Banks Struggling to Adapt to Instant Payments Transition
The shift towards instant payments presents a myriad of challenges. According to recent findings, financial institutions are largely unprepared for this evolution in payment methods. A mere 5% of the banks surveyed exhibit a strong readiness—both in business operations and technology—to take the lead in adopting instant payments.
This state of unpreparedness is particularly alarming for banks and payment service providers (PSPs) in the EU as they approach the October 2025 deadline for the Instant Payment Regulation (IPR). This regulation requires that all institutions possess full capabilities to send and receive instant payments.
Concerns regarding fraud present a major barrier, leading many banks to choose to receive instant payments without offering the ability to send them. This reluctance stems from insufficient fraud protection measures and potential liquidity challenges. Currently, only 25% of banks have the capacity to receive instant payments, while 53% can manage both sending and receiving.
Impact on Corporates and the Open Finance Landscape
The ramifications of this shift reach far beyond the banks themselves. Corporate treasurers across various sectors are facing significant inefficiencies in their accounts payable and receivable systems, which are causing serious cash flow problems.
Over 80% of companies are still dependent on manual, paper-based reconciliation processes, tying up nearly 7% of their revenue within their operational practices. This inefficiency amounts to billions of dollars that could otherwise be allocated toward business development and expansion.
According to expert Jeroen, there is considerable potential in merging instant payments with open finance to tackle these issues. He states, “The combination of instant payments and open finance could pave the way for businesses by providing real-time visibility into cash flow.”
The open finance movement, driven by regulations such as Europe’s 2018 Payment Services Directive (PSD2), has the potential to be a significant factor in the widespread adoption of instant payments. However, obstacles remain due to varying regulatory environments and differing market initiatives.
Countries like Australia, Brazil, India, and Singapore are leading the way in making data sharing more streamlined and accessible for individuals and businesses participating in an open financial ecosystem.
Despite its promise, many financial institutions are having trouble fully embracing the open finance model. Challenges such as inconsistent APIs, limited oversight regarding data usage, and a lack of incentives to collaborate with third parties are stalling advancements in this area.
The report reveals that only 17% of banks are in the advanced stages of piloting or launching open finance products, while 39% are still in the planning phase, assessing potential impacts. An additional 23% are cautious, awaiting clearer regulatory guidelines.
As the financial services sector navigates this transformative period, the success of account-to-account transactions and instant payments will likely depend on collaboration between public and private entities.
Jeroen concludes, “The progress seen with Pix in Brazil and UPI in India serves as a clear testament that success relies on collaboration between the private and public sectors. There might be some financial institutions that choose to enhance their existing payment systems or leverage shared bank infrastructure. Ultimately, consumers are demanding immediacy, and businesses are eager to invest in innovative solutions that effectively address real challenges. The time to lay the groundwork for these advancements is now.”