Getting Ready for Payments Modernization: What You Need to Know

By Oscar Herrera, Vice President, GridGain

If you’ve used Apple Pay, Google Wallet, Venmo, or a similar app, you likely want more of this type of convenience from your bank and retailers. These services keep pace with the speed of modern life. Businesses are also demanding more speed, convenience, and security in their financial transactions.

Today, emerging regulations like SEPA Instant Credit Transfer in Europe and FedNow in the U.S. align with this growing consumer and business demand. However, a “modernization” requirement to complete payment processing within a few seconds (e.g. under 10 seconds for SEPA), along with 24/7/365 availability, creates a critical infrastructure challenge for financial institutions: how to add real-time capabilities without expensive rip-and-replace projects.

The focus of this modernization is in three key areas: real-time payments (RTA)/digital wallets, instant account-to-account (A2A) transfers, and cross-border payments. While APAC, Brazil, and India are currently ahead of Europe and the U.S. in rolling out many of these services, the writing is on the wall. Financial institutions that aren’t prepared for the implementation of modern payment solutions at scale will struggle with competitiveness and compliance.

Real-Time Payments

The significant global growth of RTP systems has made it the driving force in the evolution of electronic payments. FinTech companies and regulators are collaborating on new use cases and broader access, leveraging open banking, the secure framework that enables payment initiation and supports integration with real-time payment (RTP) rails for interoperability.

RTP provides a fast, secure, and low-cost rail for digital wallets, supporting use cases such as instant wallet funding or peer-to-peer transfers. Digital wallets store payment information and enable cashless transactions across computers, smartphones, and other connected devices. They can securely hold digital versions of credit, debit, gift, and loyalty cards, as well as tickets, boarding passes, and more.

The global real-time payments market is expected to skyrocket from $24.91 billion in 2024 to $284.49 billion by 2032 (Fortune Business Insights). While the Asia-Pacific region currently leads in adoption, North America is rapidly catching up. A U.S. Bank study found that more than half of American firms are already using at least one RTP service.

RTP requires a fundamentally re-architected data platform capable of handling massive, high-speed data flows while ensuring security, reliability, and rich analytics. Confidence on the part of all stakeholders is also key, requiring financial institutions to implement advanced security measures such as encryption, tokenization, biometrics, and AI-powered fraud detection – all of which further stress current payment infrastructures.

A2A Transfers

The demand for A2A transfers is surging, with the value of global A2A transactions rising from $1.7 trillion in 2024 to $5.7 trillion by 2029 (Juniper Research). Unlike traditional credit card or check processing, A2A is a direct, near-instant transfer of funds from one bank account to another. This applies to transactions among individuals, businesses, or a combination of both. Zelle and Trustly are prime examples of this technology in action, leveraging RTA to facilitate these direct transfers.

The main draw of A2A is speed. While traditional systems like BACS or SWIFT often rely on end-of-day batch settlements, A2A transfers are typically immediate. This speed, along with the removal of intermediaries, drives down costs, a benefit that can be passed on to customers. A2A payments also enhance security through encryption and secure channels, while providing a seamless customer experience through mobile access and real-time payment confirmation.

Cross-Border Payments

The rapid growth of the global economy has fueled a massive increase in cross-border payments, which are transactions requiring a transfer of funds across international borders. This includes everything from a consumer buying a product from an overseas website to a business paying a foreign supplier or an individual sending remittance to their family back home. These transactions are complex, often involving multiple currencies, different regulatory frameworks, and various payment systems.

Several trends are accelerating the growth of cross-border payments:

• Globalization – Businesses of all sizes are increasingly reliant on international supply chains and global customer bases.
• Online Marketplaces – E-commerce has enabled consumers worldwide to easily purchase goods and services from international sellers.
• Remote Workforce – The rise of remote work and the gig economy means more people are working for companies in other countries and sending money home.

The growing demand for fast, secure, and low-cost international transactions is driving fintech innovation, with the global cross-border payments market projected to grow to $320 trillion by 2032 (FXCintelligence).

