Every day, financial institutions process trillions of dollars across dozens of payment rails. Yet when asked about innovation, most admit they’re stuck.
It’s not a technology problem. The tools exist. Cloud-native platforms. Real-time rails. AI-powered fraud detection. The issue is strategic paralysis.
“Banks are having to connect and deal with so much new technology right now that it’s a challenge for financial institutions to know where to go first,” said James Wester, Co-Head of Payments at Javelin Strategy & Research. “There’s almost a sense of vapor lock.”
The Modernization Trap
Call it analysis paralysis on steroids. Banks face simultaneous pressure from new payment types, mobile wallets, real-time rails, crypto integration, tightening regulations, and escalating fraud. Each priority feels urgent. None can wait. Yet most institutions remain frozen at the starting line.
New research from ACI Worldwide reveals the depth of the problem: 55% of organizations say technology remains underused in their operations despite billions invested in modernization. Three barriers dominate. Relentless cybersecurity demands that evolve faster than defenses. Crushing compliance burdens spanning multiple jurisdictions. Internal resistance from teams wary of disrupting systems that have worked for decades.
Consider a mid-sized regional bank with two million customers. They want to offer the FedNow® Service for instant payments, but their wire transfer system runs on code from 2008. Their card processing sits on a different platform entirely. Adding real-time payments means either building custom integrations that take 18 months and cost $3 million, or replacing infrastructure that handles 500 million transactions annually. Either path carries massive risk. So they wait. And while they wait, their customers open accounts at digital banks that launched with real-time payments on day one.
“It’s not just about connecting to new rails, connecting to real-time payments, connecting to digital wallets,” Wester said. “It’s decisioning for fraud, credit, onboarding. All these things are going on at the same time.”
The result: institutions that know they must modernize but can’t determine the first step without triggering operational risk.
What Actually Works
Paralysis isn’t inevitable. Financial institutions breaking through share three strategic pillars.
First, executive ownership with a long-term vision. Payments can’t be relegated to IT. Organizations succeeding treat payments as board-level strategy with sustained C-suite sponsorship. When the CEO of a top-20 global bank tells the board that payments infrastructure is as critical as lending operations, budgets get approved and roadblocks disappear. Partial commitment produces partial results.
Second, capability and talent activation. Strategy without execution infrastructure means nothing. Leading institutions bridge that gap by developing internal talent while partnering strategically with vendors who close capability gaps. This isn’t about hiring an army of developers. It’s about having the right team to evaluate platforms, manage integrations, and own the roadmap.
Third, agility and future readiness. Static solutions fail in dynamic markets. The most resilient organizations build adaptable infrastructure that absorbs new payment types without disrupting existing operations. When a new rail launches or regulations shift, they adjust in weeks rather than quarters.
“From the bank’s own business standpoint, what it is they’re trying to accomplish and where do they need to go,” Wester said. “What’s the most important priority for the financial institution? That’s then where you inventory what we have in terms of systems, technology, people.”
The Orchestration Advantage
Legacy systems weren’t designed for the speed, flexibility, and variety today’s payments ecosystem demands. Built for predictable volumes on established rails, they’ve become integration nightmares requiring constant patches and workarounds.
Intelligent payment hubs take a fundamentally different approach.
Rather than forcing institutions into wholesale infrastructure replacement, modern platforms enable selective modernization. Banks can introduce new payment types and services without disrupting core operations. The technology handles integration complexity behind the scenes.
Payments orchestration extends this further. By dynamically selecting optimal payment channels based on transaction type, cost, fraud risk, and regulatory requirements, orchestration delivers what legacy systems can’t: unified decision-making across fragmented infrastructure. A $50,000 wire transfer to Germany gets routed through Swift with enhanced compliance screening. A $12 peer-to-peer payment uses RTP. A recurring subscription runs through ACH. The platform makes these decisions in milliseconds based on business rules the bank controls.
ACI Worldwide’s platforms, including the recently launched ACI Connetic, exemplify this approach. ACI Connetic unifies account-to-account payments, card processing, and AI-powered fraud prevention on a single cloud-native platform. For the first time, banks can consolidate siloed systems without rip-and-replace implementations.
“One of the big things they offer is they help close those gaps where financial institutions may be coming from legacy technology,” Wester said. “It’s finding those vendors that now sell modern payment platforms that are modular, that are cloud-native, that operate around modern principles.”
The value proposition extends beyond technology. Modern platforms reduce integration time from months to weeks. Cloud provisioning delivers resilience, scalability, and cost advantages impossible with on-premises infrastructure. Modular architecture enables rapid deployment of new capabilities without touching core systems.
The Business Case Problem
For all its logic, modernization faces a measurement challenge. Quantifying the cost of inaction proves difficult until it’s too late.
“Sometimes it’s a bit difficult to make business cases for these investments because you don’t know sometimes what you don’t have,” Wester said. “You realize that you’re bleeding customers, that your attrition rate is high because consumers don’t have access to real-time payments, or they don’t have access to real-time balance information.”
This creates a dangerous lag. By the time customer attrition becomes obvious, competitors have already captured market share. Digital-native fintechs don’t suffer from legacy constraints. Neo-banks launch with modern architecture from day one. Traditional institutions trying to catch up face steeper hills.
The solution: reframe modernization as revenue enablement rather than cost avoidance. Modern platforms don’t just reduce operational friction. They unlock new products, faster time-to-market, and differentiated customer experiences that drive growth.
ACI processes more than $7 trillion daily across platforms serving 19 of the world’s top 20 banks and 11 central bank infrastructures. That scale provides visibility into what separates leaders from laggards. Institutions treating payments as strategic assets rather than back-office plumbing consistently outperform peers in revenue growth and customer retention.
Breaking the Logjam
The payments modernization challenge isn’t getting easier. Real-time payments adoption accelerates globally. Digital wallet usage grows exponentially. Regulatory complexity increases. Fraud sophistication rises. Customer expectations for instant, seamless transactions become universal.
Institutions waiting for certainty before modernizing will discover certainty arrives too late. Markets reward those who move decisively with imperfect information over those who wait for perfect information that never comes.
The path forward requires honest assessment. Start with business priorities, not technology. Inventory current capabilities against where the market is headed in 24 months, not where it is today. Identify the gaps that create competitive vulnerability. Then partner with vendors who offer modern, modular platforms designed for continuous evolution rather than periodic replacement.
Most importantly, accept that payments modernization isn’t a project with a completion date. It’s an operational discipline. The institutions thriving in payments today treat infrastructure the way they treat risk management: as an ongoing strategic function requiring constant attention, not a one-time fix.
“That gets you to where you need to be just to start looking forward,” Wester said.
The alternative: continued paralysis while competitors modernize, which carries consequences no institution can afford.
Download this report now: Payments in Transition: Leadership in an Era of Transformation.
Editor’s Note: ACI Worldwide processes billions of transactions daily, moving trillions of dollars for banks, merchants, and billers across 90+ countries. Its platforms include ACI Connetic, a unified cloud-native payments hub, and ACI Enterprise Payments Platform, serving the world’s largest financial institutions.
