How to Streamline Banks’ Payments as Pathways Proliferate
Payments orchestration centralizes traffic in a bank and sends it down the best path. As real-time payments and cross-border payments increase, setting up hubs will help banks keep up.
By Erich Litch, ACI Worldwide
Global payments are undergoing a radical transformation, with banks at the center of this shift. The rise of real-time payments, along with an explosion in cross-border transactions, have made transaction management more complex than ever.
At the same time, customer expectations have never been higher. Businesses and individuals alike demand instant, secure and seamless payments across multiple networks. Yet, behind the scenes, many banks still rely on legacy systems ill-equipped to handle today’s digital-first reality.
These inefficiencies come at a steep price. A study by IDC Financial Insights found that global financial institutions’ spending on outdated payment systems is projected to rise from $36.7 billion in 2022 to $57.1 billion by 2028. Maintaining this outdated infrastructure isn’t just expensive — it prevents banks from meeting customer demands and competing effectively in a time when they can’t risk losing ground.
Let’s examine the challenges in more depth, and then turn to a potential solution: payments orchestration.
The Challenge of Managing Multiple Payment Networks
Banks operate within an increasingly fragmented ecosystem. Between the automated clearinghouse (ACH), CHIPS, CHAPS, FedNow, the Real-Time Payments Network from The Clearing House, Swift, card networks and regional real-time payment schemes, ensuring seamless transaction processing across these networks is a growing challenge. Many financial institutions are still burdened by batch-based processing systems, which struggle to keep up with the speed and complexity of modern payments. (CHIPS stands for "Clearing House Interbank Payments System" and CHAPS stands for "Clearing House Automated Payment System.")
Outdated legacy systems result in unnecessary payment rejections, often due to rigid fraud filters that fail to distinguish between suspicious and legitimate transactions. As fraud threats evolve, banks need more sophisticated tools to minimize false declines without increasing risk exposure. In 2023 alone, U.S. financial institutions lost $6.8 billion to fraudulent transactions, a number expected to climb without improved risk management strategies.
Payment delays are another persistent issue. While real-time payments are gaining traction, many banks still process transactions in batches, leading to lags that frustrate customers and businesses alike.
This is particularly troublesome for cross-border transactions, which already face regulatory hurdles and multi-bank involvement. The Bank of England projects that global cross-border payment volumes will reach $250 trillion by 2027, making it even more critical for banks to optimize their payment flows.
Regulatory compliance is another challenge. New laws governing anti-money laundering (AML), data privacy and instant payment security require banks to maintain a high level of transparency across their transactions. Yet, without modernized payment systems, tracking and auditing transactions in real-time remains a costly and resource-intensive task.
Read more: Is the Future of Payments Public or Private? The Fed’s Waller Weighs In
How Banks Benefit from Payments Orchestration
To compete in an increasingly digital and globalized economy, banks must shift from legacy payment processing to intelligent payments orchestration. The latter term refers to a system that streamlines transaction management across multiple networks, optimizing routing and reducing failure rates.
Payments orchestration enables banks to manage multiple payment schemes efficiently without the need for costly infrastructure overhauls. This flexibility is essential as real-time payment networks expand and customer expectations for instant money movement increase. By dynamically routing transactions based on business rules, banks can ensure that payments are processed through the most cost-effective and reliable pathways.
For instance, a mid-sized European bank could adopt an orchestration platform to handle payments across SEPA Instant, Swift, and several domestic networks. (SEPA stands for "Single Euro Payments Area.") By centralizing transaction workflows, the bank can reduce its average payment processing time and see a measurable increase in successful cross-border transaction rates. This transformation also allows its treasury operations to gain clearer visibility into liquidity positions across currencies and regions.
In the U.S., a large bank operating across the country provides another relevant example. Facing growing demand for faster payments from both retail and commercial clients, the bank could adopt an orchestration strategy to integrate FedNow alongside legacy rails like ACH and wires.
Rather than relying on separate systems for each rail, the bank could unify its payment processing through a central hub, allowing it to route transactions intelligently in real time. This would not only reduce delays and operational costs but also improve customer experience by enabling 24/7 availability for time-sensitive transactions. The bank’s orchestration layer would also enable it to introduce new fraud detection capabilities tailored to each payment type, significantly reducing false positives and fraud losses.
Read more: Real-Time Payments Are at a Tipping Point, Bedeviled by Fears of Risk
How Payments Orchestration Can Help Address Fraud Issues
Payments orchestration also helps reduce false declines by leveraging AI-powered fraud detection. Instead of rejecting transactions based on rigid, outdated filters, orchestration platforms analyze risk factors in real-time, minimizing unnecessary rejections while keeping fraud under control. This approach leads to higher approval rates, improving both customer satisfaction and revenue retention.
A practical example is the use of orchestration in mobile wallet ecosystems. Several neobanks and fintechs in Asia have successfully integrated orchestration to manage fraud signals across card, wallet and bank account transfers. By consolidating data streams and applying machine learning models to spot patterns, they were able to flag fraudulent transactions faster, while reducing friction for legitimate users — especially crucial in regions where mobile payments dominate.
Further, banks benefit from enhanced compliance management. With real-time visibility into transaction data, financial institutions can quickly adapt to evolving regulations without disrupting customer payments. This is particularly important as governments worldwide push for stronger instant payment security measures, requiring banks to verify transactions faster than ever before.
For example, Australia’s New Payments Platform (NPP) has driven institutions to modernize their anti-fraud and compliance layers. By leveraging orchestration tools that integrate fraud screening, sanctions checking, and transaction enrichment, banks participating in NPP can meet compliance obligations without introducing delays — an approach increasingly emulated in other regions introducing similar schemes.
Read more: How Banks Can Fight ‘Under the Radar’ Customer Fraud
Future-Proofing Bank Payments Infrastructure
Banks that embrace payments orchestration will also position themselves to handle the next wave of innovation. Whether it’s embedded finance, instant cross-border payments or new digital asset transactions, financial institutions that modernize their payments infrastructure will be best equipped to thrive in an era of rapid change.
Consider the emergence of central bank digital currencies (CBDC). While still nascent, their integration into the mainstream payments ecosystem will add yet another layer of complexity. Banks with flexible, orchestrated systems will be better prepared to support CBDC transfers alongside traditional and real-time payments, without requiring a wholesale reinvention of their backend processes.
Similarly, as fintech partnerships become more integral to a bank’s service offering, orchestration allows for seamless integration across third-party services. Open banking initiatives in the U.K. and Europe have made interoperability a competitive necessity.
Banks that can harmonize application programming interfaces, manage partner connectivity, and route payments intelligently are not just managing complexity — they’re turning it into opportunity.
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