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From Compliance Burden to Competitive Advantage

How financial institutions can rethink their payments infrastructure for a new era of regulation and speed, based on new research across 150 UK and European banks.

How can banks turn payments regulation from a burden into a competitive advantage?

Banks turn regulation from a burden into an advantage by stopping the habit of meeting each new mandate as a separate project, and instead building a single orchestration layer that handles payments, treasury and securities messaging with richer data and consistent controls, without replacing the core banking system.

Aquila from Aqua Global provides exactly this, sitting alongside a bank’s existing core and bringing automation, native ISO 20022 processing, reconciliation and exception handling into one place, so a bank can modernise in stages rather than through repeated high risk migrations, and meet the next mandate from a stronger position rather than from firefighting.

What the research found

Aqua Global surveyed 150 senior decision makers responsible for payment messaging and processing at retail and business banks, 75 in the UK and 75 in Europe. A consistent picture emerged, the ambition to modernise is widely shared, but regulation is setting the pace and legacy infrastructure is struggling to keep up. The headline findings were these:

77% say regulatory demands outweigh customer demands when it comes to payment modernisation.
60% admit their existing infrastructure struggles to keep pace with evolving standards.
81% agree a unified messaging hub across channels will be essential to stay compliant and competitive.
97% experienced challenges migrating from Swift MT to the ISO 20022 format.
83% think short term fixes such as translation tools will cost more in the long run.

Regulation is setting the pace, but banks are struggling to keep up

Regulatory mandates rarely arrive in a coordinated way, and differing timelines and requirements often push payments teams into firefighting mode, responding tactically rather than strategically. The effect is that customer experience frequently takes a back seat to regulatory delivery, because the cost of missing a milestone is simply too high.

75% still approach each new mandate as a discrete project rather than as part of a broader modernisation strategy.
77% say missing a key regulatory milestone would cause significant operational and reputational damage.
67% spend more effort adapting systems to new standards than improving the customer experience.

Elliot Wood, CTO Aqua Global ‘The real challenge is balancing the need to modernise and stay compliant without having to rip and replace existing systems or risk downtime, which is why customer needs so often end up on the back burner while regulatory issues are dealt with first.’

Richer data is mandatory, but difficult to capture at scale

As scrutiny intensifies, banks must capture, validate and share far richer payment data, and this is exposing gaps in infrastructure and data governance. The underlying issue is not a lack of data, it is a lack of coordination in how that data is captured and applied across payment workflows, because the critical elements are often scattered across systems that were never designed to work together.

72% say richer data requirements, such as AML, sanctions and FATF checks, have exposed gaps in their current infrastructure.
31% are struggling to balance the need for richer verifiable data with concerns around privacy, data residency and third party integration.

ISO 20022 is raising the bar, but legacy systems are holding institutions back

ISO 20022 is fundamentally changing the volume and quality of information banks are expected to process with every transaction, yet the transition has been far from straightforward. Almost every bank surveyed hit difficulties, and the pattern is clear, the problems are less about the standard itself and more about the limitations of the systems it has been layered onto.

97% experienced difficulties migrating from legacy MT formats.
1 in 5 experienced downtime or payment disruption during migration.
65% continue to rely on translation tools, at least in part, to remain compliant.
83% believe those short term fixes will cost more in the long run.

Translation tools have kept payments flowing, and for many banks they were the lowest risk way to meet a deadline without disrupting live systems. But banks are clear eyed about the trade off. The reasons they ultimately want to move to native ISO 20022 processing are both operational and strategic, higher straight through processing rates, fewer errors, less manual intervention, better visibility, stronger integration with AML and fraud tools, and the ability to future proof against the next Swift mandate.

Treating ISO 20022 as a one off compliance exercise encourages short term fixes that grow more costly as new data and validation requirements arrive. Adopting a solution with a flexible workflow framework and native ISO 20022 capability turns a compliance deadline into a long overdue modernisation, with lower effort and cost and far more flexibility for whatever comes next.

T+1 settlement is compressing timelines and exposing operational gaps

The move to T+1 settlement, due in October 2027, is forcing banks to look hard at how payments and post trade processes really operate. As the settlement window shrinks, long standing dependencies on manual steps, thin liquidity, delayed reconciliation and fragmented data become visible risks, because there is no longer a two day buffer to absorb them. Readiness varies widely.

Three stat boxes

21% have already taken action to prepare for T+1.
52% are in the exploratory and planning stages.
23% have no plans in place at all.

The barriers banks cite are familiar, legacy systems that cannot support T+1 without significant investment, competing regulatory deadlines, and a lack of clarity on what T+1 will actually require. In other words, T+1 is less about resistance and more about capacity, clarity and confidence. Early movers associate readiness with reduced settlement risk and fewer fails, faster post trade processing, greater automation, better liquidity management, lower operational overhead, and stronger controls and auditability.

From reaction to intent, how banks are changing course

The cumulative weight of ISO 20022, T+1 and expanding data requirements is making it harder for banks to justify treating each new mandate as a standalone exercise. Attention is shifting away from tactical compliance delivery and towards strengthening the foundations beneath it, with more emphasis on how data is validated, governed and controlled, and on resilience and long term flexibility alongside compliance.

Increasingly, banks associate that resilience with orchestration, the ability to manage payments, data and controls coherently across channels and processes rather than expecting individual systems to do more in isolation. The capabilities they highlight for this orchestration led approach include integrated AML, sanctions and fraud checks, native ISO 20022 processing, API driven integration, real time payment orchestration, scalable reconciliation and reporting, automated exception workflows, data rich cross border payments, and trade matching.

81% of respondents believe a unified messaging hub across multiple channels will be essential to remain compliant and competitive in the future.

Turning regulatory pressure into operational confidence

The challenge for banks is no longer understanding what needs to change. It is making sure payments infrastructure is built to support continuous change without adding risk, cost or operational strain. This is where an orchestration led model earns its place, and it is how Aqua Global helps banks address the challenge within a single platform.

A unified, platform agnostic approach to financial messaging and transaction management.
Orchestrating payments, data and controls across existing environments rather than replacing core systems.
Embedding compliance and data validation directly into payment workflows, with full auditability across every transaction.
Bringing structure, automation and visibility to fragmented processes, reducing manual intervention and improving straight through processing.
Integrating with Swift, local clearing systems and third party services including AML, sanctions and fraud screening.

This approach lets banks modernise incrementally and with confidence, whether they are responding to ISO 20022, preparing for T+1 or managing ongoing regulatory change. It has allowed Aqua Global customers to adopt change without costly core system upgrades for decades, reducing risk, effort and cost, and turning regulatory pressure into a more resilient, scalable operating model that strengthens long term competitiveness.

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