Payments Forum Reveals Focus on Modernization, Business Payments, ISO 20022 Deadline and Partnerships

By Roy Urrico

At its annual US Payments Business Forum (April 2-4, 2025) Finastra, a provider of financial software applications observed four key payments trends emerging among financial services industry executives in attendance: modernizing payment infrastructures, capitalizing on business payment opportunities, preparing for the approaching ISO 20022 deadline, and developing fintech partnerships.

Mihail Duta, director, solution consulting, transaction banking at the Lake Mary, Fla.-based Finastra, explored those trends with Finopotamus.

Mihail Duta, director, solution consulting, transaction banking at Finastra,.

The US Payments Business Forum, which featured Finastra product experts, industry analysts, roundtable discussions, and panels, “is really an opportunity for us to spend some quality time between Finastra and our payment customers primarily. The event covers industry level initiatives in the payment space, like instant payments, AI (artificial intelligence) in payments, to give a couple of examples,” said Duta.

Duta continued, “Meeting in person brings such value to interacting with customers and learning about their needs, challenges, strategies. I think it is very important that we have this event every year. It is not just about, customers, hearing from Finastra speakers or partners or The Clearing House representatives but actually interacting with each other.”

FIs Must Modernize Their Payment Infrastructure

Mid-tier banks and credit unions must modernize their payment infrastructure and migrate to hosted or software as a service (SaaS) solution to keep ahead of customer needs. Presenters discussed how, per Aite-Novarica Group research, a significant majority of banks (92%) plan to increase their investment in payment technologies, with 80% identifying legacy systems as a key obstacle.

“Not only credit unions, but community banks, pretty much everybody in what we call the mid-market space have in many cases a challenge with modernization,” Duta told Finopotamus. He explained many “use ‘point legacy solutions,’ which may do very well for Fedwire or SWIFT or ACH. But they do just that one thing. They do not have the ability to add innovative solutions, even instant payments in some cases.” That is why, Duta noted, credit unions, among other financial institutions (FIs) in that space have a “need to modernize their payment solutions, frankly, their entire ecosystem,” Duta added.

Duta suggested three steps:

• Deploying payment solutions in the cloud. “It is becoming pretty much the norm in the mid-market space to look for a solution that's deployed and hosted by a provider like Finastra.”

• The concept of payment hub. “It is not necessarily new, but it is making more of a footprint in the mid-market space with credit unions especially. So basically, it is the ability to have one system that can process multiple methods of payment, multiple rails. And by rails we mean Fedwire, we mean ACH, instant payments.”

• The integration aspect. That relies on application programming interfaces (APIs) “as opposed to a more of a legacy integration model.”

Duta said, “I am not going to tell you that these are the only three aspects of what a credit union, or a small FI, is looking for, but these three topics do come up every single time we talk with an existing customer or a prospect as they're looking towards modernizing their payment solution.”

Why Capturing Business Payments Is Relevant

Finastra suggested FIs stop playing defense, and instead play offense when it comes to business payments. The forum crowd learned from Datos Insights that 89% of businesses are investing in payments tech, which creates mutual alignment between FIs and customers. Therefore, the opportunity exists for banks and credit unions to capture this business spending. The research also revealed 39% of corporate treasurers at large and mid-size companies would switch FIs for better payment automation tools.

Duta maintained new payment rails, such as instant payments, in particular RTP, could have an impact. The Finastra director also pointed out the recent transaction limit increases by RTP and FedNow. The Clearing House, which operates the RTP network, has increased the individual transaction limit to $10 million, effective February 9, 2025. The FedNow service will increase its transaction limit from $500,000 to $1 million starting on June 24, 2025.

“Obviously, we still have our traditional payment methods like Fedwire. But business payments are becoming more and more relevant in the context of FedNow and RTP with instant payments,” stated Duta.

ISO 20022 Preparations

Earlier this year, the Federal Reserve Financial Services (FRFS) announced a revised timeline for the transition to the ISO 20022 message format for the Fedwire Funds Service to July 14, 2025. On that Monday, barring any further delays, every credit union and bank processing Fedwires, will have to use the ISO 20022 format. The FRFS will sunset the existing proprietary Fedwire Application Interface Manual (FAIM) format and replace all FAIM messages with ISO 20022 messages.

ISO 20022 standardization must be a priority, said Duta. Presenters noted that 90% of US FIs are ready, as of April 2025, while almost half have completed third-party testing. Credit unions and banks must upgrade their technology, or partner with vendors, so they can adopt the new a format. “Obviously, there's still a final go/no go decision at the end of June, but based on everything we know July 14 is the (switchover) date,” said Duta.

Fintech Partnership Makes the Industry Stronger

Duta offered that the importance of fintech partnership is connected to the larger payment ecosystem. “What about my fraud solution? What about my compliance solution? What about my initiation channels? They all have to play sort of the same tune, but goes beyond everybody has to be ready.”

It is critical to have the right fintech partners, recommended Duta, “as we think about processing payments that all are aligned in the context of requirements. Duta noted once financial institutions start to process in the new format, “they're going to realize all the other things they can do based on ISO 20022.”

Once they get past the ISO 20022 implementation deadline, “We are going to start seeing credit unions, FIs, thinking of how can I take advantage (of the new messaging format) now? All this richness of data that I have at my disposal; whether it is enhanced customer statements or member statements or enhanced advices or enhanced reporting,” Duta said. “All of this plays within the context of the fintech partnership. You need to have the right partners. And that is why at Finastra, we are always looking for the right partners in all aspects that are tied to the payment lifecycle.”