As we usher in 2025, it is impossible to ignore the profound transformation the payments ecosystem has experienced over the past decade. Just ten years ago, Open Banking was still a theoretical concept. Today, the UK alone has witnessed over 18 billion successful API calls enabled by Open Banking, marking a remarkable leap in the sector’s evolution and becoming a thriving playground for innovation by all actors in the ecosystem.
This pace of change is poised to accelerate even further as banks grapple with a multitude of shifts driven by rising consumer expectations for more intuitive and seamless payment experiences. In parallel, the proliferation of digital currencies, cryptocurrencies, and alternative payment methods, coupled with forthcoming regulations like PSD3, are reshaping the landscape.
The intensifying competition from neo banks, fintech, and big tech companies is pushing the industry towards new business models such as Banking-as-a-Service (BaaS), Payments-as-a-Service (PaaS), and Software-as-a-Service (SaaS), solidifying this as a critical juncture in the evolution of the payments sector.
Banks, financial services, and payment organisations seek ways to optimise their payment systems to stay competitive in this dynamic environment. However, simply investing in payment transformation is not enough. To truly maximise the return on investment (ROI), organisations must focus on a strategic approach that integrates innovation, adaptability, and operational efficiency.
As consumers increasingly prefer speed, convenience, and security, banks and payment organisations must adapt to this changing demand. The rise of digital wallets, QR codes, and peer-to-peer payment platforms is reshaping the payment landscape. As financial institutions and payment providers work to meet consumer demand, they must ensure their payment systems can support a wide range of payment methods, delivering a seamless and convenient experience for customers.
While the increased choice of payment methods is a significant transformation, another challenge lies in the rising payment volumes associated with the shift toward a cashless society. During peak shopping events, like Black Friday, Cyber Monday, Thanksgiving, etc., transaction volumes increase dramatically, creating stress for payment systems. For example, during peak shopping, Stripe processed over 137,000 transactions per minute while maintaining 99.9999% uptime. Stripe alone processed 465 million transactions in just 4 days from Black Friday to Cyber Monday in 2024. Therefore, banks and payment organisations must architect their systems to accommodate a growing range of payment methods and effectively manage the fast-growing transaction volumes and volatility.
Tokenisation is rapidly becoming a cornerstone of secure digital transactions. Replacing sensitive payment information such as credit card numbers or bank account details with a unique, non-sensitive token provides a robust layer of protection. This technology reduces the risk of fraud and data breaches, as even if tokens are intercepted, they hold no value without the underlying data, which is securely stored in specialised vaults. This approach has gained prominence in mobile payments, with platforms like Apple Pay and Google Pay leveraging tokenisation to secure transactions.
Beyond traditional payment methods, tokenisation also plays a key role in the emerging world of Non-Fungible Tokens (NFTs) and cryptocurrencies. NFTs, which represent ownership or proof of authenticity for digital assets like art, music, or collectables, rely on tokenisation to ensure secure ownership and transfer.
The market for NFTs reached an impressive $49 billion in 2024 and is poised to grow to $521 billion by 2032, growing at a CAGR of 34.5% during the forecast period (2025-2032). Tokenisation is being used in sectors beyond art, including real estate and gaming.
Hence, payment organisations should build their payment landscape to allow seamless integration across various payment methods, whether card payments, mobile wallets, or emerging options like cryptocurrency, to maximise the benefits of their transformation. The goal is to create a frictionless customer experience while ensuring robust security measures are in place.
Another transformative trend is adopting real-time payments (RTP), which are gaining momentum worldwide. The rise of RTP is a game-changer for everyone involved, with faster transactions leading to more efficient processing, better cash flow management, and higher customer satisfaction.
A recent study from Juniper Research found that the instant payments market globally grew by 161% in 2024 to $22 trillion and is projected to reach $58 trillion by 2028. By increasing investments in RTP, banks and financial institutions can build a competitive edge, particularly in industries like retail and e-commerce, where speed is essential. This ensures meeting and exceeding customer’s expectations for faster, more reliable payment experiences, which can help build trust and loyalty.
