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Friday, October 03, 2025
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Calling Time on Legacy Paytech in Banking

By John MitchellCEO and CoFounder, Episode Six
Banks are acutely aware of the stark limitations involved with legacy technology. In the coming months and years, the impact of these shortcomings will be felt across tier one banks globally. As technical debt eats into limited budgets, CTOs will be looking to reduce their dependency on legacy systems and reallocate their resources to newer, more capable technology. Meanwhile, Heads of Payment will be focusing on minimizing implementation challenges caused by legacy paytech, which will directly impact internal teams needing to deliver ROI on technology investments.

This is a common picture for many financial institutions (FIs) worldwide. Because migrating from legacy infrastructure can be complicated and costly, many FIs spend most of their resources propping up old infrastructure. Frustratingly, for everyone, this is often at the expense of investing in infrastructure that enables FIs to provide new and innovative products and services. Legacy paytech is a tyrannical ruler – and one that exacts a high price. According to IDC, global FI spending on existing payments technology is predicted to double to US$80.3 billion in 2030, up from 2020’s US$39.7 billion. This spend on legacy technology is constricting the available budget for payments innovation, making it hard for FIs to remain current in an increasingly competitive market. FIs need to break free from the grip of legacy to future-ready paytech, because the status quo is simply unsustainable.

Reasons to Be Cautious 

There’s good reason for banks to settle for the status quo. Legacy technology is familiar and the risks are known. Migrating to a new payments technology exposes banks to unknown costs, risks, and challenges, which is the driving force behind their resistance to change. It’s a big commitment with an unknown outcome. Before they can commit, FIs need to feel confident in their partner, the paytech, and the approach. Even though they struggle to find partners they trust, FIs are cautious to undertake such a massive project alone — because they’ve historically struggled to successfully navigate digital transformation projects. Of the $1.3 trillion spent by banks on digital transformation in 2018, IDC estimates that more than $900 billion went to waste. Worryingly, 70% of all these digital transformation initiatives did not reach their goals.

Outsourcing the problem hasn’t always worked either. One of the key challenges faced by FIs during a transformation project is being sold an idealized vision that a technology provider can’t  achieve. This experience makes in-house stakeholders more cautious and concerned about how new technology will impact existing tech stacks. This “once bitten, twice shy” mindset makes them hesitant to choose a partner that appears to overpromise or is too revolutionary in its approach.

While banks are right to be cautious, they also need to hit growth targets, meaning new products need to be launched quickly.

So, What’s the Answer?

The approach of ‘ripping and replacing’ existing paytech is asking too much of FI teams with limited resources. In order to work around these limitations, banks need to ‘utilize the latest progressive modernization strategies to reduce impacts across the organisation.

Fortunately, help is on hand in the form of new payment technology providers. These new providers offer built-from-scratch products that are based in the cloud, which gives banks a highly configurable solution that can offer a wide range of product types for diverse use cases. In general, simplicity and speed are key. Banks need proven partners that can overlay new paytech on top of their existing tech platforms. This will accelerate their ability to bring new features to market with minimal investment or technical knowledge.

This goes beyond product innovation. The right partner should enable banks to enter new markets as well. A globally distributed paytech solution allows banks to deploy products wherever their customers are.

As the limitations of legacy paytech continues to impact both innovation and the migration of technology to the cloud, FIs are exploring new strategies to leave their legacy tech behind. FIs are actively exploring their options and looking for ways to progressively modernize their paytech stack. It’s imperative for FIs to find a proper partner that offers resilient and scalable bank-grade technology to get them future-ready and protect and grow their market share.

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