Banks are continuing to spend big on IT, amid growing competitive pressure from one another and fintechs.
With the penetration of generative AI into every area of the financial sector, it’s no surprise that banks are re-focusing their investments.
Instant payments, digital currencies, generative AI, and agentic AI are all innovations that not so long ago were at the periphery for banks and financial institutions. But now, investments in software platforms are commanding an increasing share of payments revenues.
Up-to-the-minute product capabilities, speed, and integration are non-negotiable. Investors are pushing for sharper margin discipline. Regulators are expanding their focus on payments and transaction banking, even as geopolitical volatility and economic sanctions create new layers of risk.
Global payments revenue will top $2.4 trillion by 2029 - Reaching $1.9 trillion in 2024 after growing at an 8.8% compound annual growth rate since 2019, but growth is expected to slow to 4.0%.
Payments fintechs hit $176 billion - Attracting $135 billion in equity funding over the past 25 years, (nearly a quarter of all global fintech investment). As a whole, fintechs generated $176 billion in revenue in 2024 and are growing at 23% annually.
Value-added services – could represent 30% - 35% of US acquiring revenue by 2027, with embedded finance estimated to add another 10% - 20%4. Software suppliers are expanding at twice the rate of digital acquirers, and almost three times that of incumbents.
Agentic AI – will influence over half of e-Commerce spending, powering fraud detection, payments reconciliation, customer service and cross-party coordination5. 81% of US customers surveyed expect to interact with agentic AI, which could boost spending by over $1 trillion, and accounting for 50% of online commerce.
In this whitepaper, we’ll explore the key technology priorities for wholesale bankers in 2026 and beyond.
We’ll examine where banks are primarily spending their money, what’s driving investment across these areas and how to make sure you get the best ROI for the software tools you buy.
Delivering a great customer experience is still top priority for banks. Launching new products to stay competitive and relevant in the marketplace, and improving operations are also key drivers behind IT investments.
Following a recent survey of over 400 banks, technology solutions provider, Temenos uncovered some insights into where tech investments are going and why.
Despite economic and geopolitical uncertainties, banks are actually investing more. Specific areas are in:
80% of leaders surveyed said they are monitoring how customers are responding to geopolitical changes so that they can gear their investments to better prepare for the future.
Data is at the center of everything in banking. GenAI offers the potential to extract more value from this data by enabling new efficiencies and unlocking untapped value – and many banks are already reaping the benefits.
From enhancing the customer experience to thoroughly transforming fraud detection, risk and compliance management and more, banks are beginning to realize the productivity and efficiency gains that GenAI offers.
The pressing questions for banking leaders now are how and where they can use GenAI most effectively going forward, and how to ensure it is fully adopted and scaled.
According to research conducted by global business analytics firm SAS, involving 243 senior leaders in the banking sector, 60% of banks are using GenAI in conjunction with the insurance industry.
38% of banks intend to start using GenAI within the next two years, while only 2% have no plans to do so.
GenAI can help modernize payments businesses in many ways, and automation is top of the list.
More than half (60%) of banks struggle with essential technology skills. GenAI can bridge this gap by optimizing workforce capacity and resources, automating repetitive manual tasks and enhancing human efforts through augmentation.
Leading banks have already automated 40% of manual tasks and augmented 39% of human tasks in payments.
But the strategic use of GenAI can do much more than automating routine tasks; it can enable hyper-personalization in payment experiences, uncover new revenue streams and enhance fraud detection capabilities.
Leading banks are selective in how and where they align their generative AI investments, with consumer and commercial domestic payments being the top priority, followed by international commercial payments.
Risk management is a hefty topic that encompasses every area of a bank’s operations.
Evolving technologies like AI, SaaS, machine learning, and APIs are transformative in their ability to help banks manage risks more effectively, remove silos, streamline operations, and enhance decision-making processes.
Using these technologies, offers an ability to collate multiple data sources, identify patterns, and manage your organization’s risks more holistically, uncovering opportunities for growth while automating routine tasks. By connecting various risk factors, banks can proactively mitigate these risks and bring efficiencies that elevate decision-making processes by freeing up human resources to consider and validate the outputs and think more strategically.
One area that doesn’t get much attention until something goes wrong is outage risk.
When payments aren’t processed in line with SLAs, banks put their revenue and relationships at risk. An hour-long outage could easily cost millions in lost revenue, and that’s only if it affected a small percentage of your transactions. Regulatory fines and enhanced scrutiny as well as considerable negative press also follow.