Achieving success with real-time payments requires integrating the right technologies to build robustness, including real-time fraud detection tools and APIs that seamlessly connect payment systems. Coherent, unified payment ecosystems are essential to unlocking the full potential of real-time payment solutions.
Security has always been a top priority in the payments industry. Still, as fraud tactics evolve and data breaches become more sophisticated, the need for advanced security measures is even more pressing. According to the UK Finance Annual Fraud Report, £1.17B was stolen through payments-related fraud in 2023, which involved approximately 3 million cases.
Investing in secure payment systems that meet the latest compliance standards, such as PCI DSS and GDPR, is paramount. However, security shouldn't just be about meeting the bare minimum; it should be proactive and adaptive. Machine learning and artificial intelligence (AI) are now being leveraged in fraud detection systems to enhance real-time security. These intelligent systems can flag suspicious activities and prevent fraudulent transactions before they occur.
To maximise their return on investment (ROI), banks must go beyond regulatory compliance and adopt a holistic approach to security that includes encryption, tokenisation, and multi-factor authentication (MFA). Regularly auditing payment systems and staying updated with the latest security protocols will help mitigate potential vulnerabilities.
While delivering an exceptional customer experience is essential, banks and payment organisations must also recognise the internal advantages of payment transformation, particularly in enhancing operational efficiency and reducing costs. One significant challenge is managing a fragmented payment infrastructure, often resulting in inefficiencies and unnecessary expenses.
To address this, banks should improve straight-through processing (STP) rates to minimise manual interventions and eliminate human errors. Adopting ISO 20022 standards should be seen as a mandatory compliance requirement and an opportunity to leverage more structured, rich data that can significantly boost automation and drive substantial improvements in STP rates.
By taking an end-to-end view of the payments value chain focused on an automation-first approach, organisations can streamline operations, reduce transaction fees and improve reconciliation processes to achieve above 20%-30% reduction in Total Cost of Ownership (TCO).
As payment systems evolve, so too do customer expectations. Today’s consumers demand a personalised, seamless experience that integrates with their daily lives. A one-size-fits-all approach is no longer enough. By investing in data-driven payment solutions, they can deliver personalised experiences that resonate with their customers.
Banks can use customer data and analytics to create customised offers, rewards, and payment options tailored to each customer’s preferences, a ‘segment of one’ approach. Integrating loyalty programs with payment systems allows for a seamless connection between payments and rewards, enhancing customer retention. Furthermore, AI-driven insights can help banks and payment organisations predict spending patterns, anticipate customer needs, and offer proactive solutions.
Hyper-personalisation is not just a trend but a fundamental shift in how banks and financial services engage with their customers. Those who tailor the payment experience to individual preferences will build deeper relationships and loyalty.
Investing in building cloud-based payment platforms is now imperative to deliver secure and highly available on-demand infrastructure to drive scalable business growth. This includes preparing for potential disruptions, such as economic downturns, technological shifts, or cyberattacks. Organisations, therefore, must focus on building a resilient payment infrastructure as the payment landscape undergoes the above-mentioned seismic shifts.
At Coforge, we believe digital transformation happens at the intersection of ideas and action. We are already collaborating with some of the world’s largest global and central banks to develop and implement innovative payment solutions. Our extensive experience positions us at the heart of the industry, driving and reshaping payment transformation to foster growth, efficiency, and security across the banking, financial services, and payments sectors.
We offer a comprehensive suite of payment transformation services, including real-time payment integration, fraud management, AI-based hyper-personalised experiences, and seamless reconciliation. Focusing on automation, security, and operational efficiency, we help banks and payment organisations create scalable platforms that drive immediate and long-term benefits.
Our experts work closely with clients to design tailored solutions that meet their unique needs, whether implementing new systems or optimising existing infrastructure. Coforge’s cutting-edge technology ensures you stay ahead of the competition, maximising ROI and empowering you to thrive in the dynamic payments landscape.