In principle, the case for prioritizing Payments Modernization 3.0 across the global financial services industry should be straightforward. Consumers and businesses increasingly expect—and in many cases require—advanced payment capabilities and modern financial management tools. At the same time, the value of digital payments continues to expand rapidly and is projected to reach more than $24 trillion by 2028. The growth opportunity is both remarkable and unprecedented.

Yet the urgency you might expect from traditional banks and financial institutions hoping to benefit from this moment has not fully materialized. Many remain tied to aging legacy systems, while others have fallen significantly behind on their stated modernization roadmaps. A closer look suggests the issue is not a lack of ambition, but rather outdated strategies coupled with the compounding complexity of long-standing challenges. This indicates that meaningful acceleration is achievable—if banks can identify and secure the right tools and expert support to break this cycle.

Volante’s recently published white paper explores this landscape in depth, detailing where momentum has stalled, why accelerating progress is increasingly critical, and what an effective blueprint for financial innovation looks like.

Below is a brief overview of several key findings and insights from the report.

The compounding costs of falling behind

At first glance, today’s urgency around payments transformation appears primarily driven by the need to evolve in tandem with technological innovation. Banks must prepare for a future defined by more advanced, more dynamic digital payment systems.

This is a major factor—and for some institutions, it is reason enough to begin modernizing. However, the more pressing reality is that the costs of not modernizing are no longer hypothetical. They are happening now, and the financial impact on operating stability and profitability grows more severe each year.

The source of these costs is typically clear: traditional institutions are spending vast amounts of time, funding, and talent on maintaining legacy systems. Many banks continue to operate on core systems that are at least 20 years old, supported by specialized expertise that is increasingly scarce in today’s digital-first technology environment.

But the talent gap is only part of the problem. The financial burden is far larger. Banks are expected to spend an additional $57 billion on legacy infrastructure by 2028, with support costs rising 7.8% per year. These escalating expenses create a persistent cycle of technical debt. Meanwhile, banks face intensifying margin pressures as per‑transaction revenues decline due to the commoditization of transaction processing.

Ongoing maintenance also does little to address the operational limitations these older systems have created. Legacy platforms typically cannot support true real‑time payments, and they were never designed for the transaction volumes banks handle today.

The result is self‑reinforcing. As institutions continue investing in outdated infrastructure, they limit their ability to meet new regulatory and market demands—such as ISO 20022 compliance for domestic and international clearing, or the now‑standard expectation from consumers and businesses for 24/7, always‑on services and real‑time capabilities.

Why modernization initiatives so often fall short

To be fair, most institutions have made genuine attempts to modernize. However, many of these efforts have not delivered the intended outcomes. According to FICO’s 2024 Digital Transformation report, nearly 75% of enterprises have not achieved the returns they expected.

So what is going wrong?

The study notes that 70% of institutions cite siloed operations as a major barrier. Even more striking, 90% report that their initiatives are too narrowly scoped, failing to address the full span of their modernization needs.

Our analysis shows three interconnected factors at the center of these challenges:

Over-customization
Across the industry, there is a strong tendency to heavily customize new platform solutions. Volante’s 2024 Big Survey, which includes insights from more than 300 senior bankers worldwide, shows that institutions consistently prioritize customization over leveraging the full capabilities of their core solutions. This leads to extended development cycles, unnecessary integration complexity, budget overruns, and rising support costs.

Vendor platform bottlenecks
Banks often select platform vendors who are simultaneously modernizing their own systems. Even capable vendors face competing priorities, and these dynamics almost always translate into integration delays, longer project timelines, and periodic resource conflicts.

Implementation challenges
Most institutions are significantly behind on implementation. Our survey found that 48% are still in planning or strategy phases, 45% are only in early discussions with partners and consultants, and just 7% have begun actual implementation. Key contributors include skill gaps in cloud and API development and persistent budget constraints. In fact, most institutions continue to allocate less than $1 million toward accelerating modernization.

A clear blueprint for financial innovation

Understanding why modernization efforts have struggled is only the first step. The real challenge is converting that understanding into a practical, executable plan for sustainable transformation.

Drawing on insights from more than 6,000 payment practitioners, Volante and Accenture’s new white paper, Payments Modernization 3.0: A Blueprint for Financial Innovation, distills these lessons into a clear and actionable framework built around four guiding principles for successful transformation.

Download your complimentary copy to explore these principles and learn how our partnership can help your institution navigate the increasingly complex landscape of payments modernization.