Industry
Banking
Banking Services Transformation: Unlocking Exponential Value
Highlights
- Technologies are transforming the way banks are future-proofing their back-office operations.
- Rapid digital transformation, regulatory changes, AI adoption, and a shift in customer expectations will completely reimagine the payments landscape over the next 5-10 years.
- BPS Payment operations will move from manual-heavy environments to fully automated payments lifecycle on intelligent real-time platforms with exception handling 24/7 to deliver a frictionless, real-time and world-class customer experience.
On this page
Introduction
The evolution of Business Process Services (BPS) in banking payment operations is seeing a seismic shift, with the banking BPS market revenue. This transformation, driven by rapid digital transformation, regulatory changes, AI adoption, and a shift in customer expectations will completely reimagine the payments landscape over the next 5-10 years.
For BPS providers this is an unprecedented opportunity to capitalize on the fast-rising tide of disruptive tech to usher in a new era of growth. One cannot take a deep dive into these innovations in payments operations, however, without first examining key global autonomous payments trends that drive them.
Key Global Autonomous Payments Trends
Three critical trends currently reshaping the sector and steering businesses in their intelligent use of automation to stay ahead and deliver an ‘end-to-end’ secure and seamless payments experience in line with customer demands are:
With ISO 20022 becoming the global messaging standard, BPS providers will offer standardized message transformation services, message enrichment tools, and compliance validation services. Cross-border advancements such as ‘Instant Cross Border,’ where funds can be sent via local instant payment providers between countries, have spurred widespread adoption where there will be interoperability between domestic rails of different countries (e.g., Project Nexus led by Bank of International Settlements) and with banks modernizing front-end channels by leveraging tools such as SWIFT global payments innovation (GPI)and SWIFT Payment pre-validation solutions in the market, cross-border servicing requests from end customers are set to come down drastically.
With these new cross border initiatives becoming mainstream traditional cross-border volumes, which usually have a straight through processing (STP) rate of ~95% due to the complexity of traditional correspondent banking will improve drastically. This will result in a lighter workforce to handle manual repairs and rejections; the back-office workforce for cross-border transactions managing liquidity and forex providers only, and the subsequent operational efficiencies for BPS providers in turn passed on to the end consumer.
The instant payments market globally continues to grow exponentially. Real-time payments (RTP) will take over batch-based automated clearing house (ACH) payments, traditional paper checks, and next-day payment rails. Functions within RTP such as rule-based fraud decisioning and sanctions screening will be replaced with AI-driven real-time predictive models with Agentic AI functionalities. Customer queries that are manually investigated today will be replaced with AI chatbots and NLP assistants. Spreadsheet-based reconciliation activities by agents will be replaced with AI-assisted exception prediction models, and the existing operations-heavy back-office units will be replaced with lean digital BPS teams managing utility layers.
Banks and financial institutions are increasing their investment in real-time rails in a bid to reinvent themselves, upgrade their product offerings, and secure their relevance in the market. This is evident across geographies with RTP adoption at different stages of maturity driven by a push coming from consumer demand especially in sectors like e-commerce where speed is critical to business success.
BPS providers are no longer satisfied being service providers and are evolving into the role of payments innovation collaborators. These firms will increasingly offer modular PaaS solutions such as payment orchestration and real-time compliance checks to banks and fintechs amid a plethora of value-added services to all stakeholders in the payments’ ecosystem including automated payment routing, APIs for client onboarding, and intelligent payment initiation. This enables banks to consume services on demand, reducing time-to-market. Banks will look to service providers to enable end-to-end transformation of their existing operations and not just offshore for cost arbitrage.
Alongside co-innovation partners such as Celonis, Symphony AI and other fintech companies that help with transforming back-office operations, BPS providers are set to act as digital utility hubs and provide cloud-based payment operations platforms for banks, thereby harnessing the operations and IT synergies. Some of the key digital technologies they will harness to power the future of operations would be AI/ML for exception management, Fraud, and compliance, APIs for integration across core channels, SWIFT GPI, and NLP and conversational AI for client servicing.
Banks’ roadmap to achieving nextgen payment operations.
Stakeholders across the payments ecosystem are embracing an automation-first approach to streamline processes for flexibility, agility, efficiency, and accuracy while delivering a seamless experience and further optimizing the entire payments value-chain. Banks and businesses therefore will have to evolve to remain competitive, creating new payments solutions that unlock cost-savings and yield significant benefits by leveraging data, next-gen tech, strategic partnerships and co-innovation to match dynamically changing market demands and deliver omnichannel excellence.
