The 10-Second Bank: How instant payments, stablecoins and AI are rewiring financial markets infrastructure

Across the global banking ecosystem, payments infrastructure is entering one of its most significant periods of transformation in decades. The perfect storm conditions of regulation, instant processing expectations, upsurge in digital asset adoption, increasingly AI-driven operations and evolving customer behaviours are driving banks into a new operational reality.

For Christian Schwarz, Payments and Banking Services lead at valantic FSA, navigating this industry transformation requires rather more than a technology upgrade cycle. It demands a structural shift in how financial institutions process, move and manage money.

The payments industry is in a state of flux. Legacy operating models are increasingly at odds with real-time expectations, with nascent digital money assets creating entirely new competitive pressures.

“If you look at the banking business, payment innovation is driven predominantly by regulation. ISO 20022 was introduced some 20 years ago and only now becomes mandatory. Instant Payments have followed the same long path: It may be a slow start but once regulation starts moving, infrastructure transformation must quickly follow.”

This observation reflects the broader market reality facing financial institutions across EMEA in particular. Banks are dealing simultaneously with ISO 20022 migration, SEPA IP regulation, increasing operational resilience obligations, AI adoption and the emergence of digital asset infrastructure. At the same time, many payments banks are managing decades-old core banking systems that were not designed for a real-time, always-on processing world.

As valantic FSA’s own research notes, the industry is shifting from fragmented systems to interconnected, interoperable ecosystems with process and workflow automation and real-time data management at the heart of competitive differentiation.

End of legacy processing models

One of the clearest themes emerging from Schwarz’s industry conversations is the widening gap between legacy banking infrastructure and modern customer expectations.

“The payment infrastructure is moving away from legacy and needs to become instant.Payments need to be receivable 24 by 7, sendable 24 by 7. Overnight batch processing doesn’t work when customers expect payments to happen in seconds.”

This is not simply about speed. It represents a fundamental change in how banks architect operational resilience, liquidity management and transaction processing within payments processing infrastructure, lifecycles and workflows.

Historically, many payment systems relied on overnight processing windows to reconcile transactions, update balances and manage operational workloads. Instant payments eradicate these windows, and Schwarz believes many banks may be underestimating the enormity of this operational change.

“It’s one of the greatest challenges of recent  years. European banks still have the majority of their infrastructure built on legacy systems that are  simply not capable of running 24 by 7, and they’re certainly not IP-ready. With instant [payments], there is no manual intervention. There is only 10 seconds to structure the payment, send it and get the acknowledgement back.”

For Schwarz, the shift is not simply about regulatory compliance. It’s a complete rethink of payments operations. The question is how to achieve necessary modernization with the least disruption to existing operational infrastructure that is already heaving under the strain of meeting rigorous and growing security, resilience and customer service demands.

valantic FSA’s market analysis suggests that almost every EMEA bank is planning payments modernization initiatives, with most going down the path of hybrid transformation strategies that balance legacy coexistence with modern cloud-native architectures. 

As a workflow automation specialist spanning payments orchestration, investigations, post-trade automation and lifecycle visibility, valantic FSA sits firmly at the intersection of banks’ payments processing pain points. Its payments suite and FinCase platform are designed purposefully to enable banks to modernize legacy infrastructure incrementally. 

“We take out the business process of the payment stream and the payment orchestration: We communicate with the legacy system and extract the needed workflow. The bank can start building a new payment orchestration system step by step, without replacing the whole heartbeat of the bank.” 

Challenges of change

It is “a truth, universally acknowledged” that infrastructure modernisation is both an imperative and challenge for most banks: A challenge compounded by the sheer complexity of understanding and managing legacy infrastructure that has been knitted together over time..

The result? An industry attempting to balance the scales of modernising mission-critical infrastructure while maintaining uninterrupted operational continuity and customer service. Schwarz offers a pragmatic explanation:

“Changing a bank’s payment infrastructure is like changing your heart or your lungs – it’s not something you decide to do on a whim. Payments are the life engine of a bank. If they stop working, the entire bank has a problem. Banks can have systems in place which are 20 or 30 years’ old and the reality is that nobody really knows what will happen when you turn them off.”

Consequently, buyers increasingly seek solutions that sit alongside existing infrastructure to connect execution, data and compliance workflows, not only enhancing processing efficiency but also providing very valuable operational intelligence across “siloed” cross-enterprise systems.

Stablecoins, tokenisation and the next payments layer

Beyond instant payments, Schwarz believes the next major shift will come from digital assets like stablecoin and tokenised payment models.

“Today, cross border payments can travel through banks for a week. With stablecoins, it can happen in seconds. That completely changes treasury management, FX exposure and liquidity because companies now know exactly where their money is in real time.”

This is particularly relevant in treasury and cross-border liquidity management, where traditional correspondent banking is still subject to operational inefficiencies and FX exposure, particularly in non-G20 cross-border countries and currencies.  

According to valantic FSA, distributed ledger technology and tokenization are not likely to replace banking workflows in their entirety – and certainly not any time soon – but they will change settlement models and cross-border financial market infrastructure. Traditional payment engines are built around networks such as SWIFT, TARGET2 and domestic clearing schemes. Stablecoin ecosystems introduce entirely different, platform-based operational models.

For banks, this presents a strategic challenge – how to connect and interoperate new digital rails within existing banking operations. And Schwarz believes the market is underestimating how quickly those models could evolve, and what will be required by banks, and their technology partners, to rethink orchestration, compliance, settlement visibility and customer advisory models..

“Wallet-to-wallet transfers and stablecoin platforms will change the infrastructure and the bank’s business. All of a sudden, the whole concept of correspondent banking needs to be rethought and reshaped. We are used to putting money into networks – SWIFT, SEPA and so on. Stablecoins run on their own internet-enabled platforms.”

AI, automation and operational intelligence

AI is also part of any modern payments conversation. Industry-wide, banks are already integrating AI into fraud detection, reconciliation, exception handling and operational analytics, embedding AI directly into operational tooling and post-trade environments. However, Schwarz cautions that banks shouldn’t rush into full-on AI adoption in payments operations. 

“You need to be very careful where you let technology make decisions. ‘AI ready’ automation software must deliver intelligent workflow orchestration without compromising governance, explainability and operational control. valantic FSA has some very good use cases exploring, testing and implementing AI safely within payments operations.” 

This is where valantic FSA differentiates itself – recognising that banks are not just looking for new technology vendors. They want specialist partners capable of helping them navigate their specific operational complexities. 

For Schwarz, perhaps the most important shift for banks to navigate is cultural rather than technical: Banks must pivot from viewing regulation and operational data as compliance burdens to position them as strategic assets. 

“With ISO 20022, banks are sitting on a gold mine of data. Currently many see MX data as a pain because they don’t have the storage or infrastructure. But this data creates enormously valuable operational intelligence and customer insight that can influence entirely new products.”

As payments become more programmable, real-time and data-rich, corporate and treasury clients need guidance on liquidity optimisation, tokenised assets, digital money flows and embedded financial operations.

“Banks have an opportunity to become advisors in the digital asset world, not just operators of accounts. The banks and fintechs who grab that advisory piece and commercialise it will be ahead of the market in the future.”

In many ways, the payments industry is moving beyond pure transaction processing towards intelligent orchestration. The institutions that succeed will not necessarily be those with the newest, whizz-bang technology. They will be the organisations that achieve infrastructure modernisation while maintaining resilience, that integrate new payment rails without adding operational fragmentation and that transform payments data into strategic insight.