners. “Banks and financial institutions are increasingly thinking about ecosystem sovereignty, resilient supply chains, trusted local capabilities and having strategic choice,” says Nasser. “These are no longer operational considerations, they have become strategic priorities for the future of the industry.” For suppliers, that means working within the national framework rather than alongside it. G+D works with SAMA in support of mada, and Nasser notes that the company holds the certifications required to issue mada cards. With a regional HQ in Riyadh, Nasser describes its role as ‘the connector and the catalyst’ between banks, digital banks, fintechs, and the major personalisation bureaux in the kingdom. Much of that contribution sits quietly in the background: G+D is a significant player in the kingdom’s payments security infrastructure, and its identity verification and card issuance software often runs behind services that carry a bank’s own brand.

into the background. If anything, ‘the more digital our life becomes, the more meaningful our physical payment card becomes’, believes El Sabban. “It’s part of our customer identity and the bank’s brand.” He sees three trends shaping the next generation of cards: premium materials, sustainability and technology. Issuers in the region can now choose from G+D’s metal and wooden cards, eco-friendly options made from recycled PVC, bio-based materials or plastic recovered from the ocean, and, at the premium end, a ceramic card. Targeted at ultra-high-net-worth individuals, it’s an artwork as much as a payment instrument, a statement of wealth and status. “Customers take the card, look at it, feel the

Banking without the branch While the infrastructure is largely hidden, one of the clearest signs of Saudi Arabia’s digital transformation is the self-service kiosk. Operated weight, the material, the by banks and government texture,” El Sabban says. bodies, hundreds of these “It’s nearly always a wow machines now sit in moment. I really like that shopping malls and airports. reaction. It is the moment G+D’s own version can when you realise that handle onboarding, KYC a payment card can become checks and account opening, an experience.” then print an instantly The appetite for luxury Bassel El Sabban, G+D cards reflects the market’s personalised payment card. unusual make-up. Saudi Arabia has around 36 It can also take cash deposits, produce a million people, some 63 per cent of them under stamped statement of account and issue 35. Many of these digital natives are affluent, a chequebook. “Everything customers can do and roughly split between Saudi nationals and inside the bank branch, they can do through expats, a mix that will continue to evolve as the one kiosk from G+D,” says Nasser. In fact, country opens further to tourism. when it comes to card issuance, it’s better There is a structural reason, too, for banks than a bank. As Nasser says: “If I can open a wanting to woo customers with cards. When bank account in five minutes, why should I every debit card runs on the same national rail, wait several days to receive my card?” the network itself is not where banks compete: Saudi customers are heavy wallet users, but the experience is, and the card in the customer’s the demand for physical cards points to one of hand is one of the most visible expressions of it. the market’s more distinctive features. A shared, sovereign payments core leaves room In one of the world’s most digitally engaged for banks to compete on what sits on top of it. populations, the physical card has not faded

The next generation of payments will be defined by the experiences we are creating

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The tourism opportunity The next phase of Saudi Arabia’s payments transformation will likely be shaped by overseas visitors. The kingdom is targeting 70 million tourists – up from 29.7 million inbound visitors in 2024. SAMA has made international acceptance a priority, so that visitors can use the payment methods they know while the domestic system stays secure and efficient. That will call for issuance, tokenisation and wallet provisioning that work across both mada and international schemes – an area where infrastructure providers, G+D among them, will have a part to play. “The next generation of payments will be defined by the experiences we are creating,” says El Sabban.

Future focussed: Saudi Arabia’s payments transformation is moving from infrastructure to experience

For any foreign fintech eager to take part in that next phase of expansion, his advice is to start with the market’s specifics. “Understand the market before anything else, understand the local ecosystem,” he says. “It’s not what has been implemented in Europe, in the USA, or anywhere else in the world.” “Years ago, global companies came to Saudi in order to introduce new ideas,” adds Nasser. “Today, companies come to Saudi to understand where the market is heading next. “The biggest misconception is thinking Saudi is just another market where you can replicate what has worked somewhere else. “The kingdom has built one of the world’s most advanced and ambitious payment ecosystems. Customer expectation is exceptionally high, regulators continue to drive innovation, and financial institutions expect partners that can evolve at the same pace. As the market matures, the conversation goes far beyond technology. “Saudi Arabia is no longer following global payment trends, it’s helping define them” FFNEWS.COM