AI-driven insights can help banks and payment organizations predict spending patterns, anticipate customer needs, and offer proactive solutions. Hyper-personalization is not just a trend but a fundamental shift in how banks and financial services engage with their customers. Those who tailor the payment experience to individual preferences will build deeper relationships and loyalty.
Many payment operations still rely on semi-manual processes, such as manual product setup and configuration in business applications, repair management in wire messages, exception handling in ACH Batch processing, raising of overdraft tickets, and manual disambiguation of sanctions alerts in compliance platforms, as well as manual reconciliation of nostro accounts using excel spreadsheets.
Future state: BPS providers will implement hyper automation using various digital levers such as RPA, ML, intelligent workflows, smart chatbots, and other next-gen levers, including Agentic AI and GenAI. Banks are extensively using RPA and AI for intelligent document processing and product setup, intelligent payment repair solutions, and AI-based exception resolution solutions. Agentic AI models for fraud detection and payments sanctions screening to decision alerts that the system cannot disambiguate, and no-code/low-code platforms to accelerate operations transformation, especially around handling payment investigations. The traditional offering of payment operations services involving resources to manage mundane data entry, low-level judgement reviews, and reporting will gradually fade away, and processors will work only on exceptions or fall-outs from straight-through processed transactions.
There is steady growth in real-time payments across different markets (e.g., Fed Now, UPI, SEPA, Instant, RTR), which require 24/7 operations coverage as opposed to earlier payment rails, which works on Batch processing and has defined cut-off times.
Future state: As a result of these new payment rails such as instant payments, banks require real-time fraud monitoring, automated exception management, and cloud-native processing hubs with ISO20022 processing capability considering the service level commitments by banks to their customers are in seconds. BPS providers will transform into global shared services by leveraging low-cost centres (India, Philippines, Eastern Europe) for 24x7 round-the-clock centers with multi-language support.
Today, due to the increase in sanctions list and geo-political changes, banks require a lot of resources to manage sanctions screening of payments real time, and this ends up in banks spending a lot of money to handle sanctions alerts.
Future state: GenAI based decision models will be embedded into the sanctions screening pipeline with various cognitive layers such as name and pattern matching using NLP, dynamic risk scoring models, explainable AI for compliance team reviews, and GenAI to generate disposition comments in line with regulatory requirements. Additionally, BPS service providers will increasingly manage compliance-as-a-service mainly for Level 2 decisioning and Level 3 reporting only.
It’s no secret that AI and ML are set to impact payments even more in the future as these integrations are already underway in 2025. Major AI investments in Europe are expected next year and we have only begun to scratch the surface with it already being deployed in detection of fraud, real-time issue monitoring and automation of checks that ensure regulatory compliance.
Future state: Traditional SWIFT-based investigations, customer disputes and manual tracing of payments will be replaced by AI/ML models trained in interpreting customer queries and fetching historical data to auto-resolve or route investigations intelligently. Industry tools such as SWIFT GPI Tracker and pre-validation tools with rich databases will be integrated in customer channels via API integration to reduce the need for L1/L2 ops support and bring in transparency on fees, traceability of funds, and notification status of funds to end customers. NLP chatbots are already available for handling queries from corporates, consumers and internal teams. Traditional batch reconciliation systems using Excel spreadsheets and legacy reconciliation tools will be replaced with real-time matching engines, exception prediction and prevention using ML, and auto-resolution of low-risk discrepancies. BPS players will integrate reconciliation across ACH, card, wire, and RTP from a centralized digital ops hub.
Conclusion
Banks, already heavily investing in digital core upgrades, especially to accommodate the ISO 20022 message standards, are also partnering with forward-looking BPS providers whose strong domain and technological capabilities, such as TCS, are catalyzing an optimistic outlook for the state of bank operations in payments.
In summary, the future of autonomous banking in BPS Payment operations will mature further and move from manual-heavy environments to fully automated payments lifecycle on intelligent real-time platforms with exception handling 24x7 to deliver a frictionless, real-time and world-class customer experience by incorporating the below digital roadmap across payment functions.
- Digital BPS utility layer to manage RTP, ACH, cross-border payments.
- Client-facing APIs for payment initiation, status, recall.
- AI-driven command center for monitoring, anomaly detection, and compliance.
- Smart case management system for AI-led investigations.
- Real-time reconciliation hub for reconciliation.
- 24x7 ops factory model to manage products that are 24 x 7.