Why Are EMEA Banks Racing to Modernise Payments?

Financial institutions across Europe, the Middle East and Africa are in a period of major transition. While new fintech firms have captured attention, traditional banks have been preparing their own transformation.

New research from Volante Technologies indicates that 99% of banks in the EMEA region are planning to implement new payment solutions within the next 12 months. This points to an industry-wide move toward modernisation.

According to Volante, banks are making substantial financial commitments with institutions allocating an average of nearly US$1.5m to these modernisation projects in the coming year. This figure accounts for financial institutions of all sizes across the region.

The urgency is clear, with more than 50% of banks aiming to complete their upgrades within six months.

For years, many of these institutions have operated with legacy systems and more than a quarter still rely on technology that is either integrated into their core banking platforms or consists of a mix of internal and vendor solutions that are 5 to 10 years old.

Operational resilience and competitive edge

The motivation for this wave of modernisation is twofold. Nearly a third of banks report that cost efficiency and operational resilience are primary reasons for the upgrades. The objective is to implement systems that have improved functionality and lower operational costs.

Beyond operational improvements, there is a distinct competitive angle. The pressure from fintech companies and neobanks has compelled established banks to evaluate their service offerings.

When customers are accustomed to instant money transfers via smartphone apps, traditional banking services that take days to process are no longer competitive.

"The fifth edition of The Big Survey shows banks recognise that modernising payments is crucial to survival in the evolving payments landscape," says Vijay Oddiraju, Co-Founder and CEO of Volante Technologies.

Navigating vendor selection and legacy systems

Volante’s research also sheds light on the concerns of banking executives. The challenges are not just technical but also strategic.

Key concerns include:

• Vendor selection anxiety: 38% of banks state that choosing the right technology partners is their biggest concern, outweighing even cybersecurity risks or budget constraints
• Legacy system burden: More than a quarter of banks are hindered by outdated technology
• Skills gap worries: Around a third are concerned about possessing the necessary internal expertise to manage such a complex transition.

When considering cloud adoption, banks are proceeding with caution. The data shows 58% of banks are utilising a hybrid strategy that combines cloud-based and on-premises solutions. A quarter are still assessing their options while remaining primarily on-premises.

This measured approach is logical in a highly regulated industry where security and compliance are paramount. It also highlights the difficulty of overhauling large-scale systems and networks.

Regulatory deadlines add urgency

The year 2025 is regarded as critical for the banking industry. Impending regulatory deadlines and new legislation, such as SEPA Instant Payments and the SWIFT ISO 20022 messaging standard, are creating additional pressure for banks to proceed with modernisation.

"It's not only market competition and changing customer expectations that are impressing this urgency upon them: 2025 is a critical year for regulatory deadlines," Vijay explains.

This regulatory pressure introduces further urgency to what is already a critical business need. Banks that fail to modernise could face compliance issues while also losing market share to more agile competitors.

The readiness of banks to invest an average of US$1.5m in payment modernisation highlights how critical they view this transformation. The scale of these budgets also clarifies why institutions are being so careful in their choice of technology partners.

"For banks, the right partners are ones who will help them modernise their payments while lowering risk, improving ROI and helping them onboard new clients quickly," Vijay notes.

The winners in this race will be the banks that can successfully manage the transition while maintaining service quality and regulatory compliance. Those that do not adapt risk being left with outdated systems that cannot compete in an increasingly digital-first market.