However, this growth comes with significant challenges. The increase in cross-border payments has also led to a sharp rise in fraud and suspicious activity. This puts a tremendous strain on the IT infrastructure of financial institutions, requiring robust security measures to support this new volume while simultaneously combating fraud.

Current Progress Toward Modernization

As the industry moves forward, it's clear that the intersection of A2A, RTP, and cross-border payments will define the future of financial services. A major challenge for banks is meeting the stringent new Service Level Agreements (SLAs) that govern real-time payments. Regulations like SEPA and FedNow set ambitious targets. The most common of these is the requirement to complete a transaction—from initiation to funds being available in the recipient's account—within a few seconds.

Beyond speed, new SLAs also demand:

• 24/7/365 Operation – Systems must be available around the clock, every day of the year.
• Resilience – Banks need robust business continuity plans to ensure uninterrupted service.
• Security and Compliance Checks – This includes real-time fraud screening. Many Anti-Money Laundering (AML) checks must also be accelerated to keep pace.
• Interoperability and Performance – APIs need to be highly reliable and fast to communicate with other systems.
• Error Handling – Institutions must have clear processes for handling transaction errors and sending prompt notifications.

The push for real-time payments is driving a need for new technologies. One such area is real-time verification of payments (VOP) and bulk VOP. These systems are critical for preventing fraud, improving operational efficiency, and ensuring regulatory compliance in an age of instant transactions. The ability to verify payments in real time is no longer a luxury. It's a necessity.

Adapting to these changes requires more than just a software upgrade; it demands a fundamental shift in how financial institutions operate. Banks must navigate the dual challenge of modernizing their systems while maintaining the stability and security their customers expect.

A Practical Place to Start: A Unified Real-Time Data Platform

So, how can financial institutions achieve the required modernization without a costly and disruptive overhaul of their entire IT infrastructure? One effective strategy is to implement a unified real-time data platform that features an in-memory data grid, which can be layered over existing systems. This approach allows banks to incorporate the new, real-time data capabilities and scale up AI processing—with millisecond latencies and 24/7 uptime—without a multi-year, multi-billion-dollar “rip-and-replace” project.

An in-memory data grid is deployed between current applications and legacy databases, such as mainframes, relational databases, and payment gateways. It works by streaming data to the memory grid, which offloads the processing burden from older systems. By acting as a central, low-latency data hub, the grid can unify fragmented payment data from various sources (e.g., core banking, fraud platforms, FX systems) into a single, real-time source of truth.

When evaluating a possible in-memory data grid solution, financial institutions should demand a few key capabilities:

• Extreme Performance – The system should offer high availability and resilience and be capable of processing millions of transactions per second with ultra-low latencies.
• Hybrid Transactional/Analytical Processing (HTAP) – This is the ability to run real-time transaction processing (OLTP) and complex analytical queries (OLAP) on the same data simultaneously. To avoid performance issues, the data should be distributed so analytics don't slow down transactions.
• Real-Time Fraud Detection – The grid must support in-memory screening of high volumes of transactions before they settle, enabling instant fraud and risk management.
• AI/ML Integration – The solution should include a built-in real-time data store for AI/ML models. This feature is crucial for real-time feature engineering, vector embeddings, and prediction caching, which are all essential for powering modern, intelligent applications.

Performance Is Everything

At heart, enabling payments modernization is about ensuring secure, real-time, ultra-low-latency processing at scale. Financial institutions that want to remain competitive must begin their modernization journey today and find a way to achieve the required performance with scale without an expensive overhaul that breaks existing processes. Moving to a modern technology platform also benefits financial firms by decreasing the processing load on mainframes, reducing the cost of MIPS for mainframe workloads, preparing IT for an eventual migration off mainframes, and reducing the need to find resources to maintain older technology. Investigating the potential benefits of an in-memory data grid is a great place to start.

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Oscar Herrera is a Vice President at GridGain, the provider of a unified real-time data storage and processing platform for transactional, analytical and AI workloads. With deep hands-on engineering experience and a track record of executive leadership, he bridges the gap between C-level business strategy and technical execution in complex enterprise environments. A technologist at heart, Oscar Herrera has architected scalable, mission-critical solutions across industries.