Most banks use transaction monitoring already, with a primary focus on flagging suspicious activity. For monitoring the health of your payment system itself, banks sometimes turn to their processors but might have a limited view, depending on their provider. In other cases, internal development teams build a solution from scratch or adapt enterprise-monitoring solutions to fit their transaction monitoring and reporting requirements.
Building in-house solutions can prove difficult to scale and maintain, especially in the current environment with so many competing IT priorities. At the same time, you might be challenged by technical talent shortages or attrition of developers who understand how the system works. Whatever transaction monitoring solution you’re using today, it absolutely needs to deliver the kind of visibility that helps you manage risks, optimize efficiency and improve team productivity.
That usually comes down to how and when (batch or real-time) the data is presented in the dashboard, you’re able to automate actions based on thresholds (expected or dynamic) and whether reporting is manual or automated. The technology should also be able to pull in that actionable data without impacting system performance.
In addition to minimizing expensive and brand-damaging outages, 67% of IR Transact customers reported increased efficiency, and 64% say they’ve reduced operational costs.
What’s more, 86% report that visualized transaction monitoring data helped them improve response and resolution time. That means their teams spend less time hunting for data and more time acting on it.
Through payment monitoring and analytics in high volume environments, financial institutions have a clear window through which to see everything within their payment systems in real time.
But at the same time, monitoring helps streamline deployments and migrations, which are becoming more commonplace as banks navigate digital transformation and new payment types.
Ensuring that a payment goes through may seem like table stakes, yet 90% of business leaders reported significant problems with their payments operations.
Reconciliation lags, lack of real time insight into cash balances across bank accounts, data quality errors and a low rate of accurate payment reconciliation - all of which lead to wasted time, employee frustration and greater financial risk.
An advanced monitoring tool like IR Transact gives you the opportunity not just to make transactions seamless for your corporate customers but to also help streamline and automate operations, including invoicing, reconciliation and liquidity management.
In fact, the biggest disconnect between bankers and their commercial customers is what customers see as a lack of value-added services.
In particular, businesses want:
However, to improve customer loyalty, you’ll need to deliver far more than additional services.
Commercial customers also want:
AI, including intelligent workflow automation and generative AI can help address many, if not all, of these demands. Most banks have been using machine learning or some form of AI to automate tasks or make predictions for years, but are only now realizing that the full benefits of artificial intelligence will be difficult without a digital core.
A strong digital core enables payments organizations to outpace the competition by leveraging the right combination of:
Fraudsters and cyber criminals are developing and using more sophisticated methods of evading detection every day.
To stay ahead of the curve, AI and data analytics play a vital role in uncovering and preventing fraudulent activities. However, tackling these challenges often requires collaboration, and well thought-out strategies:
From both a product and vendor perspective, buyers are often frustrated by their post-sale experience. Disappointments typically stem from implementation challenges and mismanaged expectations, including a higher-than-expected cost of ownership.
One of the core benefits of IR Transact monitoring solutions is that by delivering visibility across payment types, banks are easily able to track SLAs and hold vendors accountable.
Most companies who experience regret are ultimately saddled with problems they can’t easily overcome, including 56% who say the financial blow will have a significant impact on long-term business performance.
To make sure you don’t end up with buyer’s remorse, faced with extra costs and needing to search for a new vendor, be prepared:
At IR, building trust with our customers starts during the sales process. We are completely transparent about what our software is or isn’t capable of. At the same time, we recognize that time-to-value is critical for banks who have so many competing IT priorities.
We’ve developed our dashboards, alerts and reports based on our payments expertise and years of customer insights, so banks can get up and running quickly.
This means being able to not only monitor their high-value, real-time or card transactions but to gain insights into capacity, system performance and liquidity management forecasts to help them plan for the future.
As banks continue to increase technology spend, particularly on infrastructure and risk-related initiatives, it can be difficult to measure the return on investment.
With project delays, system outages and other day-to-day issues, it’s no wonder that leaders are asking, ‘What are we getting for our money?’ To help answer this question, McKinsey & Company analysts recommend that banks develop a technology management system by:
Analysts maintain that as technological change continues to accelerate, the greatest differentiator among banks will be the speed with which they adapt.
With the right forethought, technology management systems and alignment on goals you can measure success both across your organization and with any vendors or partners. This means you’ll be much more likely to have a positive experience and achieve the best business benefits.