Payments modernisation has become the defining boardroom debate in banking, and according to Tieto, the banks that move in months rather than years will be the ones that thrive in the real-time era.
In a new industry insight, Tieto argues that legacy payment infrastructure has been the biggest headache for bank CIOs and CTOs since the turn of the century. The market is now crowded with vendors promising modernisation without genuinely modern platforms, while traditional procurement processes often fail to surface trusted partners.
European banks, Tieto notes, are moving well beyond instant payments. Soon, bulk, high-value, cross-border and even direct debit transactions will all be real-time. For mid-to-large banks, the question is no longer whether change is necessary, but whether they can move quickly enough to avoid turning a straightforward technology transformation into a costly, long-haul operational burden.
Regulatory mandates around instant payments and ISO 20022 forced many banks into workarounds on legacy systems simply to hit compliance deadlines. Tieto likens this to an eighty-year-old with a chronic heart condition surviving on a pacemaker: functional for now, but far from a permanent fix.
The firm warns that some of these systems date back to an era of cheques and multi-day file-based processing, wholly unsuited to real-time demands. As volumes climb, they will either fail or become prohibitively expensive to run, with mainframe ecosystem operating costs recently tripling. A legacy platform, Tieto suggests, resembles a vintage car: familiar and valued, but ever more expensive to keep on the road. Beneath the surface, ageing teams, continuity risk and buried resilience issues compound the problem.
Hesitation is understandable. Modernising payments can feel like overhauling an aircraft engine mid-flight, and the fear is operational and emotional as much as technical. As Tieto puts it, 'The risk of doing something on time is easier to manage than the risk of not doing anything.' Yet delay simply means CIOs keeping the lights on while accumulating enormous technical and operational debt.
Tieto's answer is a step-wise, agile operating model tailored to each bank's complexity, systems landscape and ecosystem, rather than big-bang migrations that drag on without delivering value. The firm points to a client operating legacy systems across three European countries: selected as vendor in May, contract signed in July, live in September. SEPA Credit Transfer Instant Payments were delivered in roughly three months, with cross-border capability following about six months later.
The bottom line, Tieto concludes, is that change should mean progress fast enough to matter, controlled enough to trust, and tailored enough to fit. The future of payments will not wait for long-haul transformation programmes.