Legacy infrastructure leaves Banks unprepared for real-time

European banks risk falling behind in the race towards real-time payments and faster securities settlement unless they accelerate investment in automation and modern payments infrastructure, according to new research from Aqua Global.

Legacy infrastructure leaves Banks unprepared 

The survey of 150 banking IT leaders across Europe, including 75 in the UK, highlights widespread concern that legacy systems and manual post-trade processes are preventing financial institutions from meeting growing customer expectations and preparing for the industry’s transition to T+1 settlement in 2027.

The findings suggest that while real-time payments have become a strategic priority, many institutions remain constrained by operational processes designed for an earlier generation of banking.

Manual Processes Continue to Hold Banks Back

According to the research, one in three banks still takes more than a full day to resolve reconciliation exceptions, illustrating the operational challenges many institutions continue to face.

The survey found that 85% of respondents believe automation will determine which banks remain competitive in cross-border payments, while 78% warned that organisations failing to modernise risk losing ground on customer experience.

Almost three-quarters (73%) also agreed that unified messaging, transaction matching and reconciliation capabilities are no longer optional for banks seeking to operate efficiently at scale.

Cian Fernando, Chief Executive Officer of Aqua Global, said banks remain under pressure to move money faster while improving customer experience and responding to regulatory change, but too many continue to rely on manual processes and ageing messaging infrastructure.

T+1 Settlement Raises the Stakes

The findings come as the UK, European Union and Switzerland prepare for the introduction of T+1 securities settlement from October 2027, reducing the settlement cycle from two business days to one.

Aqua Global’s research suggests the industry is far from ready. Just 21% of financial institutions have already begun preparing for T+1, while almost one quarter (23%) have yet to put any plans in place.

The transition will significantly reduce the time available to identify settlement errors, complete reconciliations and resolve exceptions. Processes that currently depend on overnight batch processing and manual intervention may struggle to operate within the tighter settlement window.

The report also found that 97% of respondents experienced challenges during migration to the ISO 20022 messaging standard, 60% believe their existing infrastructure struggles to keep pace with regulatory demands, and 83% expect short-term technology fixes to prove more expensive over the longer term.

Automation Becoming a Competitive Necessity

Rather than replacing core banking systems, Aqua Global argues that many institutions should focus on modernising the orchestration layer surrounding payments and post-trade processing.

Capabilities such as real-time transaction matching, continuous reconciliation, automated exception management and end-to-end payment visibility can enable banks to meet both regulatory requirements and rising customer expectations without undertaking large-scale core system replacement.

The report concludes that T+1 settlement is likely to become a catalyst for wider operational transformation rather than simply another regulatory deadline. As real-time payments, ISO 20022 adoption and faster settlement continue to converge, banks that invest early in automation are expected to benefit from lower operational costs, improved resilience and stronger customer experiences, while those relying on legacy processes risk falling further behind.