Understanding the Infrastructure Imperative

The payments industry processes an staggering volume of transactions annually, with the global payment gateway market valued at $22.5 billion in 2021 and expected to reach $91.3 billion by 2028 with a compound annual growth rate of 22.1%20. This exponential growth trajectory reflects not just increased transaction volume, but fundamental changes in how payment systems are architected, deployed, and managed.

The current infrastructure landscape is characterized by what industry experts describe as a "technical debt crisis" affecting large financial institutions. Technical debt—the accumulated cost of maintaining legacy systems and postponed upgrades—has become more than just a financial burden; it directly impacts institutions' ability to compete with new market entrants who aren't constrained by legacy infrastructure6.

‍

"Ignoring technological change in a financial system based upon technology is like a mouse starving to death because someone moved their cheese"
_{– Chris Skinner}

This technical debt challenge is compounded by evolving consumer expectations. Today's consumers demand instant transactions, real-time reporting, and immediate fraud detection capabilities. These expectations, combined with competitive pressures from fintech companies and a continually changing regulatory landscape, create a compelling case for comprehensive infrastructure modernization.

The Regulatory Catalyst for Change

Regulatory compliance has emerged as a primary driver of payments infrastructure transformation. The Digital Operational Resiliency Act (DORA) in Europe has become a focal point for chief information officers across the financial services industry, introducing comprehensive requirements around system health, operational resilience, and cloud infrastructure risk management6.

"Banking has to work when and where you need it. The best advice and the best service in financial services happens in real-time and is based on customer behavior, using principles of Big Data, mobility and gamification."
_{– Brett King}

DORA's influence extends beyond European borders, similar to how GDPR impacted data protection globally. The regulation is becoming a blueprint for operational resilience requirements in other regions, including Latin America, North America, and Asia. This regulatory evolution coincides with other significant changes, such as the transition to ISO 20022 for cross-border payments and domestic clearing systems.

The regulatory imperative is creating what industry analysts describe as a "modernization mandate" that goes beyond simple compliance. Financial institutions must build infrastructure capable of adapting to future regulatory requirements while maintaining operational resilience and supporting innovative payment methods.

‍

Evolution of Payment System Architecture

The traditional binary choice between building in-house solutions or purchasing vendor systems is becoming obsolete. Modern organizations are increasingly adopting hybrid approaches that leverage modular frameworks combining custom-built components with specialized vendor solutions.

‍

Cloud technology has emerged as a key enabler of this architectural transformation. However, the adoption of cloud-based solutions, particularly Payments as a Service (PaaS), varies significantly by institution size. While tier-two and tier-three banks might opt for comprehensive PaaS solutions, larger institutions often take a more targeted approach, implementing cloud-based services for specific business areas while maintaining control over their core payment infrastructure.

This architectural evolution reflects a broader industry trend toward what experts call "composable infrastructure"—systems built from interchangeable components that can be rapidly reconfigured to meet changing business requirements. This approach enables financial institutions to balance the stability of core systems with the agility needed to support innovative payment methods and services.

‍